chapter 1 the estate plan and the purpose and need for a will
TRANSCRIPT
Chapter 1The Estate Plan and the Purpose and Need for a Will
Introduction
o Wills have been written on backs of envelopes, restaurant place mats, prescription blanks, hospital charts, tractor fenders, and jailhouse walls
o Not a right, but a privilege permittedby law
o Each state has its own laws and requirements
o Ambulatory in nature — subject to change during life
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Risks in Writing Your Own Will
o Risky for lay peopleo Laws are technical and differ
widely in each stateo Drafting errors are commono True meaning may be an issue
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The Estate Plan
o An arrangement of a person’s estate using the laws of various disciplines (wills, trusts, taxes, Insurance, and property) to gain maximum financial benefit of all the laws for the disposition of a person’s assets.
o During life (inter vivos) and after death
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Will
o The legally enforceable written declaration of a person’s intended distribution of property after death
o Usually written
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When There is No Will
o Dying without a will means that person’s property passes to heirs according to a statutory scheme adopted by the state legislature
o Intestate successiono Not always according to wishes of
decedento Cannot name a beneficiaryo Cannot name a guardian for
childreno No named personal representativeo No testamentary trust
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No Will
o If you die without a will, state scheme of intestate succession will dictate who, what, where, and how an estate is distributed
o May not always be the intent of decedent
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Requirements for a Will
o Capacityo Legal Capacity-
o Age at which a person acquires capacity to a valid will, usually 18
o Testamentary capacityo Sanity required for a person to make a
willo Sound mind
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Terminology
o Testatoro Male who makes or dies with a valid will
o Testatrixo Female who makes or dies with a valid
will
o Beneficiaryo A person entitled to receive property
under a will
o Deviseeo A person who receives a gift of real
property under a will
o Legateeo A person who receives a gift of
personal property under a will
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Terminology
o Intestateo A person dies without a valid will or a
willo Heir
o A person who receives a gift of real property from an intestate
o Next of Kino Closest blood relative of the decedent
o Ambulatoryo Subject to change
o Codicilo A written amendment to a will
o Letter of Instructiono A document that specifies the
testator’s intentions but does not formally amend or change the will
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Requirements for a Will
o Writingo Witnesseso Signed by Testator/trixo Sound mindo Capacity
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Intent
o Language in a will becomes significant when a court attempts to interpret the meaning and intention of a will
o Interpretation comes from the document
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Probate
o A court-supervised administration of a decedent’s estate
o Decedent- the person who has died
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Residuary Estate
o The remaining assets of the decedent’s estate after all debts have been paid and all other gifts in the will distributed
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Property Distributions
o Tenancy in Commono Undivided interest of real or
personal propertyo No right of survivorship
o Joint Tenancy o Right of survivorship
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Trusts
o A third party instrument made during life which is effective either at death or during life
o Testamentary Trusto A trust that is effective after death
o Inter vivos (Living) trust- a trust that is effective during life
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Title
o Legal Titleo Right to ownership by name
o Equitable Titleo Right to control the asset and
manage the property for the benefit of another
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Trustee
o Person or office that infers a person of trust
o Named by the testator to carry out their wishes in a trust
o Compare to Executor/personal representative who carries out wishes in will
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Personal Representative
o Person who administers and distributes decedent’s estate either intestate or testate
o Compare to Executor/trix who carries out the provisions of the will
o Administrator/trix – person appointed to carry out and distribute the decedent’s estate when they die without a will
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Will Substitutes
o Joint Tenancyo Life Insuranceo Inter vivos trusto Inter vivos gifto Community Property agreemento Pay on Death instruments –
deeds or bank accounts
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