Chapter 2 Discussion Questions

Question 1

List the basic documents used in estate planning

Answer 1

The basic documents used in estate planning include wills, codicils, side instruction letters, durable powers of attorney for health care or property, living wills or advanced medical directives, and do not resuscitate orders.

Question 2

What problems arise for someone who dies intestate?

Answer 2

The die intestate is to die without a valid will or with a will that does not dispose of all property. In this case, the decedent’s property will be transferred according to state law, which may not reflect the decedent’s desires. Intestacy may also require the state to appoint an administrator who will have to furnish a surety bond, thereby increasing the cost of administration.

Question 3

What is a holographic will?

Answer 3

Holographic wills are handwritten. The material provisions of the will must be in the testator’s handwriting. The will must be dated and signed by the testator and does not generally need to be witnessed.

Question 4

What is a nuncuperative will?

Answer 4

A nuncuperative/oral will are dying declarations made before sufficient witnesses. The use of nuncuperative wills is fairly restricted and is not valid in most states.

Question 5

What are statutory wills?

Answer 5

Statutory wills are generally drawn by an attorney, complying with the statutes for wills of the domiciliary state. They are usually signed in the presence of state’s required number of witnesses and generally notarized.

Question 6

List the common provisions in a valid will

Answer 6

1) An introductory clause to identify the testator. 2) The establishment of the testator’s domicile and residence. 3) The identification of the spouse and children of the testator. 4) A declaration that this is the last will and testament of the testator. 5) A revocation of all prior wills and codiciles by the testator. 6) The identification and selection of the executor/executrix and sucessor executor/executrix by the testator. 7)A directive for the payment of debt clause. 8) A directive of payment of taxes clause. 9) A disposition of tangible personal property clause. 10) A disposition of real estate clause. 11) Clauses regarding specific bequests of tangibles and cash. 12) A residuary clause. 13) A clause regarding who will pay taxes on bequests. 14) An appointment and powers clause, naming fiduciaries, guardians, tutors, trustees, etc. 15) A testator’s signature clause. 16) An attestation clause or witness clause. 17) Aself proving clause.

Question 7

What is a simultaneous death clause?

Answer 7

In the event that two people die simultaneously, this clause provides an assumption of which person died first.

Question 8

What is a survivor-ship clause?

Answer 8

This clause provides that the beneficiary must survive the decedent for a specified period in order to receive the inheritance or bequest. This clause prevents property from being included in two different estates in rapid succession.

Question 9

Disclaimer Clause

Answer 9

This clause simply reminds heirs that disclaiming inheritances may be an effective tool in estate planning.

Question 10

No-contest clause

Answer 10

This clause discourages heirs from contesting the will by substantially decreasing or eliminating their bequest if they file a formal, legal contest of the will.

Question 11

What is a living will?

Answer 11

A living will is a document detailing an individual’s last wishes regarding sustainment of life.

Question 12

Why should a living will be prepared in advance?

Answer 12

A living will is prepared in advance to explicitly state the client’s wishes and to avoid the need to seek court approval regarding the use of life sustaining measures.

Question 13

Identify a reason to use a living will

Answer 13

An individual who has been diagnosed with lung cancer and has undergone several invasive, expensive medical treatments may write a living will directing the medical institution to suspend the use of any life-sustaining medical treatments or devices. Often people in these situations are suffering greatly and the expenses incurred have far surpassed any medical insurance coverage. The living will is used to curtail pain and suffering, and to avoid incurring additional expense.

Question 14

What is a power of attorney?

Answer 14

A power of attorney is a legal document that gives someone else the right to act of behalf of a principal.

Question 15

Identify and discuss the parties to a power of attorney

Answer 15

There are two parties to a power of attorney. Power holder/agent- person to whom powers are given. Principal- person who gives power to the power holder.

Question 16

Identify a reason to use a power of attorney.

Answer 16

An individual serving in the military will give a power of attorney to a family member so the family member can handle any circumstances that arise while the individual is actively serving. Most commonly, the family member only uses the power to sell assets, cars, homes, etc.

Question 17

What is durable power of attorney?

Answer 17

A springing durable power of attorney does not become active until a certain defined point in time or event. Often, the power will spring upon disability or incapacity.

Question 18

What is a side instruction letter?

Answer 18

A side instruction letter details the testator’s wishes regarding the disposition of tangible possessions, the disposition of the decedent’s body, and funeral arrangements. The side instruction letter exists separately from the will.

Question 19

Identify some examples of instructions included in the side instruction letter

Answer 19

The side instruction letter usually includes burial, funeral, and other similar type instructions. It sometimes also includes information related to debts, safety deposit box locations, and other personal type information that the executor will need during the administration of the estate.