Chapter 4: Methods of Estate Transfer at Death Flashcards
What are requirements for a valid will?
4.2
- Minimum age
- Testamentary capacity
- Valid form
- How it’s executed
What are the preliminary clauses of a will?
4.2
- Introductory: introdues
- Tax apportionment: where the taxes should come from
- Family statement: who
What are dispositive clauses of a will?
4.2
- Outright disposition
- Distributions to trusts
- Distributions to classes
What is per capita in a will?
4.2
All descendants get an equal split of the assets.
Ex: 2 children and 2 grandchildren each get 1/4 of the assets
What is per capita at each generation?
4.2
The children get equal amounts of the assets. If one of the children is dead, the remainder is split equally in the next generation
What is per Stirpes in a will?
4.2
If there are 3 children, each deceased Childs 1/3 gets passed down to their kids
How do you modify a will?
4.2
With a codicil
Can be a simple addition or deletion
Less expensive and cumbersome than a new will
Attested to and witnessed the same as the original will
Why would someone execute a codicil?
4.2
Change the will
Previously named executor dies
Birth of child or grand child
Significant change in personal or financial status
What is intestacy?
4.3
Full intestacy: no will
Partial intestacy: they have a will that does not cover all assets
Advantages and disadvantages of the intestacy process?
4.3
Advantages:
- Reflects public policy
- orderly process and finality of probate
Disadvantages
- Laws are fixed
- no accommodation for friends, family and charities
- -doesn’t take tax strategies into account
What are will substitutes?
4.4
- Rights of survivorship
- beneficiary designations
- trusts
What are the advantages and disadvantages of will substitute?
4.2
Advantages:
- avoid probate
- Maintain control
- could be cheaper
Disadvantage
- Potential for estate tax
- potential for gift tax
