The Estate Plan and the Purpose and Need for a Will

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 persons 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 persons assets.
• During life (inter vivos) and after death

5
Will

• The legally enforceable written declaration of a
  persons intended distribution of property after
  death
• Usually written

6
When There is No Will

• Dying without a will means that persons 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 testators
  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
  decedents estate
• Decedent- the person who has died

14
Residuary Estate

• The remaining assets of the decedents 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 decedents
  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 decedents 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