PARL 320 Midterm

Midterm Exam Review

–

PARL 320

An advance directive is a written statement

expressing

how you want medical decisions made in the

future should you not be able to make them yourself. Illinois law allows you to make four types of

advance directives: a living will; a health care power of attorney; a mental health treatment preference

declarat

ion, and a Do

Not

Resuscitate (DNR)/Practitioner Orders For Life

Sustaining Treatment

(POLST).

If one cannot make health care decisions and failed to create an advance directive, a health care

"surrogate" may be chosen for that incapacitated person. Under Illinois law, two doctors must certify that

you cannot make health care decisions for yourself

before a health care surrogate can be appointed.

However, there are certain decisions that a surrogate cannot make.

A health care surrogate cannot tell your health care professional to withdraw or withhold life

sustaining

treatment

unless

you have a "qualifying condition.” A qualifying condition can be a terminal condition, a

permanent unconsciousness, an incurable condition, or an irreversible condition. A “terminal condition”

is defined as an incurable or irreversible

injury

for which there is no reasonable prospect of cure or

recovery, death is imminent, and life

sustaining treatment will only prolong the dying proces

A “permanent unconsciousness” is defined as a condition that, to a high degree of medical certainty, will

last permanently, without improvement; there is no thought, purposeful social interaction or sensory

awareness present; and providing life

sustaining

treatment will only have minimal medical benefit. An

“incurable or irreversible

condition

” is defined as an illness or injury for which there is no reasonable

prospect for cure or recovery, that ultimately will cause the patient's death, that imposes sever

e pain or an

inhumane burden on the patient, and for which life

sustaining treatment will have minimal medical

benefit. Two doctors must certify that you have one of these qualifying conditions in order to withdraw or

withhold life

sustaining treatment.

A health care surrogate that is not a court

appointed guardian cannot alone consent for you to have certain

mental health treatments, including treatment by electroconvulsive therapy (ECT), psychotropic

medication, or admission to a mental health facility.

However, the healthcare surrogate can petition a

court to allow these mental health services.

When a person dies with a valid Will, the estate to be distributed is considered “testate.” If no valid Will

exists at the time of death, the estate is distributed “intestate.” When a person dies intestate, without a

Will, the decedent’s estate is distribu

ted pursuant to a state statutory scheme.

In Illinois, a will must be in writing, the testator must sign the will; the testator signing a will must have

testamentary capacity, testamentary intent, and the will must be attested or witnessed in the presence of

the testator by two or more credible di

sinterested witnesses. Testamentary capacity requires that the

testator appreciated the extent of the estate and knew the effect of the act of executing a Will. As a

statutory factor, for a testator to have testamentary capacity in Illinois, the testator m

ust be at least 18

years of age and of sound mind and memory.

A plenary guardian is a guardian with full decision

making authority with regard to the disabled adult. By

virtue of a plenary guardian appointment, the disabled adult retains no legal rights to make decisions on

his or her own. That person cannot legally

execute a will. An individual with a plenary guardian does not

have testamentary capacity.

Inheritance tax is what

a beneficiary must pay when they receive the asset, if an inheritance tax is due.

inheritance tax is a state tax a beneficiary must pay that is occasionally levied on assets inherited from

someone who died. However, there is no federal inheritance tax. The person who inherits the assets pays

the inheritance tax, and rates can vary based on the size of the inheritance as well as the inheritor's

relationship to the deceased. Inheritance

taxes are only assessed by states, and only six states actually

impose this tax:

Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. Illinois imposes no

state inheritance tax upon assets a beneficiary inherits.

Estate tax differs from inheritance tax.

Estate tax

is the amount that's taken out of someone's estate upon

their death, assessed upon the value of the decedent’s estate. Unlike inheritance taxes, t

here is a federal

estate tax, but the estate tax really does not apply to most people.

In 2022, the value the federal estate tax applies to rose to assets over $12.06 million. Again, most of us do

not have $12 million in assets for estate tax purposes, and most of us would benefit greatly as a society

when estate taxes are assessed against m

ulti

millionaires and billionaires. The federal estate tax rate

ranges from 18% to 40% of the value of the decedent’s estate that will pass.

Some states also have estate taxes. For example, in Illinois, a state estate tax is assessed if the decedent’s

assets exceed $4 million. Like inheritance taxes, assets that spouses inherit generally aren't assessed an

estate tax.

A third tax are capital gains taxes. If assets appreciate after you inherit them, you might need to pay

capital gains tax if you sell the assets.

A capital gain is

the increase in a capital asset's value and is

realized when the asset is sold.

So, the basis is the original value of the asset. If the asset increases in

value and is then sold, the difference between the basis and the value when sold i

s the capital gain. It is

the income realized by that increase in the capital asset’s value that is taxed.

in terrorem

clause states that if a beneficiary or heir named in the will disputes the validity of the will,

objects to the probate of the will, or challenges the dispositions, the kind and amount of the gifts that pass

to the named persons listed in the will, that c

ontestant forfeits all benefits of the will. A completely

handwritten will is known as a

holographic

will.

A holographic will may be recognized in Illinois but

only if it complies with Illinois state laws, including the signatures of two witn

esses witnessing the

testator’s signature and

is written in the maker’s own handwriting.

A posthumous child is conceived before but born after the death of their father.

In Illinois, a posthumous

child should receive the same share of an estate as if the child had been born in wedlock during the

decedent's lifetime if the posthumous child is in utero at the decedent's death. In Illinois, if a posthumous

child is not in ute

ro at the time of the decedent's death, the child must be born of the decedent's gametes,

whether those gametes form an embryo before or after the decedent’s death.

Gametes are

an organism's reproductive cells. Female gametes are called ova or

egg cells

, and male

gametes are called sperm.

In Illinois, a posthumous child not in utero at the time of the decedent's death

should receive the same share of an estate as if the child had been born in wedlock during the decedent's

lifetime ONLY if the posthumous child was born within 36 months of th

e death of the decedent, the

decedent provided consent in writing to be a parent of any child born of such gametes posthumously, an

the decedent must not have revoked the consent prior to death.

The administrator of the estate must receive a signed and acknowledged written notice, with a copy of a

written consent attached made by the decedent in life confirming

intent that the after

born child be treated

as a child of the decedent

. The testator’s notice of intent that his after

born child be treated as his child

after death and consent would need to be prepared when alive and competent and post

mortem must be

received by the estate administrator within 6 months of the date of issua

nce of decedent’s death

certificate. The notice must confirm that the decedent’s gametes exist, the person has the intent to use the

gametes in a manner that could result in a child being born within 36 months of the death of the decedent,

and the person has the intent to raise any such child as his or her child. If done properly, the person with

the decedent’s gametes will then have a

claim to a portion of the decedent’s estate for the benefit of the

child when born.

here are individuals who cannot inherit from intestacy under the laws of intestate succession. These are

individuals related by affinity. Affinity refers to persons who are related by marriage because of the

person each spouse is married to, including fath

or mother

law, brother

or sister

law, and

stepchildren.

If there are no heirs, no spouse or kindred that survive a decedent, the decedent’s property passes to the

state by escheat. Escheat is where a decedent’s estate property passes to the state when a decedent dies

with no heirs, no spouse or kindred survivin

g the decedent.

eal property disposition is governed by the

state in which the real estate is located, so it will pass by escheat to the state in which the real property is

located.

The alternative to

per stirpes

distribution is

per capita

distribution. In per capita distribution, all surviving

heirs receive equal shares of the estate. Heirs are those who survive the decedent who are blood or

adoptive ascendents, descendants, and the spouse of the decedent.

Ascendants include parents, siblings, grandparents, aunts, uncles, and their children if the aunts or uncles

are deceased, so maybe nieces and nephews. Descendants include children and grandchildren. A “natural

child” is one born of a mother and the biolog

ical father, as distinguished from a child by adoption. If a

married woman gives birth to a child, her husband is presumed by law to be the father of the child. Even

if another is the biological father, if the mother fails to identify that person, the birt

h certificate will name

the husband as the father of the child.

A self

proving will is one that is signed as an affidavit before a notary public. A self

proving will

eliminates the need to locate and summon witnesses to the Will before the court. Admission of a will to

probate can be by testimony

affidavit of the witnesses. In other words, where normally the testimony of

those who witnessed the testator signing the will would be necessary, an alternative could be the affidavit

of witnesses created at the time of a self

proved will.

A beneficiary is a person who is entitled to receive assets under any instrument, including, but not limited

to, a will, life insurance, or annuity. Historically, a beneficiary who received real property under a will

was referred to as a devisee; devises a

re gifts of real property. A beneficiary who received money was

referred to as a legatee, so legacies are gifts of money. A beneficiary who received gifts of other personal

property received a bequest. In modern times, today, a gift of personal property ca

n be known as either or

both a legacy or a bequest.

conditional devise

is one that takes effect, or continues in effect, with the occurrence of some future

event. A

condition precedent

is one in which a specified event must occur before the estate or interest

passes to the named devisee. A

condition subsequent

is one in which an estate that is already vested in a

named devisee will not continue to be vested unless a specified event occurs. If it does not occur, the

devisee will be divested of the estate and will not continue to receive the interest.

An oral will spoken in the presence of witnesses is known as a

noncupative

will. A noncupative

will is

valid only under exceptional circumstances, such as the imminent death of the person speaking the will.

Even then, noncupative wills are prohibited in the majority of states.

A simultaneous death clause in a will is for when there is

sufficient evidence that the decedents have

died other than simultaneously, so the property of each decedent involved shall be distributed

by a plan

arrived at by the spouses in life

A survivorship period clause creates a limited period of ti

in which

spo

use

s die in close

proximity

to each

other

In Illinois, a spouse can choose to either take under the Will or elect to renounce the Will. When a spouse

chooses to renounce the will, the spouse can elect instead to take a share of the deceased spouse’s estate

that is set by statute, known as a statu

tory forced share or elective share. In Illinois, a surviving spouse

who renounces the will would receive one

third of the augmented estate if there are surviving descendants

and one

half if there are no surviving descendants.

When people are married, it is a good idea to make sure each of their wills are in parity with each other.

Reciprocal

wills are mutual wills that while separate are essentially identical wills of the spouses. They

make reciprocal provisions in each will and agree that neither spouse will change their will after the death

of the first spouse.

The personal representative of a decedent’s estate need not be a United States citizen, but the person must

be a resident of the United States. The individual must be at least 18 years old and of sound mind,

mentally competent to handle the affairs of the

estate. One who has been convicted of a felony is not

eligible.

In Illinois, a spouse cannot be disinherited, but children can be disinherited.

An amendment to a will is

called a codicil. A letter of instructions is an all

inclusive list of various personal and estate information to

help the family and personal representative locate and identify property and documents necessary to

administer the e

state.

An augmented estate is the value of a decedent’s estate used when the surviving spouse chooses to take an

elective statutory forced share. The augmented estate consists of the value of all property that constitutes

the decedent’s net probate estate, the de

cedent’s nonprobate transfers to others, the decedent’s nonprobate

transfers to the surviving spouse, and the surviving spouse’s net assets and nonprobate transfers to others.

Then that value is reduced by funeral and administration expenses, homestead all

owance, family

allowances, exempt property, and enforceable creditors’ claims. What remains is the value of the

augmented estate.

Ademption

is where property identified in a will is disposed of by the testator in life so that the property

is no longer available to be disposed of in the will; the property is said to be adeemed. A

demption

occurs

when property gifted in a will is not in the estate's possession at the time of the testator's death.