Comprehensive Volume, 18th Edition

Chapter 54: Decedents’ Estates and Trusts

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Definitions

A will is a writing that provides for disposition of property to take effect upon death.

A man who makes a will is called a testator; a woman, a testatrix.

The person to whom property is left by will is a beneficiary.

A legacy is a gift of personal property by will; a gift of real property by will is a devise.

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Requirements for Valid WillA testator must have testamentary capacity to make a will and must manifest some intention that the will is to be effective only upon death. The will must be signed by the testator and be witnessed. In special circumstances, a will may be unwitnessed if it is completely handwritten and signed by the testator.A will may be modified by a codicil or revoked either by the act of the testator or by operation of law.

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Will TerminologyTESTATOR/TESTATRIX —

maker of the will

LEGATEE — person to whom personal property is left

DEVISEE — person to whom real property is left

WILL — Document used to transfer property at death

CODICIL —Addition to will

HOLOGRAPHIC WILL — Handwritten will

LIVING WILL — Document that covers wishes regarding life-sustaining medical treatment

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Types of Wills

A holographic will is an unwitnessed will written entirely in the handwriting of the testator.

A self-proved will may be admitted to probate without the testimony of subscribing witnesses.

A living will allows a person to make wishes known regarding life-sustaining medical treatment.

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Living WillINSTRUCTIONS:

This is an important legaldocument. It sets forth yourdirections regarding medicaltreatment. You have the right torefuse treatment you do not want. You may make changesin any of these directions, or add to them, to conform themto your personal wishes.

I, John Jones , being of sound mind, make this statement as a directive to be followed if I become permanently unable to participate in decisions regarding my medical care. These instructions reflect my firm and settled commitment to decline medical treatment under the circumstances indicated below:

I direct my attending physician to withhold or withdraw treatment that serves only to prolong the process of my dying, if I should be in an incurable or irreversible mental or physical condition with no reasonable expectation of recovery.

These instructions apply if I am a) in a terminal condition; b) permanently unconscious or c) if I am conscious but have irreversible brain damage and will never regain the ability to make decisions and express my wishes.

I direct that treatment be limited to measures to keep me comfortable and to relieve pain, including any pain that might occur by withholding or withdrawing treatment.

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Living Will (cont.)While I understand that I am not legally required to be specific about future treatments, if I am in the condition(s) described above I feel especially strongly about the following forms of treatment:

I do not want cardiac resuscitation.I do not want mechanical respiration.I do not want tube feeding.I do not want antibiotics.I do want maximum pain relief.Other directions (insert personal instructions): NONE .

These directions express my legal right to refuse treatment, under the law of [name of state]. I intend my instructions to be carried out, unless I have rescinded them in a new writing or by clearly indicating that I have changed my mind.

Signed: John Jones .

Witness: Earl Hummel .

Address: 7852 Bailey Avenue .

Buffalo, New York .

Witness: Ramona Valey .

Address: 8921 Clinton Street .

Buffalo, New York .

Sign and date here in thepresence of two adult witnesses,who should also sign.

Keep the signed original with yourpersonal papers at home. Give copiesof signed original to your doctor,family, lawyer and others who mightbe involved in your care.

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Processing a Will

Probate is the process by which a proper court official accepts a will.

Probate may be refused or set aside if the will is not the free expression of the testator.

The estate of the testator will be administered by the person appointed in the will (the executor) or, if there is no will, by a person appointed by the court (an administrator).

Creditors who have claims against the estate are required to give notice of their claims.

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Estate Terminology

EXECUTOR/EXECUTRIX —

Person named in a will to administer estate

ADMINISTRATOR/ADMINISTRATIX —

Person administering an intestate estate

PERSONAL REPRESENTATIVE —

Name for party administering any estate under the UPC

PROBATE —

Act of a court in declaring a will valid

WILL CONTEST —

Challenge to validity of a will

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Distribution of Property

In estates with a valid will, the last phase of administration of the estate is the distribution of property after payment of debts and taxes.

General legacies are bequests of money, whereas specific legacies or specific devises are gifts of identified personal or real property.

Residuary legacies are when the will states something like “everything else goes to Joe.”

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Other Issues

If a beneficiary named in the will has died before the testator and no alternate provision has been made for such beneficiary, antilapse statutes provide that the gift will go to the children or heirs of the beneficiary. If specifically bequeathed property is sold, destroyed or given away before the testator’s death, the beneficiary gets nothing in the place of the property.

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Intestate Distribution

If the decedent does not dispose of all property by will or does not have a will, the property will be distributed according to state intestacy statutes.

A surviving spouse may generally elect to take the statutory allocation instead of that provided in the will.

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Intestate Distribution

Other lineals: grandchildren, other direct descendants

Parents

Spouse andchildren (equal shares)

Collateral heirs:siblings, cousins, other descendants from a common ancestor (subject to exclusion of remote heirs in some states)

The state

When a person dies without a valid will, the estate goes to:

If there are none, then:

If there are none, then:

If there are none, then:

If there are none, then:

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Per Capita vs. Per Stirpes

There are two methods of determining percentages of an estate that an heir will receive:

Per Capita: each heir receives an equal share, no matter the relationship.

Per Stirpes: each family line receives an equal share and the members of each family line split that share evenly.

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Distribution Per Capita

D’s surviving children take equal

shares

C’s surviving children take equal parts of C’s share

Decedent (D)

A B C

1/3 of estate

1/3 of estate

1/3 of estate

Decedent (D)

A B C

1/4of estate

1/4of estate

X

Y Z

1/4of estate

1/4of estate

Per Capita: divided evenly among eligible recipients

Surviving heir

Heir; predeceased Decedent D

Non- heir

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Distribution Per Stirpes

C’s surviving children take equal parts of C’s share; C’s total share is equal to A’s and B’s.

Decedent (D)

A B C

1/3 of estate

1/3 of estate

XY Z

1/6 of estate

1/6 of estate

Per Stirpes: divided evenly among each family line of the nearest generation

Surviving heir

Heir; predeceased Decedent D

Non- heir

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Trusts

A trust is a legal device by which property is held by one person for the benefit of another.

The settlor creates the trust, and the person for whose benefit the trustee holds the property is the beneficiary.

Property held in trust is the trust fund, trust corpus, trust estate, or trust res.

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Creation of a TrustA trust is usually created by a writing called a trust agreement or deed of trust. No particular form or language is required. A trust is not created unless an active duty is placed on the trustee to manage the property in some manner. A trust comes to an end when its terms so provide or when it becomes impossible to attain the object of the trust.

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Title and Interest in Trusts

Legal title to trust property is given to the trustee, but equitable title is held by the beneficiary.

A beneficiary may transfer an interest in the trust except in the case of a spendthrift trust.

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Trust Principal/Income AllocationPrincipal Payable From Principal

Original Trust Property Loans (Principal)

Proceeds and Gains from Sale Litigation Expenses

Insurance Payments Permanent Improvements

New Property Purchased with Principal Costs of Purchase

Stock Dividends

Stock Splits

Income Payable From Income

Rent Loans (Interest)

Interest Taxes

Cash Dividends Insurance Premiums

Royalties Repairs

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Trustee Duties

The trustee can exercise only those powers that are given by law or the trust instrument.

The trustee must administer the trust and carry out the trust in a proper manner.

A trustee’s acceptance of duties is presumed.