Non-Probate Transfers

Question 1

What is a non-probate transfers?

Answer 1

Transfers made during the decedents life time through the use of will substitutes

Question 2

What are types of will substitutes?

Answer 2

1. Inter vivos revocable trust
2. Life insurance
3. Pension fund/retirement plan
4. Joint bank accounts

Question 3

What is a Revocable Inter Vivos Trust?

Answer 3

a) Created during life, it becomes effectively upon creation
b) There are no tax benefits to the settlor because the settlor is still considered to be the owner of the property for purposes of taxation

Question 4

How do you modify a revocable inter vivos trust?

Answer 4

i. Settlor may modify or revoke his revocable, inter vivos trust at will
(a) Settlor should expressly reserve his right to modify or revoke the trust in the document AND specify the means by which the document can be revoked

Question 5

Can creditors & spouses get to a revocable inter vivos trust?

Answer 5

d) Creditors
i. Majority rule
(a) Creditor may reach the assets of a revocable inter vivos trust at the time of settlor’s death because they could have done so during life

e) Spouses reaching assets in the trust for purposes of her elective share
i. Depends on the state – but the trend is towards allowing the assets to be counted
ii. Revocation of the spouse upon divorce
(a) UPC says spouse cannot get to the assets of the will

Question 6

What is life insurance?

Answer 6

a) Governed by contract law
b) When you take out a life insurance policy, the contract is between the benefactor and the issuance company, others are designed as beneficiaries

Question 7

What are the types of life insurance?

Answer 7

Two types:

  i. Whole life — contract for the rest of life
  ii. Term life — a contract that obligates the insurance company to pay the named beneficiary if the insured dies within the policy’s terms

Question 8

Can the beneficiaries of a life insurance be changed?

Answer 8

The beneficiaries of a life insurance policy can never be changed by a will

   i. HOWEVER
         (a) Where life insurance proceeds are concerned, divorce does not revoke surviving ex-spouse as a beneficiary – this must be expressly done by the insured party

Question 9

What are pension funds/retirement plans?

Answer 9

a) Governed by federal law
b) Pensions funds and retirement funds that require the spouse to be listed as the beneficiary cannot be changed
i. Example:
(a) Social security and certain pensions that are backed by IRSA – those proceeds can go to the former spouse only

Question 10

What are joint bank accounts?

Answer 10

Rules governing are determined by banking law

Question 11

How do you plan for incapacity?

Answer 11

Preparing for when you cannot do things for yourself through the following documents:

  1. power of attorney
 2. living will
 3. organ donation

Question 12

What are power of attorney?

Answer 12

1. General Powers of Attorney
2. Durable Power of Attorney
3. Durable Health Care Power of Attorney

Question 13

What is a general power of attorney?

Answer 13

This POA takes effect upon execution BUT exists until such time as the principal becomes incapacitated

Question 14

What is a durable of attorney?

Answer 14

The POA takes effect upon execution and goes all the way through incapacity to death

Question 15

What is a durable health care power of attorney?

Answer 15

The principal designates the agent that will make the decisions for his end of life care

Question 16

What is a living will?

Answer 16

Allows the principal to set forth his wishes regarding the type of care he wishes to receive or not receive at the end of his life

Question 17

How can you donate organs?

Answer 17

Can always be done by designation on drivers licenses