Every will shall be 62-2-502

(1) in writing;

(2) signed by the testator or signed in the testator's name by some other individual in
the testator's presence and by the testator's direction; and

(3) signed by at least two individuals each of whom witnessed either the signing or the
testator's acknowledgment of the signature or of the will.

Using disinterested witnesses is discouraged, however, this will not prevent it from
being though it may create problems later on especially if they receive an unproprtional
share

- There must be written evidence in a will that the gift was meant to be an
advancement of an inheritance.

- If you create a second will and then revoke the second will it does not
automatically revoke the first will unless there is specific language that says it
does

If there is a third witness present but needed, and they have an excess benefit, then it is
not purged because they are not necessary.

- There is not legal relationship between the drafting attorney and the intended
beneficiary of a will. The drafter and the testator have privity of contract.SC
doesn’t have privity defense

Freedom of disposition
 American law does not grant courts any general authority to question the wisdom,
fairness or reasonableness of the donor’s intent.
 The right of freedom of disposition cannot be completely extinguished. Exp. A law that
repeals the right to completely bequeath houses.
Restrictions
- Racial
- Destruction of property that causes societal harm
- Estate taxation
- Slayer statute SC § 62-2-803

Destruction of property
 Free to do as they wish during life but court will look at social utility after death
Mechanics of Succession

Probate gives us
 Evidence of transfer of title
 Protects creditors by providing a procedure for payment of deaths
 Distribute the decedents property to those intended after the decedent’s creditors are
paid
Personal property- the law of the state where the person was domiciled at death governs
Real- state where the decedents property was located rule s

Probate is the judicial process when – public will or intestacy

1. a will is proved in a court of law and accepted as a valid public document that is the true last
testament of the deceased OR
2. The estate is settled according to the laws of intestacy in the state of residence of the
deceased at the time of death in absence of a legal will

Non-probate property- property passes outside of probate—this is private

 Joint tenancy- automatically goes to the joint tenant,
 Life insurance
 Contracts payable on death
 Inter vivos trust
Bars to Succession
 Slayer statute—SC Code 62-2-803—applies to intestacy, wills, and no probate transfers
 The conviction of a felonious intentional killing of another or can determine by propond
Rule --Legal title does not pass to the slayer because of the equitable principle that one should
not be able to benefit from wrongful conduct. Legal title passed as though the slayer
predeceased the victim

Constructive trust—Equtiable remedy

 It resembles a trust, one party owns legal title and other owns beneficial title but not a
real trust.
Imposed if a person was wronged because of
1. a person owning legal title they should not posses
2. the individual is under a duty to transfer title to the owner

Intestacy law—serves as default rules that carry out intent of a typical intestate decedent
 Decedent leaves no will
 Decedent leaves a part of a will and the rest has to be disposed
 Choice of law—real vs personal property
 Testacy- decedent leaves a will that provides for the disposition at death

Systems of representation
 Modern Per Stripes (Per Capita with representation) SC § 62-2-106
 Each line of descent is treated equally beginning with the first generation with a living
taker.
 The next generation does not receive their part until the next line dies.

Surviving spouse share §62-2-102 the intestate share of the surviving spouse is
1. if there is no surviving issue (child) of the decedent, then the entire estate
2. if there is a surviving issue, one half of the entire estate
If man is remarried to a new wife and dies, unless the wills states otherwise the new wife would
take ½ of the estate and the kids would split the other ½

If there is no spouse § 62-2-103

1. if all of same degree of kinship to the decedent they take equally, but if unequal degree
those of more remote degree take by representation
2. if no surviving issue—then to parents
3. is no surviving issue or parent—then to issue of parents or either of them by representation
4. grandparents or issue of representation
5- great grands

Half Blood Collaterals §62-2-107

  Relatives of half blood inherit the same share they would inherit if they were full blood
- Do not confuse this with the marital status of the children. The marital status is
irrelevant to the inheritance of the children.

Adoption § 62-2-109
1. an adopted person is the child of an adopting parent and not of natural parent unless
stipulated in 63-9-1120
2. adoption of step parent who is a spouse has no effective of natural parent

Nonmarital children
1. child of mother
2. that person is also a child of the father if married before or after birth
Posthumously conceived child
 No statute in sc
 62-2-108

Adult adoption is allowed in SC § 63-9-1120- if court finds it is in the best interest of those
involved.

Unmarried cohabitating partners

Simultaneous death SC § 62-2-104

 Claimant was established survivorship by 5 days by clear and convincing evidence

SC defaults against 62-2-110

  If a person dies intestate, the property which he gave in his lifetime to an heir is treated
as an advancement against the latter's share of the estate only if declared in a

contemporaneous writing signed by the decedent or acknowledged in a writing signed

by the heir to be an advancement.

Wills
Functions of formalities
 Evidentiary- supplies evidence to the court
 Cautionary function- the performance of some ceremony for the purpose of impressing
the transferor with the significance of his statements.
 Protective- safeguards the testator
 Channeling function- standardization of forms simplified administering

Execution- South Carolina

 Strict compliance state- signed by the testator or signed in the testator’s name
 In writing
 Witnesses- signed by at least two individuals who witnessed either the signing of the
will of the testator’s acknowledgement of the signature of the will.
Interested witness and purging- SC §62-2-504
 Purge only the excess benefit
 The excess passes through intestacy
Model execution ceremony
Choice of law
 Real property- where the property is located
 Personal property- where the testator is domiciled
Self proving affidavits- SC §62-2-503
Either on or two step
 One step- combines the attestation clause and the self proving affidavit
 Two step- self proving attached to the will and testator and witness sign separate
affidavit after they have signed the will

Holographic wills – wills written eitirely by hand

 Not allowed in SC
 But if hand written and signed by two witness, this is a valid will In SC.

Revocation of wills- SC §2-2-506

 a person remains free to rework her estate plan until the moment of death.
Can revoke by
 burning, tearing, canceling, obliterating, destroying with the intent and purpose of
revocation
Partial Revocation- SC § 62-2-506
 crossing out part of of the will
Revival of revoked wills- 62-2-508
 if a subsequent will that wholly provoked a previous will is thereafter revoked by act,
the previous will remains revoked unless it is revived
 it is revived if it appears by clear and convincing evidence that the testator intended to
revive the original
Change in family circumstances 62-2-507
 divorce, or divorce plus a property settlement revokes any provision in the decedents
will for the divorced spouse.
 Can be overridden by marital agreement
Integration of wills
 All papers present at the time of the execution and are intended to be part of the will
are treated as part of the will
Lost will- if a will is lost a presumption arises that it was revoked by the testator
 the burden is on the proponent of the will to prove it was not revoked
 look for another copy, ask the drafter

Codicil- a document that amends rather than replacing a previously executed will.
 It indicates that the earlier will is still in force to the extent not altered by the codicil
Incorporation by reference- 62-2-509
 Must be in existence when the will is executed
 Must manifest this intent
 Must describe the writing sufficiently
Separate writing that identifies certain types of intangible property 62-2-512
A will may refer to a written statement or list to dispose of items of tangible personal
property not otherwise specifically disposed of by the will, other than money, evidences
of indebtedness, documents of title (as defined in Section 36-1-201(15)), securities (as
defined in Section 36-8-102(1)(A)), and property used in trade or business. To be
admissible under this section as evidence of the intended disposition, the writing must
either be in the handwriting of the testator or be signed by him and must describe the
items and the devisees with reasonable certainty. The writing may be referred to as one
to be in existence at the time of the testator's death; it may be prepared before or after
the execution of the will; it may be altered by the testator after its preparation; and it
may be a writing which has no significance apart from its effect upon the dispositions
made by the will.

 Can be a written statement disposing of personal property other than money

 Must be signed by the testator and describe the items and devisee with reasonable
certainty
 Can not just change it at will tho
Acts of independent significance 62-2-511
 May dispose of property by reference to acts and events that have a significance apart
from their effect upon the dispositions made by the will.
Contracts concerning succession
 contract made not to revoke or revise a will established
- provision of a will stating material provisions of a contract
- express reference in will and extrinsic evidence of a contract
- signed decedent writing evidencing contract
- execution of a joint wills does not create a presumption of contract not to revoke the
will or wills

Capacity and contest

Capacity looks suspicious when he doesn’t know the objects of his bounty ie thinks he has more
kids than he really does.
 An individual who is of sound mind and who is not a minor as defined In 62-1-201(27)
may make a will
Testator must be capable of knowing and understanding
1. the nature and extent of his or her property
2. the natural objects of his or her bounty and
3. the disposition that he or she is making of that property and must also be
4. capable of relating those elements to one another and forming an orderly desire regarding
the disposition of that property
Lucid Intervals
 A person who is mentally incapacitated part of the time but also has lucid intervals can
make a will during one of those periods in the absence of adjudication or statute that
has a contrary effect may make a will or inter vivos transfer
Insane delusions
 Majority rule- a delusion is insane even if there is some factual basis for it, if a rational
person could have not drawn the same conclusion
 Unclear if SC recognizes insane delusion as a separate ground for contesting a will.

Undue influence
 A donative transfer is produced by undue influence if the influence excerted over the
donor overcame the donor’s free will and caused the donor to make a donative transfer
that the donor would have not otherwise have made.
 In SC the applicable standard of proof for undue influence is unmistakable and
convincing evidence
 Generally there has been evidence of threats, force, and or restricted visitation or an
existing fiduciary relationship
  62-3-407- Contestants of the will have the burden of establishing undue influence,
fraud, duress, mistake, revocation or lack of testamentary intent or capacity.

Burden of proof – 62-3-407

 When suspicious circumstances arise we presume undue influence and require the
person with better access to the proof to prove that the will was made freely and that
the person acted in good faith.

Bequest to lawyers and fiduciary appointments

 Many courts hold a presumption of undue influence arises when an attorney drafter
receives a legacy, except when related to the testator
Unethical conduct
 A lawyer shall not solicit any substantial gift from a client including a testamentary gift,
or prepare on behalf of a client an instrument, or prepare on behalf of a client an
instrument giving the lawyer or a person related to the lawyer a substantial gift unless
the recipient is related to the client
Fiduciary appointments
 A lawyer should advise the client about the extent and nature of the lawyers financial
interest in the appointment
.
Penalty clause for contest 62-3-905
 A provision in a will purporting to penalize any interested person for contesting the will
or instituting other proceedings related to the estate is unenforable if probable cause
exist in instituting the proceedings
Revocable trust
 The longer the trust, the more the intent of the grantor really intended it and the harder
it will be for them to unravel it
 Preferred way to effect an unequal bequest
 The longer it has been effect the more it as seen as the grators intent
 Can be challenge with undue influence
Duress
 Donative transfer is procured by duress if the wrongdoer threatened to perform or did
preform a wrongful act that coerced the donor into making a donative transfer that the
donor would have otherwise not made
Fraud
 Wrongdoer knowingly or recklessly made a false representation to the donor about the
material fact that was intended to and did lead the donor to make a donative transfer
the donor would have otherwise not have made
 Fraud in execution- person intentionally misrepresented the contents of the intraments
signed by the testator, which does not in fact carry out the testators intent
 Fraud in inducement- misrepresentation causes the testator to execute or revoke a will,
to refrain from executing or revoking a will or to include particular provisions in the
wrongdoers favor
Tortious interference basics
 Not formally recognized in Sc
 But the supreme court has suggested it possible

Plain meaning and no extrinsic evidence rule- 62-2-601

 The intention of the testator as expressed in the testators will controls the legal effect of
the testators dispositions
 Language cannot be modified to meet unforeseen changes in conditions
 Parol evidence can not be introduced to vary a will
 Some extrinsic evidence is let in surround the circumstances around the testator at the
time.
No reformation rule
 The court may reform the term of the will, even if unambiguous, so to conform the
terms of the to the testators intention if it is proved by clear and convincing evidence
that the testators intention were affected by mistake of fact or law.
Reformation- 62-2-601
 The court may reform the terms of the will, even if unambiguous to conform to the
terms of the testators intent if it is proved by clear and convincing evidence that the
testators intent and the terms of the will were affected by a mistake of fact or law.
The type of ambiguity doesn’t matter, they can allow it regardless
Patent ambiguity
 Evident from the face of a will exp ½ to a ½ to b etc.
- No extrinsic evidence allowed
Latent ambiguity- favored in sc
  When the terms are applied to the facts
 Equivocation – My cousin John Smith (where there are two of them).
 Personal Usage – Called someone named Barbara Trixie (no one else did).
 No Exact Fit – 2000 Bardstown Road (where there is no building at that address)

SC Non-Statutory rules of construction

1. The cardinal rule is to determine the testator’s intent
 See, eg, Bob Jones Univ. v. Standell, 344 SC 244 (SC Ct App 2001)
2. If possible intention should be discerned from the four corners of the will
3. The will should be read in light of the surrounding circumstances
 See, eg, In re Estate of Fabian, 326 SC 349 (SC Ct App 1997)
4. If possible, a court should give effect to all parts of a will
 See, eg, Shevlin v. Colony Lutheran Church, 227 SC 598 (1955)
5. If possible a court should give words their ordinary meaning
 See, eg, Bob Jones Univ. v. Standell, 344 SC 244 (SC Ct App 2001)
6. If possible a court should read all provisions of a will as consistent
 See, eg, Shevlin v. Colony Lutheran Church, 227 SC 598 (1955)
7. Generally the will speaks as of the time of the testator’s death
 See, eg, Shelley v. Shelley, 244 SC 598 (1964)
8. If possible, a court should apply a presumption against intestacy
 See, eg, In re Estate of Blankenship, 336 SC 103 (SC Ct App 1999)

Inerpreting a will In SC
1. Place to begin is the language of the will
2. Do the rules of construction help?
3. If will contains ambiguity then extrinsic evidence may be admissible
 Ambiguities can be patent or latent (but more likely if latent)
 Note: Courts are more willing to allow evidence of the circumstances surrounding the
testator than they are evidence of his declarations of intentions
Devises bequests and legacies

Specific
 Devise or bequest of a particular thing or part of the testators estate as distinguished
from the other estates property and can be satisfied only by a delivery of the particular
thing or part to the beneficiary
General
 Payable out of the general assets of the estate without regard to any particular fund or
property
Demonstrative
 General in that it must be a bequest in the natural of a general legacy
 Specific in that the fund or property out of which it is payable must be designated
Residuary
  The portion of the individuals estate that remains after all of the specific gifts and
bequest have been made and all claims of the estate are satisfied

Failure of a testamentary provision

 Except as provided in 62-2-603, if a devise other than a residuary devise fails for any
reason it becomes part of the residue
 Except as provided in 62-2-603, if the residue is devised to two or more people, the
share of the residuary clause that fails for any reason passes to the other residuary
devisees in proportion to their interest in the residue
Anti-lapse statute
 Absent contrary intent of the testator, if the testamentary gift to a specific predeceasing
beneficiary lapses, the gift will not pass to the residue or the intestacy, instead it will
pass to certain substitute takers usually the descendants of the intended takers
IN SC
 Unless a contrary intent appears in the will, if a devisee, who is a great-grandparent or a
lineal descendant of a great-grandparent of the testator is dead at the time of
execution of the will, fails to survive the testator, or is treated as if he predeceased the
testator, the issue of the deceased devisee who survive the testator take in place of the
deceased devisee and if they are all of the same degree of kinship to the devisee they
take equally, but if of unequal degree than those of more remote degree take by
representation
Words of survivorship- 62-2-603
 If he surrvies me or to my surviving children, are in absence of additional evidence a
sufficient indication of intent contrary to the application of subs A and B
 B- one who would have been a devisee under a class gift if he had survived the testator
is treated as a devisee for the purpose of this section
  Anti-lapse does apply to gifts in SC
Class gift arises when the testator was group minded
 Traditionally only surviving members of the class split it unless there is an antilapse
statute

Ademption- specific devises of real and personal property are subject to the doctrine of
ademption by extinction
 Identity theory- if a specifically devised item is not in the testators estate, the gift is
extinguished
 Intent theory- if the specifically devised item is not in the testators estate, the
beneficiary may be entitled to the cash value of the item if the beneficiary can show that
this is what the testator would have wanted
Ademption In SC- identity theory with some adjustments
 Contrary interest of the testator can supersede the operation of these sections

Non-ademption of specific devises- A specific devisee has the right to the specifically devised
property in the testator's estate at the testator's death and - 62-2-606(a)
 any balance of the purchase price (together with any mortgage or other security
interest) owed by a purchaser to the testator at the testator's death by reason of sale of
the property;
 any amount of a condemnation award for the taking of the property unpaid at the
testator
 any proceeds unpaid at the testator's death on fire or casualty insurance or on other
recovery for injury to the property;'s death;
 any property owned by the testator at death and acquired as a result of foreclosure, or
obtained in lieu of foreclosure, of the security for a specifically devised obligation.
62-2-606(b)
 If specifically devised property is sold or mortgaged by a conservator or by an agent
acting within the authority of a durable power of attorney for an incapacitated principal,
or a condemnation award or insurance proceeds or recovery for injury to the property is
paid to a conservator or to an agent . . ., the specific devisee has the right to a general
pecuniary devise equal to the net sale price, the amount of the unpaid loan, the
condemnation award, the insurance proceeds, or the recovery.
Change in securities- 62-2-605
 If the testator intended a specific devise of certain securities rather than the equivalent
value thereof, the specific devisee is entitled only to:
1. as much of the devised securities as is a part of the testator's estate at the time of the
testator's death;
2. any additional or other securities of the same organization owned by the testator by reason
of action initiated by the organization or any successor, related or acquiring organization
excluding any acquired by exercise of purchase options;

(3) securities of another organization owned by the testator as a result of a merger,

consolidation, reorganization, or other similar action initiated by the organization or any
successor, related or acquiring organization;

(4) any additional securities of the organization owned by the testator as a result of a plan of
reinvestment in the organization.

Abatement

 Applies when the estate doesn’t have enough property to satisfy all of the testator’s
devises
 Sometimes because the estate has less property than expected
 Sometimes because debts and taxes were not taken into account
62-3-902 (a)
(a) . . . shares of distributees abate . . . in the following order: (1) property not disposed of by
the will; (2) residuary devises; (3) general devises; (4) specific devises.
Abatement within each classification is in proportion to the amounts of property each of the
beneficiaries would have received if full distribution of the property had been made in
accordance with the terms of the will.

(b) If the will expresses an order of abatement, or if the testamentary plan or the express or
implied purpose of the devise would be defeated by the order of abatement stated in
subsection (a), as, for instance, in case the will was executed before the effective date of this
Code, the shares of the distributees abate as may be found necessary to give effect to the
intention of the testator.

(c) If the subject of a preferred devise is sold or used incident to administration, abatement
shall be achieved by appropriate adjustments in, or contribution from, other interests in the
remaining assets.

When suing an attorney for a mistake must prove that you were an intended benficairy of the
will.

Trust

Four funtions of a trusteeship

Custodial- taking custody of the property and safeguarding it

Administrative- account and recordkeeping as well as making tax and other required filings

Investment- reviewing the trust assets and making and implementing a prudent investment
program

Distribution- making distributions of income or principal to the beneficiaries

Revocable
 A will substitute, it has all the benefits of a will
 The provisions do not apply to the trustor
 The trustee only owes duty to the trustor

Irrevocable trust
 A pardadimatic trust
 Trustor has no powers
 Trustee has broad powers
 Trustee owes duties to beneficiaries who can bring a suit

Commercial trust
 Separates owner and control- the settlors have a wide latitude in determining the rights
of the benefices
 Allows entrepreneurs to escape regulation inherent to other business entities or to
create specialized transaction structures

Trust requirments SC 62-7-402

The creation of a trust requires:
[(1) capacity by the settlor (we’ve already discussed)]
(2) intent by the settlor to create a trust;
(3) ascertainable beneficiaries who can enforce the trust; and
(4) a trustee with duties to perform[specific property,
(5) a writing may be required to satisfy the Wills Act or the Statute of Frauds.

The beneficiary principle UTC § 402(a)(3); 62-7-402(a)(3)

(a) A trust is created only if: …

(3) the trust has a definite beneficiary or is:
(A) a charitable trust;
(B) a trust for the care of an animal as provided in Section 62-7-408
(C) a trust for a noncharitable purposes as provided by Section 62-7-409

A trust for an indefinite class UTC § 402(c); 62-7-402(d)

 Trustee has the power to select a beneficiary from an indefinite class
 If power is not executed in reasonable time, the power fails and the property passes to
the person it would have if ther person had not had power

Trust for non-charitable purpose- SC

 Statutory trust for pet animal or other non-charitable person are authorized by 62-7-
408-9
 Authorizes court to reduce the excessive trust property and
  Provide for enforcement by the person appointed on the terms of the trust or a court
appointee
Oral trust for personal property UTC 407 62-7-407
Must be established by clear and convincing evidence
 A declaration of trust of personal property requires no particular formalities’
 Only needs to manifest the intention to hold certain of settlors property for a
beneficiary.
Will substitues- 1. they tend to be asset specific, 2. Avoid probate, 3. Are not subject to the wills
act
Questions to ask
1. should wills act formalities be required for validity- ritual, evidentiary, protective, channeling
2. should the subsidiary law of wills apply to the substitutes
Perfect will substitutes
 Life insurance
 Pension accounts
 Joint accounts TOD and POD
 Revocable trust
Imperfect
 Joint tenancies

Revocable trust

Setllor’s powers 62-7-603

 The rights of the beneficiaries are subject to the control of, and the duties of the trustee
are owed exclusively to the settlor
 Revocation or amendment of a revocable trust
 By substantial compliance with a method provided by in the terms of the trust
 If the terms of the trust do not provide a method or the method provided by in the
terms in not expressly made exclusive by
1. a later will or codicil that expressly refers to the trust, manifesting clear and
convincing evidence of the settlor’s intent, or
2. by oral statement to the trustee if the trust was created orally, or
3. any other written method, other than a later will or codicil, delivered to the trustee
and manifesting clear and convincing evidence of the settlor’s intent

Powers of agent- 62-7-602(a)

An agent acting pursuant to a power of attorney may exercise the following powers of the
settlor with respect to a revocable trust only to the extent expressly authorized by the terms
of the trust of the power of attorney
1. revocation of the trust
2. amendment of the trust
3. additons to the trust
4. directions to dispose of property of the trust
5. creation of the trust, notwithstanding the provisons of section 62-7-402 (a)(1) and (2).

62-3-803—Limitation on the presentation of claims

(a) all claims against a decedents estate before the death of the descendent are barred against
the estate personal representative of the decedents heirs and devisees and the non-probate
transfer of the descendent heirs and devisees
Unless
1. presented one year after the decedents death or
2. the time provided in section 62-3-801(b) for creditors who are given actual notice and with
the time procided in section 62-3-801(a) for all creditors barred by publication

62-7-505- revocable trust creditor’s during settlor’s life

(a) regardless if the trust contains a spendthrift provision the following rules apply
1. during the lifetime of the settlor, the property of a revocable trust is subject to claims of the
settlors creditors

Revocation through divorce or annulment

 Can be overridden by marital agreement
 Applies broadly to dispositions of beneficiaries designations, joint tenants, both probabe
and non-probate
 Does not apply to third parties who act in good faith and don’t forget about ERISA
 They must receive notice
Revocation on divorce of trust 62-7-607
 The divorce revokes any disposition or appointment of property including beneficial
interest made by such trust to the spouse, unless the trust expressly provides otherwise
Pour-Over Will
Testamentary additions to trust 62-2-510
(A) a devise made by a will to the trustee of a trust is valid so long as.
1. the trust is identified in the testators will and the terms are set forth in
(a) a written instrument (other than a will) executed before, concurrently with, or after
the execution of the testator’s will but not later than the testators death or
(b) in the valid last will of another individual who has predeceased the testator

(B) the trust is not required to have a trust corpus other than the expectancy of receiving the
testators devise

(C) the decise is not invalid because the trust is amendable or revocable, or because the trust is
amended after the execution of the will or death of the testator.

Life insurance
1. Life insurance is nonprobate
2. Background about Life Insurance
(i) It was created to replace the contributions of a breadwinner
(ii) When estate taxes were high, it provided instant liquidity for beneficiaries while
the estate went through probate
(iii) Life insurance is relatively inexpensive if the owner gets it when they are young
(iv) Life insurance is technically subject to the estate tax, but we don’t worry about it
because the tax level is so high
(v) Two kinds:
(a) Term insurance
(1) Sold in “terms”—i.e. if you die over the next 30 years, we will pay
(2) Premium is based on the price to buy an annuity
(3) Good for families who might need one to two million in coverage and
have limited income
(b) Whole life
(1) Premium goes two places
 Part pays for the risk term
 Other part the insurance company invests and pays a return on it
(2) The insured can borrow or withdraw from the fund created by whole life
insurance
(3) Premiums are higher
(4) The investment risk is with the insurance company
Universal life insurance
 Generally permanent with caveats
 Premiums can be increased or decreased depending on life events
 Shifts some of the risk for maintaining the death benefit to the policy owner
 Policy lapses when the cash value is no longer sufficient to cover the the policy and admit
expenses
Pension and retirement plans
 Originally intended to secure the retirement of workers and their spouses
 Evolved into a tax-advantaged saving and investment plan (401(k) is a tax section),
culminating in a nonprobate transfer at death
 Tax Advantages
Either
a. Contribution with pretax dollars OR
b. Or you can choose to use post tax dollars (Roth)
 Tax free growth
 After death
a. Account ownership can be shifted to a much younger beneficiary with required distributions
reset to the younger beneficiary’s age
b. Ensuring another lifetime’s worth of tax-advantaged growth

ERISA- you do not have a choice but to name your spouse your benificary in 401(K) plans or
other ERISA plans unless they waive their right. This can not be done in a prenum and must be
done after the wedding.
a. by federal law all ERISA plans are exempt from creditors
  IRAs are protected by state law from creditors. See Section 15-41-30(A)(13)
a. the exception is the IRS, which can and will levy retirement accounts to satisfy debts

 Profit-sharing retirement plans

 Stock bonus plans
 Money purchase plans
 401(k) plans
 Employee stock ownership plans
 Defined benefit retirement plans
 Generally NOT:
 State employee pension plans
 IRAs (with some exceptions)
a. you can name pretty much anyone to be a beneficiary for a roth but must make
changes through the beneficiary designation, not your will

Life insurance and Creditors in SC

 Proceeds and cash surrender values of life insurance payable to a beneficiary other than
the insured’s estate in which such proceeds and cash surrender values are expressed to
be for the primary benefit of the insured’s spouse, children, or dependents are exempt
from creditors of the insured whether or not the right to change the beneficiary is
reserved and whether or not the policy is payable to the insured

Multiple Party Accounts

62-6-201 During life: each joint accont holder owns in proportion to their net contributions
  Interest is also held in proportion
62-6-202 At death: net contributions go to the survivor
 Unless there are multiple parties and one of them is a spouse of the decedent—in this
case the entire net contribution goes to the spouse
Creditors
62-2-205: creditors of the deceased party can reach the proceeds if the probate estate is
insufficient

Presumption of ownership of tangible personal property- 62-2-805

 Because personal property is often not titled or registered ownership rights by the
surviving spouse can be uncertain
 Presumes that the spouses owned the property with right of survivorship, absent some
contrary written evidence
a. Does not apply to nonmarital property (e.g. purchased before the marriage or acquired
by inheritance)

Incapacity: property management

 Guardianship- Origin in feudal practice in which a guardian took possession of the
ward’s lands; still subject to extensive judicial supervision.
a. A guardianship is a legal relationship between a capable adult, the Guardian, and a Ward, the
person who has been determined to be legally disabled
b. Legal disability by a judge
c. A doctor, social worker, neighbor or your child have no authority to declare you legally
disabled or incompetent

 Conservatorship- Court-appointed conservator has power over finances similar to that

of a trustee
a. A Conservatorship is a form of Limited Guardianship
b. A Conservatorship may be requested in the initial filing or may be selected as appropriate by
the jury
c. In a Conservatorship, the Conservator handles the money
d. The Ward may retain all personal rights or there may also be a personal guardian

 Revocable Trust- Successor trustee can act with respect to trust property immediately
and without judicial involvement

 Durable Power of Attorney- Agent authorized to act with respect to any of the
principal’s property, but only while principal is alive

a. A Durable Power of Attorney allows the Principal’s Attorney-in-fact to handle his financial
affairs
b. “Durable” means that it stays in effect even if you become incompetent
c. Statutory language: "This power of attorney shall not be affected by subsequent disability or
incapacity of the principal, or lapse of time”
d. In the world of elder law, the document would be useless without durability statement

Durable power SC
 Legal basis for a Power of Attorney in SC is found at Title 62, Article 8 (1/1/17)
 b. Same requirements as a will (62-8-105)
a. Signed, acknowledged, two witnesses
 Default is that a power is durable (62-8-104)
 Persons engaging in transactions can ask for a certification, translation, or an opinion of
counsel but with exceptions they must accept an acknowledged power of attorney (62-
8-120)

Health Care Directives

 Living Will (Instructional Directive) - A legal document that states a person’s wishes
regarding the use of life prolonging treatment (machines), when he or she is terminally
ill with no hope of recovery
a. Specifies treatment in end-of-life situation or in the event of incompetence.

 Healthcare Surrogate (Proxy Directive)

a. Designates an agent to make health care decisions for the patient.

 hybrid or Combined Directives (SC allows for the combined directive under 44-77-50)
a. Incorporates both the living will and the healthcare surrogate, that is, directs treatment
preferences and designates an agent to make substituted decisions.

Marital Property systems- South Carolina is a Separate property state

Separate
 No automatic sharing of earnings; whatever spouse earns or acquires is his or hers.
 Protection against disinheritance provided through elective share.

Community property
 Property earned or acquired during marriage is community property.
 No elective share, because each spouse owns all earnings during marriage in equal,
undivided shares.

Elective shares 62-2-201

 Intestacy – share is 100% if no issue or 50% if there is an issue
 Testacy- 1/3 of the probate estate
a. non probate is not applicable unless
i. if a revocable trust is found to be illusory pursuant to 62-7-401(c)—e.g. spouse retains
excessive control over the trust and does not transfer assets into the trust (fact-based inquiry)
  nonprobate assets are charged against the elective share pursuant to 62-2-207
Waiver of the Spousal Share In SC 62-2-204
 (A) The rights of a surviving spouse to an elective share, homestead allowance, and
exempt property, or any of them, may be waived, wholly or partially, before or after
marriage, by a written contract, agreement, or waiver voluntarily signed by the waiving
party after fair and reasonable disclosures to the waiving party of the other party's
property and financial obligations have been given in writing.

Martial agreement rules in SC.

Hardee v. Hardee, 355 S.C. 382, 585 S.E.2d 501 (2003) criteria:
1. Was the Agreement obtained through fraud, duress or mistake, or through
misrepresentation or non-disclosure of material facts? [procedural]
2. Is the Agreement unconscionable? [substantive]
3. Have the facts and circumstances changed since the Agreement was executed so as to
make its enforcement unfair and unreasonable? [substantive]
Omitted Spouse in SC 62-2-301
(a) If a testator fails to provide by will for his surviving spouse who married the testator after
the execution of the will, the omitted spouse . . ., shall receive the same share of the estate he
would have received if the decedent left no will unless:
(1) it appears from the will that the omission was intentional; or
(2) the testator provided for the spouse by transfer outside the will and the intent that the
transfer be in lieu of a testamentary provision is shown by statements of the testator or from
the amount of the transfer or other evidence.
(c) The spouse may claim a share as provided by this section by filing in the court and serving
upon the personal representative, if any, a summons and petition for such share within the
later of (1) eight months after the date of death, (2) six months after the informal or formal
probate of the decedent's will, or (3) thirty days after the omitted spouse is served with a
summons and petition to set aside an informal probate or to modify or vacate an order for
formal probate of decedent's will.

SC Pretermitted Children Statute

 Probable intent
 Modern statute
 Assumes heir gets an intestate share unless:
o Omission was intentional
o The testator left substantially all of the estate to the other parent
o Provided for the child otherwise
 In satisfying the intestate share, the other devisees and heirs contribute to make up the
share of the omitted heir
Three kind of trust

1. Business Trusts for Commercial Deals

 Created for a commercial purpose such as organizing a mutual fund or facilitating asset
securitization.
Revocable Trusts for Nonprobate Transfers
 Commonly used as a will substitute for conveying property at death outside of probate.
 Also used as a conservatorship substitute
Irrevocable Trusts for Ongoing Fiduciary Administration
 Administration of property by a trustee in accordance with the settlor’s intent.
Increasingly, the trustee of such a trust is a fee-paid professional.
 These can be thought of as management trusts

Functions of a Trust
Custodial
 Taking custody of trust property and properly safeguarding it
Administrative
 Includes recordkeeping, bringing and defending claims held in trust, accounting and
giving information to the beneficiaries, and making tax and other required lings
Investment
 Reviewing the trust assets and then making and implementing an ongoing program of
investment in light of the purpose of the trust and the circumstances of the
beneficiaries
Distribution
 Making disbursements of income and principal to beneficiaries according to the terms
of the trust

Fiduciary obligation
Rise of the Management Trust
 Maximum Empowerment
 Fiduciary Obligation
Duty of Loyalty (addresses conflicts of interest) 62-7-802
 (a) A trustee shall administer the trust solely in the interests of the beneficiaries.
 (b) Subject to the rights of persons dealing with or assisting the trustee as provided in
Section 62-7-1012, a sale, encumbrance, or other transaction involving the investment
or management of trust property entered into by the trustee for the trustee's own
personal account or which is otherwise affected by a conflict between the trustee's
fiduciary and personal interests is voidable by a beneficiary affected by the transaction
unless:
 (1) the transaction was authorized by the terms of the trust;
 (2) the transaction was approved by the court;
  (3) the beneficiary did not commence a judicial proceeding within the time allowed by
Section 62-7-1005;
 (4) the beneficiary consented to the trustee's conduct, ratified the transaction, or
released the trustee in compliance with Section 62-7-1009; or
 (5) the transaction involves a contract entered into or claim acquired by the trustee
before the person became or contemplated becoming trustee.

c) A sale, encumbrance, or other transaction involving the investment or management of trust

property is presumed to be affected by a conflict between personal and fiduciary interests if it
is entered into by the trustee with:
 (1) the trustee's spouse;
 (2) the trustee's descendants, siblings, parents, or their spouses;
 (3) an agent or attorney of the trustee;.
 (4) a corporation or other person or enterprise in which the trustee has such a
substantial interest that it might affect the trustee's best judgment; and
 (5) a corporation or other person or enterprise which has such a substantial interest in
the trustee that it might affect the trustee's best judgment.
(d) A transaction between a trustee and a beneficiary that does not concern trust property but
that occurs during the existence of the trust or while the trustee retains significant influence
over the beneficiary and from which the trustee obtains an advantage is voidable by the
beneficiary unless the trustee establishes that the transaction was fair to the beneficiary.

(e) A transaction not concerning trust property in which the trustee engages in the trustee's
individual capacity involves a conflict between personal and fiduciary interests if the transaction
concerns an opportunity properly belonging to the trust.

(f) An investment by a trustee in securities of an investment company or investment trust to

which the trustee, or its affiliate, provides services in a capacity other than as trustee is not
presumed to be affected by a conflict between personal and fiduciary interests if the
investment otherwise complies with the prudent investor rule of Part 9.

(g) In voting shares of stock or in exercising powers of control over similar interests in other
forms of enterprise, the trustee shall act in the best interests of the beneficiaries. If the trust is
the sole owner of a corporation or other form of enterprise, the trustee shall elect or appoint
directors or other managers who will manage the corporation or enterprise in the best interests
of the beneficiaries.

(h) This section does not preclude the following transactions, if fair to the beneficiaries:

(1) an agreement between a trustee and a beneficiary relating to the appointment or

compensation of the trustee;
(2) payment of reasonable compensation to the trustee;
(3) a transaction between a trust and another trust, decedent's estate, or conservatorship of
which the trustee is a fiduciary or in which a beneficiary has an interest;
(4) a deposit of trust money in a regulated financial-service institution operated by the trustee;
or
(5) an advance by the trustee of money for the protection of the trust.

Duty of Prudence (addresses issues such as distribution and investment )62-7-804

 A trustee shall administer the trust as a prudent person would, by considering the
purposes, terms, distributional requirements, and other circumstances of the trust. In
satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.

 Subsidiary Rules (e.g. impartiality, inform and account, etc.)

Extended Discretion 62-7-814

 (a) Notwithstanding the breadth of discretion granted to a trustee in the terms of the
trust, including the use of such terms as "absolute", "sole", or "uncontrolled", the
trustee shall exercise a discretionary power in good faith and in accordance with the
terms and purposes of the trust and the interests of the beneficiaries

Exculpatory clauses
 A term of a trust relieving a trustee of liability for breach of trust is unenforceable to the
extent that it:
(a) relieves the trustee of liability for breach of trust committed in bad faith or with reckless
indifference to the purposes of the trust or the interests of the beneficiaries; or
(b) was inserted as the result of an abuse by the trustee of a fiduciary or confidential
relationship to the settlor

Prudent Investor Rule:62-7-933

 trust investments are“evaluated not in isolation, but in the context of the trust portfolio
as a whole and as part of an overall investment strategy having risk and return
objectives reasonably suited to the trust
§1 Prudent Investor Rule
 [SC] (B)(2) The prudent investor rule is a default rule that may be expanded, restricted,
eliminated, or otherwise altered by the provisions of a trust. A trustee is not liable to a
beneficiary to the extent that the trustee acted in reasonable reliance on the provisions
of the trust.

§2 Portfolio Strategy
 [SC] (C)(2) A trustee’s investment and management decisions respecting individuals
assets must be evaluated not in isolation, but in the context of the trust portfolio as a
 whole and as a part of an overall investment strategy having risk and return objectives
reasonably suited to the trust.
§3 Diversification [SC] (D) A trustee shall diversify the investments of the trust unless the
trustee reasonably determines that, because of special circumstances, the purposes of the trust
are better served without diversifying.

§4 Duties at Inception of Trusteeship

 [SC] (E) Within a reasonable time after accepting a trusteeship or receiving trust assets,
a trustee shall review the trust assets and make and implement decisions concerning
the retention and disposition of assets in order to bring the trust portfolio into
compliance with the purposes, terms, distribution requirements, and other
circumstances of the trust and with the requirements of this act.
Permissive Retention
 Does not excuse the trustee from liability for failing to diversify in the absence of good
reasons for not diversifying
 Such a clause speaks to the scope of the trustee’s powers, not the propriety of their
exercise (though the clause might suggest a more deferential standard of review)
 The fiduciary must still exercise care, skill, and caution in making decisions to acquire or
retain the investment.”
Mandatory Retention Clause
 mandates retention of the trust’s inception assets or otherwise purports to absolve the
trustee from the duty to diversify

Duty to Collect and Protect Trust Property

 Trustee must collect and protect property without unnecessary delay.
Duty to Earmark Trust Property
 Trustee must designate property as trust property rather than the trustee’s own.
Duty Not to Mingle Trust Funds with the Trustee’s Own
 Trustee must not commingle trust funds with his own, even if trustee does not use the
trust funds for his own purposes.
Duty to Keep Adequate Records of Administration
 Trustee must document important decisions and actions and the reason for those
decisions and actions.
Duty to Bring and Defend Claims
 Trustee must take reasonable steps to enforce and defend claims relating to the trust.

Delegation of trustee duties 62-7-807

(a) A trustee may delegate duties and powers…. The trustee shall exercise reasonable care,
skill, and caution in:
(1) selecting an agent;
(2) establishing the scope and terms of the delegation…; and
(3) periodically reviewing the agent’s actions….
(b) In performing a delegated function, an agent owes a duty to the trust to exercise reasonable
care to comply with the terms of the delegation.
(c) A trustee who complies with the requirements of subsection (a) is not liable to the
beneficiaries or to the trust for the decisions or actions of the agent ….
(d) By accepting a delegation of powers or duties from the trustee of a trust that is subject to
the law of this state, an agent submits to the jurisdiction of the courts of this state.

Powers and discretions of a trust protector 62-7-818

 The powers and discretions of a trust protector are as provided in the governing
instrument and may be exercised or not exercised, in the best interests of the trust, in
the sole and absolute discretion of the trust protector and are binding on all other
persons. . . .
Directed Trust
 Trustee is subject to direction by a nontrustee

Duty of Impartiality 62-7-803

 If a trust has two or more beneficiaries, the trustee shall act impartially in investing,
managing, and distributing the trust property, giving due regard to the beneficiaries
respective interests.
Principal and income provsions- 62-7-901

Unitrust- Settlor may set a percentage of the value of the trust corpus that must be paid to the
income beneficiary each year. The corpus is then revalued each year.

Duty to inform, account and report 62-7-813

(b) . . . a trustee … shall:

(1) within ninety days after the trustee accepts a trusteeship or undertakes administration of an
irrevocable trust or a revocable trust that has become irrevocable whether by the death of the
settlor or by the terms of the trust, notify the qualified beneficiaries, as defined in Section 62-7-
103(12), of:
(A) the existence of the trust;
(B) the identity of the settlor or settlors;
(C) the trustee's name, address and telephone number;
(D) the right to request in writing a copy of the trust instrument; and
(E) the right to request in writing a copy of any trustee's report described in (c)(1) below;

(c) (1) have a continuing duty to:

(A) keep the distributees and permissible distributees, or other qualified beneficiaries
who request information in writing, reasonably informed as to the administration of the
trust; and

(B) send annually, and upon the termination of the trust, a written report of the trust
property which may be in any format which provides the distributees and permissible
 distributees, or other qualified beneficiaries who have requested in writing, with
information necessary to protect their interests. The report may include a copy of the
fiduciary income tax return, or copies of bank or brokerage statements, or an informal
list of assets and if feasible, the market values of those assets, the liabilities, the receipts
and the disbursements, including the source and amount of the trustee's compensation;

Limitation of action against a trustee 62-7-1005

(a) Unless previously barred by adjudication, consent, or limitation, a beneficiary may not
commence a proceeding against a trustee for breach of trust more than one year after the date
the beneficiary or a representative of the beneficiary was sent a report that adequately
disclosed the existence of a potential claim for breach of trust.

(b) A report adequately discloses the existence of a potential claim for breach of trust if it
provides sufficient information so that the beneficiary or representative knows of the potential
claim or should have inquired into its existence.

(c) If subsection (a) does not apply, a judicial proceeding by a beneficiary or on behalf of a
beneficiary against a trustee for breach of trust must be commenced within three years after
the first to occur of:
(1) the removal, resignation, or death of the trustee;

(2) the termination of the beneficiary's interest in the trust; or

(3) the termination of the trust.

Trust Removal- 62-7-706

(b) The court may remove a trustee if:

(1) the trustee has committed a serious breach of trust;

(2) lack of cooperation among co-trustees substantially impairs the administration of the trust;
(3) because of unfitness, unwillingness, or persistent failure of the trustee to administer the
trust effectively, the court determines that removal of the trustee best serves the interests of
the beneficiaries; or
(4) there has been a substantial change of circumstances or removal is requested by all of the
qualified beneficiaries, the court finds that removal of the trustee best serves the interests of all
of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable
co-trustee or successor trustee is available.

Discretionary Trust
(b) Except as otherwise provided in subsection (c) of this subsection, whether or not a trust
contains a spendthrift provision, a creditor of a beneficiary may not compel a distribution that
is subject to the trustee’s discretion, even if:
(1) The discretion is expressed in the form of a standard of distribution; or
(2) The trustee has abused the discretion.
(c) To the extent a trustee has not complied with a standard of distribution or has abused a
discretion:
(1) A distribution may be ordered by the court to satisfy a judgment or court order against the
beneficiary for support or maintenance of the beneficiary’s child; and
(2) The court shall direct the trustee to pay to the child such amount as is equitable under the
circumstances, but not more than the amount the trustee would have been required to
distribute to or for the benefit of the beneficiary had the trustee complied with the standard or
not abused the discretion.

 Pure Discretionary Trust

o Trustee has absolute discretion over distributions to the beneficiary.
o Creditor of a beneficiary has no recourse against beneficiary’s interest in trust.

 Support Trust
o Trustee required to make distributions as necessary for beneficiary’s needs.
o Insulates the trust property from some but not all of the beneficiary’s creditors
(child, spouses, and suppliers of necessities).
 Discretionary Support Trust
o Common for a trust to combine absolute discretion with a distribution standard.
Spendthrift trust 62-7-502
(a) A spendthrift provision is valid only if it restrains both voluntary and involuntary transfer of a
beneficiary's interest.
(b) A term of a trust providing that the interest of a beneficiary is held subject to a "spendthrift
trust", or words of similar import, is sufficient to restrain both voluntary and involuntary
transfer of the beneficiary's interest.
(c) A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift
provision and, except as otherwise provided in this article, a creditor or assignee of the
beneficiary may not reach the interest or a distribution by the trustee before its receipt by the
beneficiary.
Exceptions to Spendthrift Provisions
(a) In this section, "child" includes any person for whom an order or judgment for child support
has been entered in this or another State.
(b) Even if a trust contains a spendthrift provision, a beneficiary's child who has a judgment or
court order against the beneficiary for support or maintenance may obtain from a court an
order attaching present or future distributions to or for the benefit of the beneficiary.
(c) The exception in subsection (b) is unenforceable against a special needs trust, supplemental
needs trust, or similar trust established for a disabled person if the applicability of such a
provision . . .has the effect or potential effect of rendering such disabled person ineligible for
any program of public benefit, including, but not limited to, Medicaid and SSI.

Modification or termination by Consent §62-7-411

(b) A noncharitable irrevocable trust may be terminated upon consent of all of the beneficiaries
if the court concludes that continuance of the trust is not necessary to achieve any material
purpose of the trust. A noncharitable irrevocable trust may be modified upon consent of all of
the beneficiaries if the court concludes that modification is not inconsistent with a material
purpose of the trust.
(d) If not all of the beneficiaries consent to a proposed modification or termination of the trust
under subsection (1) or (2) of this section, the modification or termination may be approved by
the court if the court is satisfied that:
(1) If all of the beneficiaries had consented, the trust could have been modified or terminated
under this section; and
(2) The interests of a beneficiary who does not consent will be adequately protected.

Unanticipated Circumstances 62-7-412

(a) The court may modify the administrative or dispositive terms of a trust or terminate the
trust if, because of circumstances not anticipated by the settlor, modification or termination
will further the purposes of the trust. To the extent practicable, the modification shall be made
in accordance with the settlor’s probable intention.
(b) The court may modify the administrative terms of a trust if continuation of the trust on its
existing terms would be impracticable or wasteful or impair the trust’s administration.
(3) Upon termination of a trust under this section, the trustee shall distribute the trust property
in a manner consistent with the purposes of the trust.

Trust Decanting 62-7-816A

 Explicitly allows for trust decanting:
(a) Unless the terms of the instrument expressly provide otherwise, a trustee with the
discretion to make distributions of principal or income to or for the benefit of one or more
beneficiaries of a trust, the original trust, may exercise that discretion by appointing all or part
of the property subject to that discretion in favor of another trust for the benefit of one or
more of those beneficiaries, the second trust. This power may be exercised without the
approval of a court, but court approval is necessary if the terms of the original trust expressly
prohibit the exercise of such power or require court approval.

Charitable Purpose 62-7-405

(a) A charitable trust may be created for the relief of poverty, the advancement of education
or religion, the promotion of health, governmental or municipal purposes, or other purposes
the achievement of which is beneficial to the community.

(b) If the terms of a charitable trust do not indicate a particular charitable purpose or
beneficiary, the court may select one or more charitable purposes or beneficiaries. The
selection must be consistent with the settlor's intention to the extent it can be ascertained.

Cy Pres= “as nearly as possible”

 “Wasteful” as basis for cy pres:
o Cy pres allowed if stated charitable purpose becomes “unlawful, impracticable,
impossible to achieve, or wasteful.”
 Presumption of general charitable intent:
 o Party opposing cy pres must show donor lacked general charitable intent.
Equitable Deviation 62-7-413
a) Except as otherwise provided in subsection (b), if a particular charitable purpose becomes
unlawful, impracticable, impossible to achieve, or wasteful:
(1) the trust does not fail, in whole or in part;
(2) the trust property does not revert to the settlor or the settlor's successors in interest; and
(3) the court may deviate from the terms of the trust to modify or terminate the trust by directing
that the trust property be applied or distributed, in whole or in part, in a manner consistent with
the settlor's charitable intent.

(b) A provision in the terms of a charitable trust that would result in distribution of the trust
property to a noncharitable beneficiary prevails over the power of the court under subsection (a)
to modify or terminate the trust only if, when the provision takes effect:
(1) the trust property is to revert to the settlor and the settlor is still living; or
(2) fewer than the number of years allowed under any rule against perpetuities applicable under
South Carolina law, have elapsed since the date of the trust's creation.

Charitable trust enforcement 62-7-405

(c) The settlor of a charitable trust, the trustee, and the Attorney General, among others may
maintain a proceeding to enforce the trust.
(d) Unless otherwise required by statute or by rule or regulation of the Attorney General, the
trustees of charitable trusts shall not be required to file with the Attorney General any copies
of trusts instruments or reports concerning the activities of charitable trusts.
(e) The Attorney General may make such rules and regulations relating to the information to be
contained with the filing of a trust as may be required.

Do creditor protections apply to life insurance policies if the trustee of the trust is listed as the
beneficiary?
Section 62-7-504 (SC Trust Code)
 (e) . . . a creditor of a beneficiary may not compel a distribution from insurance
proceeds payable to the trustee as beneficiary to the extent state law exempts such
insurance proceeds from creditors' claims.