Chapter 51 Flashcards
Estate Planning
Planning on how to transfer stuff from someone who died in advance
Will
An instrument by a testator directing what’s to be done w/ their stuff after death
Testator
The person who makes and executes a will
Testate
The person who left a will before dying
Executor
The person who administers the testator’s state
Administrator (In terms of a will)
The person who’s there if the person died w/o a valid will or is the executor can’t serve
Interstate
Someone who died w/o a will
Interstacy Laws
State statutes that specify how someone’s property will be distributed when they die interstate
Interstacy laws aim to…
Carry out the likely intent and wishes of the decedent
Interstacy laws assumes that _____ inherits the property
The natural heirs
Who takes priority in getting 1st dibs on inheritance?
Grandchildren and parents
Siblings, cousins, aunts and uncles are after
Collateral heirs are last
What happens if no heirs exist?
Th property goes to the state
Probate
The process of validating a will
How can people avoid probate costs?
Will substitutes, like living trusts and life insurance
Gifts by will can be…
- Specific
- General
- Residuary
Specific gifts
Specifying what property goes to who
General gifts
Doesn’t single out a particular item
Residuary gifts
Used when you don’t know how much of something is going to someone
They get what’s leftover from specific and general gifts
Abatement
People in the will get less stuff than intended if there aren’t enough assets
Lapsed Legacies occurs when…
Someone in the will dies before the testator, or before the legacy is payable
Aka failed legacy
Power of attorney
Gives someone the authority to act on another’s behalf
Health Care power of attorney
A document designating someone the power to choose what type + how much medical treatment on behalf of someone
Valid wills must comply w/ statutory formalities, which are designed to…
Ensure that the testator understood the testate’s actions when the will was made
The basic requirements for executing a will are…
- Proof of testator’s capacity and intent
- A written document
- The testator’s signature
- The signature of the testator’s witnesses
Is it required for testators to give their property to their natural heirs?
No, but their intent to disinherit needs to be clarified
The testator can revoke a will by…
Intentionally destroying it, or making a new will
Revocation by operation of law occurs when…
Marriage, divorce, or child birth takes place after a will has been executed
Revocation via marriage
The new spouse receives a share of the testator’s estate, even if not listed in the will
Revocation via divorce
Revokes distribution of a property made under a will to the former spouse
Revocation via child birth
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
Codicil
Eliminates the necessity of making/ fixing a new will
How much can a codicil revoke a will?
Either fully or partially
Trust
An arrangement that lets someone (the trustee) hold onto something for the benefit of another (the beneficiary)
Express trusts are created/declared in…
explicit terms, usually in writing
Living trusts are created by…
The grantor (settlor) that’s effective during their lifetime
Assets held in a living trust can be..,
Passed into their heirs w/o going thru probate
Do express trusts shelters assets from estate taxes?
No, but the grantor can pay income taxes on trust earnings, depending on if the trust is recovable or irrecoverable
Revocable trusts
Allows the grantor to do/change what they want with their property until they die
Irrevocable trusts
Permanently gives up control of the property to the trustee
No takebacks! :3
