Chapter 1

1. Chapter 1 The Estate Plan and the Purpose and Need for a Will

2. Introduction • Wills have been written on backs of envelopes, restaurant place mats, prescription blanks, hospital charts, tractor fenders, and jailhouse walls • Not a right, but a privilege permittedby law • Each state has its own laws and requirements • Ambulatory in nature — subject to change during life

3. Risks in Writing Your Own Will • Risky for lay people • Laws are technical and differ widely in each state • Drafting errors are common • True meaning may be an issue

4. The Estate Plan • 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. • During life (inter vivos) and after death

5. Will • The legally enforceable written declaration of a person’s intended distribution of property after death • Usually written

6. When There is No Will • Dying without a will means that person’s property passes to heirs according to a statutory scheme adopted by the state legislature • Intestate succession • Not always according to wishes of decedent • Cannot name a beneficiary • Cannot name a guardian for children • No named personal representative • No testamentary trust

7. No Will • If you die without a will, state scheme of intestate succession will dictate who, what, where, and how an estate is distributed • May not always be the intent of decedent

8. Requirements for a Will • Capacity • Legal Capacity- • Age at which a person acquires capacity to a valid will, usually 18 • Testamentary capacity • Sanity required for a person to make a will • Sound mind

9. Terminology • Testator • Male who makes or dies with a valid will • Testatrix • Female who makes or dies with a valid will • Beneficiary • A person entitled to receive property under a will • Devisee • A person who receives a gift of real property under a will • Legatee • A person who receives a gift of personal property under a will

10. Terminology • Intestate • A person dies without a valid will or a will • Heir • A person who receives a gift of real property from an intestate • Next of Kin • Closest blood relative of the decedent • Ambulatory • Subject to change • Codicil • A written amendment to a will • Letter of Instruction • A document that specifies the testator’s intentions but does not formally amend or change the will

11. Requirements for a Will • Writing • Witnesses • Signed by Testator/trix • Sound mind • Capacity

12. Intent • Language in a will becomes significant when a court attempts to interpret the meaning and intention of a will • Interpretation comes from the document

13. Probate • A court-supervised administration of a decedent’s estate • Decedent- the person who has died

14. Residuary Estate • The remaining assets of the decedent’s estate after all debts have been paid and all other gifts in the will distributed

15. Property Distributions • Tenancy in Common • Undivided interest of real or personal property • No right of survivorship • Joint Tenancy • Right of survivorship

16. Trusts • A third party instrument made during life which is effective either at death or during life • Testamentary Trust • A trust that is effective after death • Inter vivos (Living) trust- a trust that is effective during life

17. Title • Legal Title • Right to ownership by name • Equitable Title • Right to control the asset and manage the property for the benefit of another

18. Trustee • Person or office that infers a person of trust • Named by the testator to carry out their wishes in a trust • Compare to Executor/personal representative who carries out wishes in will

19. Personal Representative • Person who administers and distributes decedent’s estate either intestate or testate • Compare to Executor/trix who carries out the provisions of the will • Administrator/trix – person appointed to carry out and distribute the decedent’s estate when they die without a will

20. Will Substitutes • Joint Tenancy • Life Insurance • Inter vivos trust • Inter vivos gift • Community Property agreement • Pay on Death instruments – deeds or bank accounts