The Estate Plan and the Purpose and Need for a Will

Will

A legally enforceable written declaration of a person’s intended distribution of property after death

Fact about wills

Many Americans die without having a Will and thus have no say in the distribution of their estate after death.

Capacity for a Will

Legal Capacity: The age at which a person can legally create a valid Will is usually 18

Testamentary Capacity: A person is required to be sane (of sound mind) to create a valid Will

Testator (for a Will)

A male who makes and/or dies with a valid Will

Testatrix

A female who makes and/or dies with a valid Will

Requirements for a Will

1. Written document

2. Witnesses

3. Date (in most states)

4. Signature from Testator/ Testatrix

5. Sound of mind (Testator/ Testatrix)

6. Legal capacity (Testator/ Testatrix)

7. Section of personal representative

Holographic will

A handwritten and signed last will that generally does not require formal witnesses or notarization ( some states allow it)

Formal probate

A court-supervised administration of a decedent’s estate

(decedent: person who has died)

Informal Probate

A court proceeding of a decedent’s estate with limited or no court supervision

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 the will

Intestate

A person who dies without a will

Heir

A person who receives a gift of real property from an intestate

Next of Kin

The closest blood relative of a decedent

Ambulatory

Subject to change

Codicil

A written amendment to a will

Letter of instructions

A document that specifies a testator’s intentions for organ donation and funeral and burial plans but does not amend or change a will

Apportionment for Death Taxes

Testator can determine the source from which death taxes (federal and state estate taxes and state inheritance taxes) will be paid

If missing or ambiguous, state statutes will decide

Residuary Estate

The remaining assets of a decedent’s estate after all debts have been paid and all other gifts in the will have been distributed

Property Distributions

Tenancy in Common – owned by two or more; no survivorship, so passes to beneficiaries on death

Joint Tenancy – owned by two or more; passes to survivor(s) upon death

Fiduciary

Fiduciary – a person appointed to serve in a position of trust and confidence; controls and manages property exclusively for the benefit of others. Must have the highest ethical standard!

Trust

A right of property, real or personal, held by one person for the benefit of another

Testamentary Trust

A trust created in a will becomes operational upon the death of its creator

•Inter Vivos Trust

A trust that is effective during the life of its creator becomes operational immediately after it is created

Legal Title

The form of ownership of trust property held by the trustee, giving the trustee the right to control and manage the property for another’s benefit

Equitable Title

Provides the right to the benefits of a trust to the beneficiary

Trustee

The person or institution named by the maker of a will or creator/settlor of a trust to administer the property for the benefit of another, according to the creator’s provisions

Personal Representative

A person who administers and distributes an intestate or testate decedent’s estate

Will Substitutes

•Joint Tenancy

•Life Insurance with Named Beneficiary

•Inter Vivos Trust

•Inter Vivos Gift

•Community Property Agreement

•Transfer-on-Death Deed/Beneficiary Deed