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Wills, Estates, and Trusts

Lessons. CHAPTER 24. Wills, Estates, and Trusts. 24-1 Legal Consequences of Death 24-2 Trusts. GOALS. LESSON 24-1. Legal Consequences of Death. Explain why an orderly distribution of a decedent’s estate is necessary Discuss the benefits of making a will

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Wills, Estates, and Trusts

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  1. Lessons Chapter 24 CHAPTER 24 Wills, Estates, and Trusts 24-1 Legal Consequences of Death 24-2 Trusts

  2. GOALS Chapter 24 LESSON 24-1 Legal Consequences of Death Explain why an orderly distribution of a decedent’s estate is necessary Discuss the benefits of making a will Describe how a valid will is made

  3. Chapter 24 DEATH AND THE LAW • Death without a will • Death with a will • Creation and execution of a valid will • Amendment of a valid will • Special types of wills • Revocation of a will

  4. Chapter 24 Someone dies -- ? • Decedent – person who is deceased • What does the law do? • Looks for instructions • How are debts to be paid? • Remaining property? • Will – written document which state wishes of the deceased (how property is to be divided)

  5. Chapter 24 No Will • Intestate – dying without a will • ProbateCourt – settles the affairs • appoints a personal representative • ADMINISTRATOR (male) • ADMINISTRATIX (female) Estate – property of the deceased No Will = large administrative expenses and large estate taxes

  6. Chapter 24

  7. Chapter 24 No Will • Intestacy Statutes – dictates how property will be dispersed • 1/3 or ½ to spouse remainder among children No surviving children/grandchildren – decedent’s parents Parents deceased – decedent’s sisters & brothers and their children

  8. Chapter 24 With a Will • Testate – dying with a valid Will • Testator – maker of the Will (male) • Testatrix – maker of the Will (female) • Allows the deceased to decide how property will be divided instead of intestacy statutes.

  9. Chapter 24 With a Will Executor (male) Executrix (female) personal representative of deceased Can be exempt from posting bond (paying the court $ to ensure the duties are properly performed) Appoint guardian for minor children guardian can also be exempt from posting bond

  10. Chapter 24 Living Wills • Directions to physicians on choices regarding life-support treatment for • terminally ill • vegetative state Durable Power of Attorney – confers the power to an individual to make health care decisions on your behalf

  11. Chapter 24 Rules on creation and execution of a valid Will • There are strict state laws that govern: • how wills are created • how wills are executed • Testatrix/Testator must have Testamentary Intent (clear intention to create a will)  no deception present 2) Testamentary Capacity – understand clearly what you are giving and to whom

  12. Chapter 24 • Writing – signature witnessed by 2-3 adults witnesses not in will witnesses aware the document is a will Must be at least 18 years of age.

  13. Chapter 24 Amendment • Wills become effective when the person dies. • Can be changed at any time before the person dies. • Codicil – formal, written, and witnessed amendment.

  14. Chapter 24 Special Types of Wills • Holographic Will – written by decedent’s own hand and signed • Nuncupative Will – oral will / during maker’s last illness or by service personnel on active duty.

  15. Chapter 24 • Lee was fatally injured in a car accident. • As she was dying – she told 3 witnesses she was making a will. • She wanted her paintings collection to go to her good friend, Anne. • In a State that allows nuncupative wills, if the witnesses’ testimonies were properly and promptly reduced to writing, Lee’s dying wish as to the disposition of her property would be carried out.

  16. Chapter 24 Revocation of a Will • As long as the Testator/trix has testamentary intent and capacity, the will can be amended. • Revoke a Will – • destroy / deface • marriage / adoption (not divorce; but divorce settlement can alter a will)

  17. Chapter 24 Revocation of a Will • Written revocation – in new will, write: “I hereby revoke all prior wills, . . .”

  18. Chapter 24 Procedures for Estate Resolution • After decedant dies – -- Administrator must bring proof of death to the appropriate court (probate/surrogate)  death certificate  official notice from armed services  disaster recovery testimony

  19. Chapter 24 Procedures for Estate Resolution • If a person just vanished – • State can declare dead under “Enoch Arden laws” (after 5 – 7 years) -- Organizing all assets and debts -- Give public notice of the estate and necessity for filing claims against it within the statutory period (six months)

  20. Chapter 24 Procedures for Estate Resolution -- Paying valid claims against the estate -- Distributing the remaining property according to the will or statute Administrator is personally liable for failure to reasonably carry out the duties.

  21. Chapter 24 Distributions Without a Will • Hawaii as an example: • Person dies intestate (one or more children, no spouse) – children inherit equal shares • Person dies (spouse + children) – spouse gets ½ and rest divided equally among children

  22. Chapter 24 • Person dies (spouse, no children) – spouse gets ½ and parents of the deceased receive the remainder. If parents are deceased  brothers and sisters

  23. Chapter 24 Distributions with a Will • Terms of the Will are followed. • There may be statutory provisions allowing certain relatives to override the will’s terms and receive more of the estate than the will provided. i.e. some states – surviving spouse may elect to receive ½-1/3 instead of the will’s provision.

  24. John’s Children Grandchildren Great-Grandchildren Harold Robin Maynard Scott Marie (deceased) Molly Alicia (deceased) Morris Guy Grant (deceased) Damon Oliva Alex Chapter 24 DIVISION OF $1,800,000 ESTATE John(testator—deceased)

  25. ($0) ($0) ($150,000) ($150,000) ($200,000) ($200,000) ($200,000) Chapter 24 DIVISION OF $1,800,000 ESTATE PER STIRPES John’s Children Grandchildren Great-Grandchildren Harold Robin ($600,000) Maynard John(testator—deceased) Scott ($300,000) Marie (deceased) Molly Alicia (deceased) Morris Guy Grant (deceased) Damon Oliva Alex ($0)

  26. ($180,000) ($180,000) ($180,000) ($180,000) ($180,000) ($180,000) ($180,000) ($180,000) ($180,000) Chapter 24 DIVISION OF $1,800,000 ESTATE PER CAPITA John’s Children Grandchildren Great-Grandchildren Harold Robin ($180,000) Maynard John(testator—deceased) Scott Marie (deceased) Molly Alicia (deceased) Morris Guy Grant (deceased) Damon Oliva Alex

  27. Chapter 24 No Inheritors • Property of the deceased “escheats” or reverts to the state.

  28. GOALS Chapter 24 LESSON 24-2 Trusts Explain the usefulness of trusts Name and describe the various types of trusts Distinguish between express and implied trusts

  29. Chapter 24 DISTRIBUTION OF A DECEDENT’S ESTATE • Procedure for estate resolution

  30. Chapter 24 What’s your verdict • Pedro buys a vacation home as a way to “keep the family together”. • Didn’t want the property to be split up and sold when he dies. • Pedro wants the vacation home to remain as a “family gathering place.” • What can he do?

  31. Chapter 24 CREATION OF TRUSTS A trust is a legal device used to transfer the immediate control of property to another party. A separate legal entity.

  32. Chapter 24 Creation of Trusts • Trustee – legal entity that has title to property. • Settlor – person who creates the trust • Beneficiary – person for whom the trust has been set up

  33. Chapter 24 Creation of Trusts • Trustees have the right to be paid for managing the trust. • NJ – 5%-7%

  34. Express Trust Inter vivos trust Testamentary trust Charitable trust Private trust Spendthrift trust Implied Trust Resulting trust Constructive trust Chapter 24 TYPES OF TRUSTS

  35. Chapter 24 Inter vivos trust • A trust created during the lifetime of the settlor.

  36. Chapter 24 Testamentary trust • A trust created after the death of the settlor in accordance with his/her wishes.

  37. Chapter 24 Charitable trust • A trust created for altruistic purposes. • Raise money to help build shelter for homeless.

  38. Chapter 24 Private trust • A trust created for a private purpose. • One type  Spendthrift Trust - protects the beneficiary’s interest in the property from potential creditors. Beneficiary cannot have any control over the trust.

  39. Chapter 24 Express Trusts • Written or oral statements made by the settlor where terms are explicitly stated by the settlor.

  40. Chapter 24 Implied Trusts • Resulting Trust -- Entity intended to receive the benefit of an express trust cannot do so. Resulting Trust formed to hold the property for its original owner. What’s your verdict – Oliver formed charitable trust to install air conditioning in local high school. Transferred property to be sold for for the cause. School building burned down.

  41. Chapter 24 Implied Trusts • Constructive Trust -- Created to require a person holding property to transfer it to another b/c retention of the property would be a wrongful and unjust enrichment of the holder. Property obtained via fraud, duress, etc.

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