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Estate Planning > Estate Planning Documents > Flashcards

Estate Planning Documents Flashcards

1
Q

What are some frequently used documents for estate planning?

A
  • Wills
  • DNR orders
  • Advanced medical directives (living will)
  • Power of attorney for property
  • General power of attorney for healthcare
  • Side letters of instruction
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2
Q

What is a will?

A
  • A legal document that the creator creates (the testator) while alive to control the distribution of their property at death.
  • A will can be amended, changed, or revoked at any time PRIOR to death
    • Although, the testator must be competent when doing any of those
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3
Q

How can a will help with estate planning?

A
  • It can help avoid distribution of property under the state’s intestacy laws (dying without a will)
  • It helps distribute property that is a part of the probate estate to the correct bene’s
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4
Q

How can a testator be considered “competent”

A
  • Must be mentally compotent and attained age 18
    • Must understand the significance of writing the will
    • Must understand the type and amount of property being distributed by the will
    • Must recognized friends and relatives who may claims to assets
  • Must be of legal age according to state of domicile
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5
Q

What conditions may lead to intestacy?

A
  • These conditions can lead to dying without a will:
    • The will not prepared or created according to the laws and standards of the state
    • The decedent died in another state other than the state of where the will was created (although there can be exceptions here)
    • The decedent was not considered competent when making the will
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6
Q

Who is responsible when a person dies intestate?

A
  • The court will appoint a administrator
    • Usually will be spouse or the next of kin if there is no spouse
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7
Q

Advantages of having a will

A
  • Testator can change the will as personal, financial, and property related interest change over time
  • The will can allocate sources of payment of estate taxes and bequests from the decednet’s estate
  • The will can have an executor and a contingent exector for their personal rep, instead of court appointed
  • Wills direct the transfer of property:
    • A will can decide who or who does not receive a share of the estate
      • A spouse CANNOT be disinherited
      • A child CAN be disinherited if not named in the will except in Lousisana
  • A will can help in the estate planning process by minimzing estate tax burden at spouse’s death by maximizing the marital deduction
  • Designated estate assets passing to charity could reduce the taxable estate
  • A will can designate primary and contingent guardians for minor children
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8
Q

Disadvantages and constraints of having a will

A
  • Bene’s can contest the will, which can lead to substantial admin and legal expenses and can be time-consuming
  • Assets that transfer automatically to designated bene’s by law cannot be changed by the will
  • A poorly written will can be rejected and decedent could be considered intestate
  • Property will pass trhough probate, which is more costly and time-consuming
  • Property passing to grandchildren by will can be subject to GST tax
  • Property bequested to an ex-spouse by an OUTDATED will can be subject to intestacy by some states
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9
Q

Explain holographic wills

A
  • These are written wills that must be signed and dated by testator
  • No witness is usually required
  • Must meet material requirements of a will
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10
Q

Explain Noncupative wills

A
  • These are oral wills that are usually executed just prior to the death of a decedent (last wishes)
  • There usually needs to be a witness
  • Some states do not accept these
  • Personal assets can be transffered by this will, but REAL ASSETS CANNOT
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11
Q

Explain Statutory Wills

A
  • These are prepared and written by attorney so they meet all legal requirements in the state of domicile
  • Requires signatures from testator and from witnesses
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12
Q

Sweetheart wills/Reciprocal wills

A
  • These are I LOVE YOU wills
  • Basically have two identical wills between spouses and leave everything to one another
  • Can be a mutual will
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13
Q

Explain Joint Wills

A
  • Executed by two or more parties
  • Upon death of first party, the will requires the surviving party to dispose of the assets based on instructions by the will
  • Spouses often use these types of wills together to decide what bene’s get the property
  • Could be used for someone who had a previous marriage to try and protect their children
  • Some states do not allow these wills
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14
Q

Mutual wills

A
  • Executed when individuals own property together and agree to bequeth the property to one another
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15
Q

Pour-over wills

A
  • Designate a testator’s recovable trust to receive remainder of a decedent’s property
  • Goes to probate, but avoids intestacy
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16
Q

Who are heirs?

A
  • A person’s relatives by BLOOD
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17
Q

Who are legatees?

A
  • The people who inherit the person’s property
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18
Q

Who are devisees?

A
  • The people who receive REAL property based on the will
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19
Q

Will Clauses - Intro Clause (Exordium)

A
  • Has the testator’s basic info such as full name, address and state of domicile
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20
Q

Will Clauses - Declaration Clause

A
  • Identifies the will as the most current will and REVOKES all PREVIOUS wills
  • Used to avoid any future controversary that may arise out of changes from previous wills
21
Q

Will Clauses - Bequest Clauses

A
  • Instructions of distributions of assets to the legatees
  • One bequest is created for EACH legatee
  • Bequests can be:
    • Specific
    • General OR
    • Residual
22
Q

Will Clauses - Bequest Clause - Contingency Clause

A
  • Identifies the bene who should receive the property in the event the legatee die or disown the bequest
23
Q

Will Clauses - Bequest Clause - Ademption Statute

A
  • Addresses tangible personal property that is bequeathed by will but DOES NOT EXIST at the testator’s death
24
Q

Will Clauses - Bequest Clause - Per Capita Method

A
  • Contingent bene’s can receive assets based on their generational closeness to the decedent
  • Each bene who is alive at time of testator’s death will inherit EQUALLY
25
Q

Will Clauses - Bequest Clause - Per Stirpes Method

A
  • Transfers assets to heirs in an UNEQUAL manner when one or more decendants have predeceased the testator
    • If son dies before testator, that son’s children will receive equal shares of their father’s property interests under the will
26
Q

Will Clauses - Residuary clause

A
  • Transfers the remaining undistributed property to an indivdiual, trust, or charity
  • In absence of this clause, the remaining property acquired after a will was executed becomes part of the intestate property
27
Q

Will Clauses - Guardianship clause

A
  • Designates indiviudals who will take care of minor or legal dependents upon death of testator
  • Serves as custodian for a child and as “guardian of the estate”
28
Q

Will Clauses - Tax appointment clause

A
  • Directs the assets that will be spent to pay for reamining debt and estate taxes of the testator
29
Q

Will Clauses - Attestation clause

A
  • Signed by a witness and certifies that the will was signed by the testator in a compotent state of mind without facing any durress or coercion
  • Legatees CANNOT serve as witness to the will
30
Q

Will Clauses - Self-proving clause

A
  • Signed by the notary confirming that the will was signed by the named testator in front of the named witnesses
31
Q

Will Clauses - Simultaneous death clause

A
  • Named the person who will be assumed to have DIED FIRST should both spouses die simulatneously OR WITHIN 1-5 days of the other spouse’s death
  • Prevents assets from being included successively in both spouses’ estates
32
Q

Will Clauses - Survivorship clause

A
  • identifies spouse who is presumed to survive
  • Prevents assets from being included successively in both spouses’ estates
33
Q

Will Clauses - Disclaimer clause

A
  • Instructs bene’s that they can refuse to accept a bequest under the following conditions:
    • Bene disclaiming bequest cannot benefit from it
    • Disclaiming bene cannot designate another recipient to receive it
    • Property has to be discalimed WITHIN NINE MONTHS of testator’s death
    • Has to be in WRITING
34
Q

Will Clauses - No contest clause

A
  • Discourages heirs from contesting a will
  • The disputing heirs are REMOVED from the list of bene’s
35
Q

Will Clauses - Codicil

A
  • Becomes part of the will and is used for modifying, amending, or explaining a will
36
Q

Will Clauses - Side instructions letter

A
  • Usuually for funeral/burial wishes and may include additional info about assets being left as bequests or transfers
  • SEPARATE from will
37
Q

What is power of attorney?

A
  • A legal document with which a person can delegate or authorize another person to make financial, banking investment, and business decisions on their behalf
  • Principal - the person who grants power
  • Agent - the person who receives the power
38
Q

General power of attorney

A
  • Authorizes agent to act as the principal in ALL legal, finanical, and business matters
  • Principal can take away power by serving notice with revocation form
  • If agent dies BEFORE grantor, part of the estate may be included in the agent’s estate
  • Power does end on death of grantor or revocation of power (durable power of attorney)
  • Does NOT end when grantor becomes incapacitated or mentally disabled
39
Q

Limited power of attorney

A
  • Agent has authority to act on SPECIFIC task or in a LIMITED capacity
  • Nondurable power of attorney
    • Ends when grantor dies or becomes incapacitated/mentally incompetent
  • Does have power to manage and appoint assets as directed by the principal in the power of attorney document
40
Q

Power of attorney - side instructions letters

A
  • NOT LEGALLY BINDING
41
Q

How to revoke a will

A
  • Create a new will OR
  • Add to the old will by adding a codicil
42
Q

Forced heirship

A
  • Some states REQUIRE that a portion of the decedent’s estate pass to the children
43
Q

Durable power of attorney for property

A
  • Grants an agent the ability to maek property-related decisions on the principal’s behalf
  • Can be an individual or a financial institution, such as a bank
  • Advantage is that it saves on time and costs (because if the court had to appoint a guardian in the event of principal mental incompotence)
  • May NOT be accepted by all banks if it is not current enough of meet bank’s requirements
44
Q

Funded standby trust

A
  • A trustee’s authoirty is recognized by banks no matter how long ago the trust was establsihed
  • So this is good for incapacity planning purposes for managing an incapacitated person’s financial and property interests
45
Q

Springing power of attorney

A
  • Power of attorney is triggered when certain conditions are met or when certain events happen, such as prinicpal becoming mentally disabled or incapacitated
  • Authority may end if principal recovers from disability
  • Remains in effect until death or if principal is legally competent to revoke the power
46
Q

Durable power of attorney for healthcare (healthcare proxy)

A
  • A legal document that appoints an agent to make healthcare-related decisions when the principal in unable to communicate or make these decisions
  • Agent may confer with medical professionals to determine extent of treatment and best treatment options
  • Agent may have limited scope of authory made by prinicpal
  • MOST STATES do NOT allow agent the right to make a decision on ending a life-sustaining treatment
  • Is a SPRINING power of attorney and becomes effective when principal cannot make these decisions on their own due to disablity or incapacity
47
Q

Advance medical directive (living will)

A
  • Legal document that contains an individiual’s last wishes regarding sustainment of life under specific circumstances
  • Also appoints an agent to make life-sustaining decisions for the incapacitated person
  • Gives someone power to die on their own terms and most likely save a shitload of money in paying for life support
  • Not all states recgonzied living wills
48
Q

DNR orders

A
  • Legal document that contains a terminally ill’s principal’s wish to NOT have CPR performed or to contiue with other life-sustaining treatments once it is medically evident the person cannot survive
49
Q

Guardianship

A
  • An arrangement that provides for an incompetent person’s care and the management of his/her own property
  • DOES NOT hold legal title to property
  • This is when a person takes custody of the child and provides for his/her personal care, property, and financial affairs

Estate Planning (10 decks)

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