Estate Planning Documents

Question 1

Bequest

Answer 1

property left to a beneficiary under the provisions of a will

Question 2

Pour-over will

Answer 2

A will that has a previously established trust as its primary beneficiary. Funded through probate. Assets transferred from the pour-over will into the trust are subject to probate.

Question 3

Precatory language

Answer 3

Language in a will that uses terms as “hope, wish, or desire”, which may not be enforceable the by probate court.

Question 4

Residuary clause

Answer 4

A class in a will that directs the testator’s property that was not disposed of through other will clauses. Can pass to others or an existing trust. These clauses prevent partial intestacy of property after all payments are addressed.

Question 5

Dispositive clause

Answer 5

A clause in a will that names a class of beneficiaries to receive property, such as “descendants” or “issue” who are lineal family members

Question 6

Per capita (clause in a will)

Answer 6

A clause in a will that means that all living family members would receive an equal share of the property

Question 7

Fudiciary appointment clause

Answer 7

A clause in a will appoints primary and contingent executors, guardians, and trustees for testamentary trusts.

Question 8

Tax apportionment clause

Answer 8

A clause in a will that designates the source for payment of death taxes.

Question 9

Simultaneous death statute

Answer 9

A statute in a will that determines the order of death if it cannot be determined which spouse actually survived the other. This avoids having two probate process and death taxes levied on the same property, if the other spouse does not live long enough to enjoy the property.

Question 10

Divorce or annulment statute

Answer 10

A statute in a will that address how property should be handled if the spouse who was the original beneficiary is no longer married to the deceased

Question 11

Situs

Answer 11

laws of the state where the land is located

Question 12

Per Stirpes distribution

Answer 12

Do not calculate the ratio for the living beneficiaries. However, for the deceased beneficiary (sibling of the other other beneficiaries), split the original share for his descendants

Question 13

Per Capita distribution

Answer 13

Recalculate the share of what beneficiaries get by including the descendants of deceased into the count of people.

Question 14

Will execution requirements

Answer 14

1) Testator must be at least 18 years of age
2) Testator must have mental capacity
3) Will must be signed by the testator and witnessed by at least two witnesses

Question 15

Testamentary trust

Answer 15

1) Created through decedent’s last will
2) sets the terms of a trust where a named trustee can manage assets on behalf of beneficiaries for many years.
3) Useful for managing assets for the benefit of testator’s minor children

Question 16

Codicil

Answer 16

1) An additional legal document to a will that revises the will
2) Must be executed with the same execution requirements as a will
3) Advantages of codicil - convenient, simple, inexpensive
4) Used for minor changes

Question 17

Types of wills

Answer 17

1) holographic wills - done in handwriting, only a few states allow it
2) joint wills - last will and testament for two individuals, typically married couples. The first-to-die spouse’s property interests are commonly categorized as terminable interests and will not qualify for the marital deduction
3) simple wills - often done between spouses as “I Love you” reciprocal will
4) Mutual will - can also be reciprocal will; this will is made in agreement without another about property disposition
4) pour-over wills
5) tax-effective wills - uses estate tax exemption equivalent and /or the marital deduction and/or the charitable deduction

Question 18

Will contests

Answer 18

Will contests are initiated by a disenchanted or disinherited beneficiary who seeks a greater portion of the decedent’s estate

Question 19

Uniform Probate Code (UPS) on will contests

Answer 19

Awards the surviving spouse an increasing percentage of the estate based upon the number of years that the decedent and the surviving spouse were married to each other.

Question 20

What can supersede the will?

Answer 20

Premarital or post-marital agreements that are validly executed can supersede state statutes.

Question 21

Basis for will contests

Answer 21

1) testator of the will was not of sound mind (may not know who he/she is) at the time the will was executed
2) testator was unduly influenced by another individual which had direct impact on distribution of estate
3) testator was fraudulently deceived, and as a result disinherited a person who originally would have had a larger share of the estate
4) testator suffered from an insane delusion at the time the will was drafted. Example: Testator knows his heirs but disinherits them because he thinks they are trying to kill him.

Question 22

How to reduce/deter will contests

Answer 22

Add a provision to the will that stipulates, “if any heirs contest the will, they are only entitled to $5”

Question 23

Types of guardianship

Answer 23

1) Guardianship of the person provides for personal care
2) Guardianship or conservatorship of the estate manages property and financial affairs
3) Plenary guardianship manages both the incapacitated ward’s property and personal affairs

Question 24

Guardian ad litem

Answer 24

Guardian appointed DURING the public court proceedings with oral and testimony to decide on competency. The goal is to represent the ward and to protect his rights.

Question 25

Process of becoming a guardian or conservator

Answer 25

1) petition filed indicating that person has become incapacitated
2) appointment of Guardian Ad Litem to represent the ward during the court proceedings
3) submission of testimony - proof regarding the ward’s physical and mental competency
4) court appointment of guardian - court decided on competency. If incompetent, then guardian or conservator may be appointed.
5) Ongoing supervision by course

Costly process with fees to the court proceedings, cost of the bond posted for the conservator. Preplanning using Durable Power of Attorney and funded revocable trusts will eliminate the need for these court-imposed arrangements.

Question 26

Authority of guardians and conservators

Answer 26

Fiduciary, but does not have legal title to the ward’s property.
1) authority to provide continuing care
2) Limited guardianship - only manage specific care
3) Conservators can under the Uniform Probate Code manage and distribute property for the support, education, care, or benefit of the protected person and his dependents. Court has to give permission for property transactions. Restrictions for use and gift of ward’s assets. Will cannot be created for the ward.
4) Limited conservatorship further restricts management of property and numbers of transactions on behalf of the ward.

Question 27

(quiz) Each of the following elements should be included in the powers of attorney EXCEPT:
[ x ] An outline of the general aspects of the covered principal’s affairs
[ ] A provision authorizing the agent to make elections with respect to retirement plan assets.
[ ] Verbiage dealing with gifting powers such as annual exclusions and/or lifetime gifts.
[ ] Authority to transfer assets into a trust created by the principal.

Answer 27

The powers of attorney should be VERY SPECIFIC and not general as to the aspects of the principal’s affairs that are covered.