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Business law I > Chapter 51 > Flashcards

Chapter 51 Flashcards

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1
Q

Estate Planning

A

Planning on how to transfer stuff from someone who died in advance

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2
Q

Will

A

An instrument by a testator directing what’s to be done w/ their stuff after death

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3
Q

Testator

A

The person who makes and executes a will

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4
Q

Testate

A

The person who left a will before dying

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5
Q

Executor

A

The person who administers the testator’s state

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6
Q

Administrator (In terms of a will)

A

The person who’s there if the person died w/o a valid will or is the executor can’t serve

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7
Q

Interstate

A

Someone who died w/o a will

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8
Q

Interstacy Laws

A

State statutes that specify how someone’s property will be distributed when they die interstate

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9
Q

Interstacy laws aim to…

A

Carry out the likely intent and wishes of the decedent

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10
Q

Interstacy laws assumes that _____ inherits the property

A

The natural heirs

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11
Q

Who takes priority in getting 1st dibs on inheritance?

A

Grandchildren and parents

Siblings, cousins, aunts and uncles are after

Collateral heirs are last

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12
Q

What happens if no heirs exist?

A

Th property goes to the state

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13
Q

Probate

A

The process of validating a will

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14
Q

How can people avoid probate costs?

A

Will substitutes, like living trusts and life insurance

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15
Q

Gifts by will can be…

A
  1. Specific
  2. General
  3. Residuary
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16
Q

Specific gifts

A

Specifying what property goes to who

17
Q

General gifts

A

Doesn’t single out a particular item

18
Q

Residuary gifts

A

Used when you don’t know how much of something is going to someone

They get what’s leftover from specific and general gifts

19
Q

Abatement

A

People in the will get less stuff than intended if there aren’t enough assets

20
Q

Lapsed Legacies occurs when…

A

Someone in the will dies before the testator, or before the legacy is payable

Aka failed legacy

21
Q

Power of attorney

A

Gives someone the authority to act on another’s behalf

22
Q

Health Care power of attorney

A

A document designating someone the power to choose what type + how much medical treatment on behalf of someone

23
Q

Valid wills must comply w/ statutory formalities, which are designed to…

A

Ensure that the testator understood the testate’s actions when the will was made

24
Q

The basic requirements for executing a will are…

A
  • Proof of testator’s capacity and intent
  • A written document
  • The testator’s signature
  • The signature of the testator’s witnesses
25
Q

Is it required for testators to give their property to their natural heirs?

A

No, but their intent to disinherit needs to be clarified

26
Q

The testator can revoke a will by…

A

Intentionally destroying it, or making a new will

27
Q

Revocation by operation of law occurs when…

A

Marriage, divorce, or child birth takes place after a will has been executed

28
Q

Revocation via marriage

A

The new spouse receives a share of the testator’s estate, even if not listed in the will

29
Q

Revocation via divorce

A

Revokes distribution of a property made under a will to the former spouse

30
Q

Revocation via child birth

A

Allows a child to receive some of the parent’s estate, even if not in the will

Unless there’s clear intent to disinherit the child

31
Q

Codicil

A

Eliminates the necessity of making/ fixing a new will

32
Q

How much can a codicil revoke a will?

A

Either fully or partially

33
Q

Trust

A

An arrangement that lets someone (the trustee) hold onto something for the benefit of another (the beneficiary)

34
Q

Express trusts are created/declared in…

A

explicit terms, usually in writing

35
Q

Living trusts are created by…

A

The grantor (settlor) that’s effective during their lifetime

36
Q

Assets held in a living trust can be..,

A

Passed into their heirs w/o going thru probate

37
Q

Do express trusts shelters assets from estate taxes?

A

No, but the grantor can pay income taxes on trust earnings, depending on if the trust is recovable or irrecoverable

38
Q

Revocable trusts

A

Allows the grantor to do/change what they want with their property until they die

39
Q

Irrevocable trusts

A

Permanently gives up control of the property to the trustee

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Business law I (16 decks)

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