chapter 16

Question 1

what is an ESTATE?

Answer 1

everything that you own minus your debt

- essentially your net worth

Question 2

estate planning:

probate court:

Answer 2

estate planning: orderly handling of your estate after a person has passed
probate court: court in which the estate distribution is determined in the case of no will or a discrepancy in the will

Question 3

3 steps to estate planning

Answer 3

1. set goals and objectives: where do you want your money to go?
2. Make a will
3. establish a trust

Question 4

what should be considered when you set your estate planning goals?

Answer 4

• assess your current situation
• support spouse and/or children
• still need a will if you are never married/no children
• keep records of all assets and sources of income

Question 5

what is a will?

who can have a will?

Answer 5

legal document stating your desires in regards to your estate and guardianship of your children.

• anyone over 18 or 21 (Dependent on state)
• must be mentally capable

Question 6

types of wills:

Answer 6

formal will: written will (typically by lawyer) with 2 signed witnesses
holographic will (handwritten will): informal will where you simply write it down on your own
nuncupative (oral) will: speaking your desires at your death bed
- highly dependent on witnesses

Question 7

how often do you write a will?
how many wills should you have at one time?
how many copies should you have?
can you have a will with your spouse?

Answer 7

not often (keep general so you do not have to continue to make changes)
only 1: destroy an old will when you make a new one
only 1 copy: keep it at home and only tell someone trusted where it is
No: spouses must each have their own will, but can seek guidance together

Question 8

Will vocabulary:

• intestate
• testator
• beneficiary
• codicil
• executor

Answer 8

• intestate: when you die without a valid will
• testator: person making the will
• beneficiary: those who receive a portion of your estate
• codicil: small modification section added to the will at another time (rather than making a whole new will)
  executor: appointed by you to lead the interpretation of the will and distribution of the estate

Question 9

what are the tasks of the executor?

Answer 9

• initiate probate if necessary
• prove authenticity of will
• set up court hearing
• travel wherever necessary to distribute estate

Question 10

why would someone want to establish an estate trust before they die?

Answer 10

• tax implications: reduce amount in estate to prevent estate/gift taxes for the beneficiary

Question 11

living will
healthcare power of attorney
durable power of attorney

Answer 11

living will/advanced directive: statement declaring the steps you wish family and physician to take if you are incapacitated
healthcare power of attorney: person you choose to make healthcare decisions for you if you are incapacitated
durable power of attorney: person who can make financial decisions if you are incapacitated

Question 12

two types of trusts

Answer 12

revocable: trust agreement stating your trust objectives with freedom to change your mind
irrevocable: cannot change your mind (DO NOT DO!!)

Question 13

what % of Adults do NOT have wills?

Answer 13

70%