Unit 7 Flashcards
Abatement
a proportional reduction of a devise when estate assets are not sufficient to pay it in full
Ademption
the extinction or withdrawal of an inheritance because decedent did not own the named property at the time of death
Administrator
a person appointed by a court to manage the estate of a deceased person or insolvent company.
Administratix
outdated term used to refer to women that are court appointed to oversee the administration of estates for those that pass intesta
Codicil
an addition or amendment of a last will and testament executed with the same formality of the will
Escheat
forfeiture of a decedent’s property to the state in the absence of heirs
Bequest
a gift of personal property made through a will.
Concealment
the act of intentionally or unintentionally not revealing information that should be disclosed and would otherwise affect the terms or creation of a contract
Custodian
is a person or entity that is entrusted with the care of someone or something, such as a child, property, or debtor’s assets
Devisee
the person who received a devise
Estate
the total value of a person’s assets minus their liabilities. It can also refer to the property owned by a person before it is distributed through a will or trust
Devise
a gift of real or personal property by will
Durable Power of Attorney
a power of attorney that remains in effect after the disability or incapacity of the principal.
Principal
is a person or entity that gives another party the legal authority to act on their behalf
Executor
(Representative) the person who represents and settles the estate of the deceased
Guardian
a person who is legally responsible for the care of a child or adult who can’t care for themselves. A guardian may also be called a conservator, especially when they are responsible for managing the ward’s finances
Heir
one who inherits, or is entitled to receive property by laws of intestacy
Holographic Will
a will written entirely by hand of the testator
Inheritance
the estate assets which pass from the decedent to his/her heirs
Insurance Company
is a business that sells insurance policies to protect individuals and organizations from financial losses caused by unexpected events
Intestate
the state or condition of dying without having made a will; intestacy
Insolvent Estate
the condition of the estate of a deceased person which is unable to pay the debts of the decedents and/or the estate
Intestacy
the legal term for when someone dies without a valid will
Intestate Succession
the method used to distribute property owned by a person who dies without a valid will
Inventory
listing and valuation of a decedent’s assets by personal representative of the estate
Legatee
is a person or organization that receives personal property or money from a deceased person’s will
Per Capita
the method of dividing an estate by which an equal share is given to each number of persons, all of whom stand in equal degree or kindred to the decedent
Living Will
a document which governs the withholdings of life sustaining treatment from an individual in the event of an incurable or irreversible condition that will cause death within a relatively short time and which become effective when such a person is no longer able to make decisions regarding his/her medical treatment
Nuncupative Will
oral will declared or dictated by testator during last illness before appropriate witnesses to dispose of personal property and afterwards reduced to writing (not valid in all states) and only applies to personal property
Personal Representative
a person or institution that manages the estate of a deceased person. They are also known as executors or administrators
Policy
a legal contract that details the essential workings of the insurance. It’s a physical document that the insurance company issues to the policyholder
Per Stirpes
the method of proportionately dividing an estate between beneficiaries according to their deceased ancestor’s share
General Power of Attorney
a written instrument granting the agent broad powers to act for the principal.
Probate
the process of administering an estate and determining the validity of a will
Premium
The payment, or one of the periodic payments, a policyowner agrees to make for an insurance policy
Probate Estate
the property and debts of a decedent that is subject to administration by the personal representative of an estate
Preferred Claim
a legal action that seeks to recover money paid to a creditor before a bankruptcy filing
Sprining Power of Attorney
a written instrument authorizing one person to act as an agent for another effective only upon a certain event occurring
Testate
a condition of leaving a will at death
Testator
a person who makes a valid will
Will
an instrument executed with required formality by persons making disposition of their property to take effect upon their death
Power or Attorney
an instrument granting someone authority to act as an agent or attorney in fact for the principal; an ordinary power of attorney is revocable and automatically terminates upon the death or incapacity of the principal
Testamentary Disposition
The act of giving away one’s property by will after death.
Legal Age for a Will
The age at which a person is legally able to create a will, typically 18 years old.
Testamentary Capacity
The mental capacity required to create a valid will, including intent, understanding the nature and extent of one’s estate, and recognizing the natural heirs or beneficiaries.
Will Formality
A will must be in writing, signed by the testator or testatrix, and witnessed by a specific number of witnesses, which varies by state.
Revocation by Act of Testator
A will can be revoked by destroying it or by writing a new will.
Revocation by Operation of Law
A will can be partially revoked or modified due to life events such as divorce, marriage, or the birth/adoption of children
Spouse’s Election
The legal right of a surviving spouse to choose to take a portion of the estate against the provisions of the will.
Disinheritance
The act of intentionally preventing someone from inheriting under a will.
Law of Intestate Succession
The process by which personal property is distributed according to state law when someone dies without a will, usually in the state where the deceased was domiciled
Real Property and Intestacy
Real property is passed to heirs based on the law of the location where the property is situated when a person dies intestate
Personal Property and Intestacy
Personal property passes to an executor or administrator for distribution to heirs when someone dies intestate
Last Will and Testament
A legal document that allows a person to choose who will manage their end-of-life affairs, distribute assets to beneficiaries, and provide instructions for their final disposition after death.
Testamentary Capacity
he mental capacity required to create a valid will. It means being of sound mind and understanding the nature of one’s estate, beneficiaries, and intentions for asset distribution.
Testate Estate
An estate where the decedent left a valid will.
Challenging Testamentary Capacity
Testamentary capacity can be challenged if it can be proven that the testator suffered from a mental condition such as senility, dementia, or was coerced at the time of executing the will.
Requirements for Mental Capacity to Execute a Will:
The person must:
- Know the nature and extent of their property.
- Know their closest blood relatives (natural objects of bounty).
- Know how they intend to distribute their property.
- Connect all these elements into a coherent plan.
Validity of Nuncupative Wills
Valid in roughly 20 states, but each state has specific requirements for these wills to be recognized as valid for personal property.
Holographic Will Requirements
For a holographic will to be valid, it must:
- Show the intent of the person to write a will.
- Prove the person had testamentary capacity.
- Identify the personal property to be distributed.
- Name the beneficiaries.
- Be signed by the testator.
Nuncupative Will Requirements
To be valid, a nuncupative will may require:
- A minimum number of witnesses to the oral declaration.
- Limitations on the type or value of personal property disposed of.
- Written memorialization by witnesses.
- Timely submission of the written record to authorities.
- Limited to final illness situations.
- Cannot supersede a written will.
Validity Issues of Holographic Wills
A holographic will may be contested based on:
- Illegible handwriting.
- Mental capacity of the testator at the time.
- Failure to identify beneficiaries fully.
- Broad or unclear descriptions of personal property.
Will Revocation
The legal cancellation or omission of a will. This can be done through three methods:
- Destroying the written will.
- Writing a new will with a provision to revoke previous wills
Spousal Election
A legal remedy allowing a spouse to claim a portion of estate assets when their spouse tries to disinherit them. The spousal ‘right of election’ ensures that a spouse receives assets, even if they were left out of a will.
Per Capita Distribution
A method of distributing an estate where each heir receives an equal share if they are of the same degree of relation to the deceased. If one heir predeceases the decedent, their share is equally divided among the surviving heirs of the same relation.
Per Stirpes Distribution
A method of distributing an estate where the share of a predeceased heir is passed down to their descendants. If a son dies before the father, his share would be distributed among his children, rather than divided among his siblings.
Per Capita vs. Per Stirpes Example
If a father dies and has three sons, both per capita and per stirpes distribution would result in equal shares if all sons survive. However, if one son predeceases the father:
Per capita: The estate is split equally between the two surviving sons.
Per stirpes: The deceased son’s share is passed down to his children.
Escheat Laws
Laws that allow a state government to claim a person’s estate if they die without any known legal heirs. If a rightful heir is later found, the property can be returned. Escheat laws can also be triggered if an heir is deemed unable to manage their inheritance.
Probate
The legal process of administering an estate, determining the validity of a will, and overseeing the distribution of the decedent’s assets.
Personal Representative (Executor/Administrator)
A person appointed by the probate court to administer the estate of a decedent. The personal representative is responsible for managing the estate, paying debts, and distributing remaining assets.
Probate Court
A court that supervises the probate process, including estate administration and validation of wills. It also oversees intestate estates when no will is present.
Intestate Estate
An estate where the decedent died without a will. The court usually appoints a close family member, such as a spouse or adult child, to administer the estate.
Duties of a Personal Representative
- Identify the estate’s assets and debts.
- Pay debts and taxes owed by the decedent or the estate.
- Distribute remaining assets to heirs or devisees based on the will or intestate succession laws.
Solvent Estate
An estate where the assets exceed the liabilities, meaning there is enough value in the estate to pay off all debts and still have assets to distribute to heirs.
Insolvent Estate
An estate where the liabilities exceed the assets, meaning there are not enough assets to cover all debts. Probate laws determine the order in which creditors are paid in such cases.
Priority of Claims
Probate laws categorize claims against an estate into three priority levels:
- Preferred claims (e.g., funeral and estate administration expenses).
- Secured claims (e.g., mortgages, loans with collateral).
- Unsecured claims (e.g., credit card bills, utility bills).
Secured Claims
Debts backed by collateral, such as a mortgage or a car loan. If the debtor fails to pay, the creditor has the right to seize the asset used as collateral.
Unsecured Claims
Debts that are not backed by collateral, such as credit card bills or utility payments. These claims have the lowest priority when an estate’s debts are paid.
Preferred Claims
Debts that are given priority in payment, including funeral expenses and estate administration costs. Funeral directors must file a claim if the funeral bill is unpaid.
Estate Asset Distribution
The process of distributing the remaining assets of an estate after debts and taxes have been paid. This can be done formally through probate court or informally through agreements among heirs.
What is a Power of Attorney (POA)?
A legal document that allows a Principal to delegate authority to an Agent to make legal, financial, or property decisions on their behalf.
What happens to a Power of Attorney after the Principal dies?
The authority granted by the POA ends once the Principal dies
What is a General Power of Attorney?
A POA that grants broad powers to the Agent, but it ends if the Principal becomes incapacitated or disabled.
What is a Springing Power of Attorney?
A POA that only becomes effective upon a specific event, such as the Principal becoming incapacitated.
What is a Durable Power of Attorney?
A POA that remains in effect even if the Principal becomes incapacitated or disabled.
What are some alternative names for a Power of Attorney?
What are some alternative names for a Power of Attorney?
What is a Living Will?
A legal directive that outlines a person’s wishes regarding life-sustaining treatment if they are terminally ill or in an irreversible condition.
What decisions might be included in a Living Will?
Refusing treatments like cardiac resuscitation, mechanical respiration, and tube feeding, but requesting maximum pain relief.
What is a Health Care Proxy?
A document that allows a person to appoint someone to make healthcare decisions on their behalf if they become incapacitated.
What is another term for a Health Care Proxy?
Durable Medical Power of Attorney or Appointment of a Health Care Agent.
When does a Health Care Proxy become active?
It becomes active when the Principal is incapacitated and unable to communicate their healthcare preferences.
