Book 6 Pages 1 - 61 Flashcards
the process of accumulation, management, conservation, and transfer of wealth, considering legal, tax, and personal objectives
estate planning
emotional issues such as ____ and ____ make estate planning difficult
control and affection
what are the costs associated with estate planning?
cost of professional guidance cost of probate cost of transfer taxes opportunity costs cost of documents
estate planning objectives should include the ____ and ____ transfer of assets
efficient and effective
the efficient transfer of assets refers to ____
minimizing costs
the effective transfer of assets refers to ____
assets go to the desired beneficiary
when someone dies without a valid will
intestate
true or false?
when intestate occurs, the assets may not transfer to the desired beneficiary
true
a legal document that enables the testator (maker) to transfer property at the testator’s death in the manner the testator desires
will
what are some advantages of a will?
can name an executor can transfer property to anyone desired can specify how estate taxes are apportioned can designate guardians for minors can name charitable beneficiaries
when a person dies without a will (intestate), who directs how the decedent’s property will be distributed?
the probate court based off state laws
true or false?
in some states, a spouse’s share of the decedent’s estate will be equal to a child’s share. Example if 9 kids then each kid would get 1/10 and the spouse would get 1/10
true
true or false?
if intestacy occurs, assets will still be left to charity
false
the person making a will must be ___ years old or older
18
the person making the will must be of sound mind, also known as_____
testamentary capacity
the person making the will must have absence of ______
undue influence
_____ is present when someone, such as a trusted advisor, friend, or family member, influences the testator to include provisions in the will the testator would not have included otherwise
undue influence
true or false?
the absence of fraud is required for a will to be valid
true
the person making the will must:
understand the ____ of the act of making a will
understand the general nature of the will-maker’s ____
have the ____ to remember and ____ the nature of the ____ to the persons affected
nature ; property ; ability ; understand; relationship
a handwritten will
holographic will
true or false?
holographic wills are recognized in all states
false
do holographic wills need to be witnessed?
false
a dying declaration before sufficient witnesses
nuncupative will
true or false?
noncupative wills are recognized in all states
false
an oral will
nuncupative will
a formal will
statutory will
true or false?
an attorney should draw up a statutory will
true
true or false?
a statutory will does not have to comply with the laws of the domiciliary state
false
any real property outside the state of domicile will be subject to ____ probate
ancillary
true or false?
a valid will must include a revocation of all prior wills and codicils
true
true or false?
a valid will must name an executor and successor executor
true
states a beneficiary must survive a specific period beyond the testator’s death to receive the bequest
survivorship clause
to qualify for the estate tax marital deduction, the will cannot require the spouse to survive for more than ____ months to receive the bequest
6
bars transfer of beneficiary’s interest to a third party and stipulates that the interest is not subject to claims of the beneficiary’s creditors
spendthrift clause
if both spouses die simultaneously it creates a presumption as to the the order of death (the other spouse dies first)
simultaneous death clause
discourages heirs from contesting the will by substantially decreasing or eliminating their bequest if the file a will contest
no contest clause
a separate document that amends a will
codicil
what is the default method a court will use to determine where inherited property will go if there is not a valid will in place?
per stirpes
Give an example of per stirpes
Stephen had 3 children
1 of his children had two kids
the other two children had no kids
the child who has 2 children of their own passes away
Stephen then passes away with $300k of assets
the $300k would get distributed as 1/3 to each of Stephen’s own kids ($100k and $100k) and then 1/3 to the 2 grandkids ($50k and $50k)
give an example of per capita
Stephen had 3 children
1 of his children had two kids
1 of his children had one kid
1 of his children had no kids
the child who has 2 children of their own passes away
Stephen then passes away with $300k of assets
the $300k would be split up into 5 equal parts
1/5 to each remaining living person
per capita provides for an ____ share to each beneficiary
equal
a will that leaves everything to the surviving spouse
sweetheart or I love you wills
true or false?
a sweetheart or I love you will may cause over-qualification of an estate
true
synonyms for prenuptial agreement
antenuptial
married property agreement
___ avoids cluttering the will with small details or assets such as photos and other items of only sentimental value
letter of personal instruction (side letter)
states the writer’s wishes regarding tangible possessions of nominal pecuniary value and other matters such as funeral arrangements
letter of personal instruction (side letter)
true or false?
a letter of personal instruction is a legally binding document
false
establishes the medical situations in which the maker no longer wants life-sustaining treatment
living will/medical directives
true or false?
a medical directive gives permission to another person to make health care decisions on behalf of the incapacitated
false, it just lays out the incapacitated persons wishes that were made prior to becoming incapacitated
true or false?
durable and nondurable powers apply to medical directives
false
appoints a person to make health care decisions for the principal
durable power of attorney for health care
____ means the power remains effective even if the principal becomes incapacitated
durable
a durable power of attorney for health care may be ____ which means it becomes effective on incapacity
springing
a written document in which one individual designates another person or persons to act as attorney in fact
durable power of attorney
true or false?
you must be 18 years old to be a durable power of attorney
true
a durable power of attorney survives the principal’s ____ but not ____
incapacity ; death
a nondurable power of attorney does not survive the principal’s ____
incapacity
what types of people is having a durable power of attorney important for?
nontraditional couples such as cohabitating couples who haven’t married or same sex couples. It is important to have a durable power of attorney in place for them because if they didn’t the powers to make crucial decisions may fall to unintended family members
includes rights and interest associated with ownership in things other than real property
personal property
personal property can be ____ or ____
tangible or intangible
give examples of tangible property
cars, jewelry, furniture
give examples of intangible property
stocks, patents, copyrights, bonds
what are the two property rights?
right to possession and enjoyment
right to make disposition by sale, gift, other conveyance
personal property that is affixed to real property
fixtures
true or false?
even if the contract of sale specifically states that fixtures are not to be included in the sale of real property, they will still be sold
false, if they are specifically excluded by contract then they won’t be sold
a property interest where the is complete ownership with all rights
fee simple
true or false?
under fee simple interest, the property will pass through probate
true
fee simple property is also referred to as _____ ownership property
sole
the holder of the ______ has an exclusive right to the use and enjoyment of the property for the remainder of her life or for the life of another person
life estate
has the right to possess and use the property during the specified life
life tenant
the life tenant has an obligation to ______, ________, and _____
pay taxes
make repairs
not commit waste
similar to life estate except the interest is for a specific amount of time/specific period
interest for term
a right to ownership or enjoyment of property at some point in the future or upon the occurrence of a specified event
future interest
if the future interest goes to someone other than the grantor it is called ____
a remainder
if the future interest goes back to the original grantor, it is called _____
a reversion
the interest retained by a grantor who transfers a life estate to another without making a disposition of the interest remaining after the life estate terminates
reversion
a reversion is a ____ future interest
vested
interest that exists at the termination of a prior interest, such as a life estate
remainder
a remainder may be ___ and ____
conveyed and inherited
two or more persons holding an undivided interest in the whole property
tenancy in common
true or false?
under tenancy in common, each tenant’s interest can be sold, donated, willed, or pass through intestate
true
true or false?
when one tenant in common dies, the others automatically receive the dead tenant’s interest
false
two or more persons owning the same fractional interest
joint tenancy with right of survivorship (JTWROS)
