Wills, Trusts, & Estates
What are the two types of advance directives?
1. Living will (also referred to as healthcare directive, healthcare declaration, medical directive, directive to physician) 2. Medical power of attorney (also referred to as healthcare power of attorney, healthcare proxy, appointment of healthcare agent, durable power of attorney for healthcare, special power of attorney for healthcare)
Charitable remainder annuity trust
A Charitable Remainder Annuity Trust is when the settlor places property in the trust, which must pay a fixed amount, a sum certain, of income at least annually to the noncharitable beneficiary for life; after the beneficiary dies, the trust property passes to the qualified charity. Does not allow additional contributions.
Totten trust
A bank deposit of a person's money in the name of the account holder as trustee for another person.
When is a bond generally required/not required?
A bond is generally required if the testator requests it in the will, unless the court finds it unnecessary. A bond is not (in most states) required if the testator states in the will that the personal representative may serve without bond.
Bond (surety bond)
A certificate in which a surety (an individual or insurance company) promises to pay up to the amount of the bond to the probate court if the personal representative fails to faithfully perform the duties of administration of the estate.
Valid but undischarged claim
A claim by a creditor of the estate that was not paid during the distribution of assets.
Apportionment clause
A clause in a will that allocates the tax burden among the residuary estate and the beneficiaries of the will.
"In terrorem" clause
A clause in a will that if a beneficiary of the will objects to probate or challenges the will's distributions, that contestant forfeits all benefits of the will.
Assisted living facility
A community residential living arrangement that provides individual personal care and health services for people who need help with activities of daily living.
Holographic will
A completely handwritten, signed, and usually dated will that often requires no witnesses.
What is the distinction between a condition precedent and a condition subsequent?
A condition precedent is one in which a specified event must occur before the interest vests in the named devisee. A condition subsequent is one in which an estate that is already vested in a named devisee will not continue to be vested in that devisee unless a specified event occurs, and if it does occur, the devisee will be divested of the estate. Courts favor conditions subsequent.
Life insurance
A contract by which the insurance company promises to pay the policyholder or designated beneficiary a certain sum of money if policyholder sustains a specific loss, such as death or total disability, depending on the contract. Can be term, ordinary (whole or straight), or universal.
Postnuptial agreement
A contract made by spouses after marriage where by the property rights of either or both spouses are determined.
Antenuptial (premarital) agreement
A contract made by the parties before their marriage or in a contemplation of that marriage whereby the property rights of either or both of the prospective parties are determined.
Statement of informal probate
A court document that accepts an application for informal proceedings.
Decree of distribution
A court order recognizing that all allowed claims and expenses of an estate have been paid and that all heirs are named and the share of the decedent's property to which they are entitled is listed.
Administrator/administratrix de bonis non
A court-appointed PR who replaces a previous PR who has begun but failed to complete the administration of a decedent's estate for any reason, including death.
Applicable credit amount (unified credit)
A credit against the federal unified transfer tax on gifts (prior to death) and estates (after death).
Claimant
A creditor who files a claim against the decedent's estate.
Small estate
A decedent's estate in which assets are w/in a certain limited monetary amount and/or consist entirely of exempt property, homestead allowance or exemption, family allowances, and where the estate debts are limited to funeral and burial expenses, and hospital and medical expenses of the decedent's last illness.
Inventory
A detailed list of property and other assets containing a description or designation of each specific item and its value at the time of the decedent's death.
Per stirpes distribution
A distribution of property that depends on the relationship to the intestate of those entitled to the estate. Distribution by the representation.
Letter of instruction
A document that specifies the testator's instructions for organ donation and funeral and burial plans. It can also be an all-inclusive checklist of various personal and estate information to help the family and personal representative locate and identify property and documents necessary to administer the estate.
Living will
A document, separate from a will, that expresses a person's wish to be allowed to die a natural death and not be kept alive by artificial means.
Fiduciary duty
A duty or responsibility required of a fiduciary to act solely for another's benefit that arises out of a position of loyalty and trust.
Nonforfeiture benefit
A feature that returns a portion of the premiums if the insured cancels the insurance policy or allows it to lapse.
Medicare
A federal program that provides hospital and medical insurance for people age 65 and older, certain disabled persons under 65 who qualify under SS, & people w/ permanent kidney failure treated w/ dialysis or a transplant.
Generation-skipping transfer tax
A federal tax on the transfer of property when its value exceeds the lifetime exemption to a person two or more generation below the generation of the transferrer (donor or decedent), e.g., a grandparent who transfers property to a grandchild, thereby skipping a child.
Conservator
A fiduciary; an individual or trust institution appointed by a court to care for an manage property of an incompetent person.
Administrator/administratrix cum testamento annexo
A figure appointed by the court when 1) the maker of the will does not name an executor or 2) the maker of the will names an executor but the latter cannot serve because of a deficiency in qualifications or competency.
Statutory will
A fill-in-the-blank will that is created and authorized by the statute in a few states.
Annuity
A fixed sum to be paid at regular intervals, such as annually, for either a certain or indefinite period as for a stated number of years or for life.
Tenancy by the entirety
A form of joint tenancy available only to a husband and wife; it also has the right of survivorship.
Legal title
A form of ownership giving the trustee the right to control and manage the property for another's benefit.
Medicaid
A form of public assistance, sponsored & funded jointly by federal and state governments, which provides medical aid for people whose income + assets fall below a certain level.
Life estate
A freehold estate in which a person, called the life tenant, holds an interest in real property during his own or someone else's lifetime.
Remainder
A future estate in real property that takes effect on the termination of a prior estate created by the same instrument at the same time.
What is the difference between a general administrator versus a special administrator?
A general administrator is selected and appointed by the probate court to administer the entire estate of an intestate. A special administrator is appointed temporarily by a probate court to handle certain immediate needs of an estate until a general administrator or executor can be appointed. This person usually handles Summary Proceedings when the amount of the decedent's property qualifies as a "small estate" in some states.
Direct skip
A generation-skipping transfer of an interest in property to a skip person; a direct skip is subject to the federal generation-skipping transfer tax and ale the federal gift or estate tax.
General legacy
A gift of a fixed amount of money from the general assets of the estate.
Specific legacy or bequest
A gift of a particular item or class of a personal property in a will.
Residuary legacy, residuary devise
A gift of all the testator's personal property not otherwise effectively disposed of by a will; a gift of all the real property not disposed of.
Specific devise
A gift of real property in a will. Under the UPC, a gift of real or personal property in a will.
Demonstrative legacy
A gift or bequest of a specific monetary amount to be paid from the sale of a particular item of property or from some identifiable fund.
Medical power of attorney
A legal document granting authority to another person to make healthcare decisions for a patient, should the patient lose the ability to make decisions for him- or her- self. If possible, it is best to have both a living will and a medical power of attorney.
Advance healthcare directive
A legal document intended to ensure that healthcare providers honor a patient's decisions regarding treatment, even when he or she is no longer able to communicate those decisions.
Letter of instructions
A letter to the personal representative and family; explains where the will and important assets are located, lists current market values of assets or recommends appraisers, makes management suggestions and investment recommendations to personal representative. May also be used to identify digital assets.
Why is a lifetime gifting program beneficial for tax planning purposes?
A lifetime gifting program lowers the size of the estate and thus lowers the amount of estate taxes. Gifting estate assets during lifetime reduces the amount of assets which will be included in the decedent's estate after death. It is not advantageous for a donee to receive the donor's basis in property, since a future sale might result in a capital gain.
Final account
A list made by an executor or administrator of an estate that includes all estate assets that he/she has collected as well as all receipts and disbursements.
Testator/testatrix
A man or woman who makes and/or dies with a valid will.
Appraisal
A market-based valuation of a decedent's real or personal property by a recognized expert.
Per capita distribution
A method of dividing an intestate estate. If a member of the identified group predeceases the decedent, then his or her share would pass to the other members of the group rather than to his descendants.
Per capita by representation
A method of dividing an intestate estate. If the members of the identified group are not of the same generation, then the younger generation will only be entitled to the that portion of the estate that the older generation would have received had they survived.
Ward
A minor or incompetent person placed under the care and supervision of a guardian by the probate court.
How might a paralegal assist with informal probate?
A paralegal might: gather information necessary to complete forms, prepare and file forms, and communicate with the PR/registrar to ensure that procedure is properly executed.
Property guardian
A party appointed by the testator who manages property left to minor or incompetent children, otherwise the court steps in. They should be empowered to hold, accumulate, and manage the funds and property under a trust for the duration of their minority or incapacity.
Personal guardian
A party named in the will to properly care for the testator's minor or incompetent children if the other parent is deceased or unable to care for them; otherwise court must determine custody and/or guardianship of the person.
Totten trust
A payable-on-death savings account in a bank in which money is deposited in the depositor's name as trustee for another person named as beneficiary.
Remainderman
A person entitled to the future fee simple estate after a particular smaller estate, e.g., a life estate, has expired.
Trustee
A person of trust who holds and manages property for the benefit of one or more beneficiaries.
Secondary (contingent) beneficiary
A person selected by the policyholder as a successor to the benefits of a life insurance policy when the proceeds of the policy are not paid to the primary beneficiary.
Straw man
A person used to create a joint tenancy of real property between the existing owner of the property and one or more other persons.
Settlor
A person who creates a trust.
Settlor
A person who creates a trust; also called donor, grantor, creator, or trustor.
Primary beneficiary
A person who has a superior claim over all others to the benefits of a life insurance contract.
Beneficiary
A person who has the right to receive the benefits of the property of a trust.
Interested witness
A person who is a beneficiary and a witness of the same will.
Personal representative
A person who is appointed by the probate court to manage the estate of the decedents and either distribute the estate assets accordingly.
Beneficiary
A person who is entitled to receive property under a will or to whom the decedent's property is given or distributed.
Competent witness
A person who is legally capable and suitable to act as a witnesses to a will.
Legatee
A person who receives a gift of personal property under a will.
Devisee
A person who receives a gift of real property under a will as defined by the UPC.
Fiduciary
A person, such as a personal representative, guardian, conservator, or trustee, who is appointed to serve in a position of trust and confidence and controls and manages property exclusively for the benefit of others. By law the fiduciary's conduct is held to the highest ethical standard.
What are the requirements to be a personal representative?
A personal representative must be: able to perform all estate administration tasks, capable of engaging in business transactions, intelligent, honest, and loyal. PRs cannot be minors, incompetent persons, felons, or anyone w/a conflict of interest.
What is the role of a personal representative?
A personal representative's role is to: probate the will or petition for estate administration if no will exists, protect/manage decedent's probate estate, publish notice to creditors, pay taxes & claims, distribute remaining assets to the beneficiaries, refrain from acts of self-dealing, don't delegate responsibilities.
Disclaimer
A petition filed with the court by a beneficiary who wishes to surrender any interest in a will.
Power of appointment
A power to dispose of property not owned by the holder of the power.
What powers does a probate court have?
A probate court may: establish the validity of a will, appoint the PR, verify the statutory rights of a spouse and children, supervise guardianship of minors or incompetent persons, supervise PR's financial transactions WRT settling estate, and supervise other related matters.
"Spending down"
A procedure that requires an individual to spend enough income and resources to qualify for Medicaid eligibility.
Trust
A property arrangement in which real or personal property is transferred from the settlor to one or more trustees who hold legal title to the property for the benefit of one or more beneficiaries who hold equitable title.
Waiver of premium payment
A provision in a long-term care insurance policy that allows the insured to stop paying premiums once benefits are received.
What is the difference between a public administrator versus an ancillary administrator?
A public administrator is a public official appointed by the court to administer the property of an intestate who has left no kindred entitled to apply for appointment and Letters of Administration. An ancillary administrator is appointed by the probate court to oversee the distribution of that part of a decedent's estate located in a jurisdiction different from the one of the main administration, which is the decedent's domicile state at the time of death.
Public administrator
A public official appointed by the court to administer the property of an intestate who has left no kindred entitled to apply for appointment and Letters of Administration.
Nursing home
A residential institution that provides care and services for the elderly or infirm.
What is the difference between a resulting trust and a constructive trust?
A resulting trust and a constructive trust are both implied trusts, but they occur in different ways. A resulting trust is created because of inferred or presumed intent of a property owner. It is created by the equity court to carry out the true intent of the owner where the intent is adequately expressed and title is held by someone other than the person intended. A constructive trust is imposed by courts of equity as a means of accomplishing justice and preventing unjust enrichment. A constructive trust is not based on either actual or presumed intent of the parties.
Purchase-money resulting trust
A resulting trust in which property is purchased and paid for by one person, at whose direction the seller transfers possession and title to another person.
What are some elements of a revocable living trust?
A revocable living trust: has the same conditions apply as with trusts in general, can be an advantage over a will & can be considered a will substitute since it avoids probate, reduces costs of estate administration, avoids publicity, has no court supervision, allows tax savings, and allows the settlor to manage or dictate assets and distributions after death.
Trust
A right of property, real or personal, held by one person (trustee) for the benefit of another (beneficiary).
Equitable title (trust)
A right of the party who holds the equitable title or beneficial interest to the benefits of the trust.
Undivided interest
A right to an undivided portion of property that is owned by one or two or more joint tenants or tenants in common before the property is divided (partitioned).
Chose in action
A right to bring a civil lawsuit to recover money damages or possession of personal property.
Condition precedent
A situation where a specified event must occur before the interest vests in the named devisee. May fail if it is regarded as socially unacceptable.
Condition subsequent
A situation where an estate that is already vested in a named devisee will not continue unless a specified event occurs. Usually courts favor this one.
What is a spendthrift trust, and why would someone create one?
A spendthrift trust is a trust created to provide a fund for the maintenance of a beneficiary while safeguarding the fund against the beneficiary's or spendthrift's own extravagance or inexperience in spending money. The settlor creates this type of trust to prevent a beneficiary from assigning to anyone the rights to receive trust income or principal, to prevent creditors from reaching the trust benefits by obtaining a court order, to protect the beneficiary who cannot or will not handle money wisely.
What is a sprinkling trust, and why would someone create one?
A sprinkling trust gives the trustee the authority and power to accumulate or distribute the income or the principal, or both among the trust beneficiaries in varying amounts. This gives the trustee the opportunity to change distributions to meet the needs of the beneficiaries that might change over time. It also gives some protection from creditors since the trustee alone decides how much to give each beneficiary. Such trusts also may help reduce estate taxes.
Family allowance
A statute that allows the court to award to the surviving spouse and/or minor children a monthly cash allowance for their maintenance and support.
Anti-lapse statute
A statute that prevents a lapse (termination) of a clause in a will that would otherwise occur if the beneficiary who was to receive property under the clause dies before the testator.
Homestead exemption
A statute that protects a family from eviction from their home by creditors.
Homestead allowance
A statute that provides a modest cash award for the benefit of a surviving spouse or minor children. It is a priority payment to them and is not subject to creditors' claims.
Lucid interval
A temporary restoration to sanity during which an incompetent person has sufficient intelligence and judgement to make a valid will.
Garnishment
A three-party statutory proceeding in which a judgment creditor may demand that someone who owes money to or possesses property of a judgment debtor pay the money or transfer the property to the creditor to satisfy the creditors claim against the debtor.
How is a "tickler system" used for an estate administration?
A tickler system lists chronologically all the important steps and dates in the stages of the administration of the estate.
Generation-skipping transfer
A transfer of assets to a person two or more generations below the transferor, e.g. from a grandparent to a grandchild.
In what ways can a trust be created?
A trust can be created orally, if personal property and in accord with the Statute of Frauds, or in writing by a testamentary trust in a will; a trust agreement in writing between the settlor and trustee that creates the trust and is signed by them; or by a declaration of trust, which is a document that creates a trust in which the settlor is also the trustee.
How might a trust be terminated?
A trust can be terminated: through completion of the trust's purpose, through evocation by the settlor, through merger of all interests (legal and equitable) in the same person, or upon request of the beneficiary when there is no express purpose that requires continuation of the trust.
Inter vivos or living trust
A trust created by a maker (settlor) during the maker's lifetime. It becomes operational immediately after the trust is created.
Spendthrift trust
A trust created for beneficiaries who are financially irresponsible.
Testamentary trust
A trust created in a will. It becomes operational only after death.
Public (charitable) trust
A trust established for the social benefit either of the public at large or the community.
Testamentary trust clause
A trust is used to transfer ownership to another without giving the recipient full power over the property.
What are the essential elements of a trust?
A trust must have: a settlor who creates the trust, one or more trustees who administer and manage the trust, one or more beneficiaries who receive the benefits of the trust and who enforce the trust, and real/personal property that must be transferred to the trust.
Excessive endowment trust
A trust that is established when the value of property exceeds the amount needed for the purpose of a private express trust.
Generation-skipping transfer trust
A trust that partially avoids federal gift and estate taxes on transfers of large sums of money or other valuable assets established to transfer these assets to a beneficiary two or more generations below the transferor.
Charitable remainder unitrust
A trust where cash or property is placed in the trust, paying a distribution of a fixed percentage of not less than 5 percent of the fair market value of the trust property, determined annually, to a noncharitable income beneficiary for life. Can be additional contributions made to the trust property.
Irrevocable trust
A trust which cannot be changed or the property returned after it has been created and where terms may be changed during the settlor's life, but the trust continues.
Transfer-on-death deed (beneficiary deed)
A type of deed, properly executed and recorded, that allows the transfer of real property to a designated beneficiary without probate. The transfer does not take effect until the death of the owner.
QTIP trust
A type of trust set up when the settlor wants the surviving spouse to have all the income from the trust for life but wants the principal of the trust to pass to someone other than the surviving spouse.
Uniform Probate Code (UPC)
A uniform law available for adoption by the states to modernize and improve the efficiency of the administration of a decedent's estate.
What are the elements required for a testator's signature to be valid?
A valid testator's signature requires a date, and in most states 2+ people acting as attesting witnesses.
What is the court's position on a trust that has all its required elements but lacks a trustee? Explain.
A valid trust will not fail for want of a trustee or successor trustee if the trust is otherwise valid. Usually the court will preserve the trust and appoint a trustee. The trust will fail only if it can be shown that the settlor intended that only the named person and no one else could be the trustee; in this case the court will not name a successor trustee.
What are the statutory requirements for a will?
A valid will requires legal capacity (age of majority) and testamentary capacity (the person is mentally unimpaired).
What can a will accomplish?
A will can: establish testamentary trust, appoint guardians, appoint an executor, indicate how an estate should be distributed, prevent will contests through a no-contest clause, intentionally disinherit children in all states except Louisiana, and transfer property interests to partners.
Joint will
A will for spouses that consists of a single document signed by them as their will.
What does a will need in order to be properly executed?
A will must conform to the laws of the state in which it was made, it must be written, signed and dated by the maker, and attested and signed by two or three witnesses.
Pour-over will
A will provision in which the testator directs the residue of the estate to go to an existing living trust.
Exordium clause
A will's introduction. Its purpose is to declare to the public the testator's identity, that the testator has the intent and capacity to create a will, that the document is the testator's last will, and the location of the testator's principal residence. Declares the intention that the provisions in the document be followed after death.
Deed
A writing signed by the grantor whereby title to real property is transferred or conveyed to the grantee.
Codicil
A written amendment to the will that changes but does not invalidate it.
Trust instrument
A written document that creates a trust; establishes the terms of the trust; establishes the rights, duties, and obligations of the trustee; and names the beneficiary.
Durable power of attorney for healthcare
A written document that gives an agent, as a substitute for the principal, the power and authority to make all decisions relating to the performance of medical and health care treatment.
Deposition
A written statement signed under oath by a witness that may serve to validate a will in place of testimony in open court.
Self-proving affidavit clause
Accomplished by an acknowledgment of the testator and with affidavits of the witnesses to the will, made before and signed in front of a notary public. "Enough" of a will to be admitted to probate but still must meet formal will requirements.
"Types" of children
Adopted, nonmarital (born to parents who aren't married), pre-termitted/omitted (omitted in a parent's will), posthumous (child born after the death of their father).
Issue
All persons who have descended from a common ancestor.
Estate
All property owned by a person while alive or at the time of death. Also called gross estate, probate estate, probate assets, or probate property.
Community property
All property, other than property received by gift, will, or inheritance, acquired by either spouse during marriage is considered to belong to both spouses equally in the nine community property states and Alaska if community property is elected.
Residuary clause
Allows the testator to transfer the remaining property that has not been specifically given in the will.
Does estate planning need to begin only in the later stages of someone's life? Explain your answer.
Although it becomes more compelling later in life, estate planning should begin when a client begins to accumulate assets. For example, a new parent may want to select who will become the guardian for the minor in the event that one or both parents should become incapacitated or die.
Probate court clerk
An administrative assistant to the court and administers oaths and authenticates and certifies copies of instruments, documents, and records of the court. Cannot give legal advice.
Collection by affidavit
An affidavit is procedure to collect and transfer personal property to a beneficiary, devisee, or heir; to collect debts owed the decedent; or to take possession of the decedent's property held by third parties. Eliminates the need for Personal Representative appointment, Probate Court supervision, and notice to creditors. Need Death Certificate.
Closing statement
An affidavit signed by the personal representative at the end of informal probate proceedings to close the estate and to be discharged.
Successor
An all-inclusive UPC term meaning any person, other than a creditor, who is entitled to real or personal property of a decedent either under the will or through intestate succession.
Commencement of informal probate
An applicant who seeks to be appointed personal representative submits a completed application for informal probate and informal appointment.
Estate plan
An arrangement of a person's estate using the laws of various disciplines, e.g., wills, trusts, taxes, insurance, and property, to gain maximum financial benefit of all the laws for the disposition of a person's assets during life and after death.
Incidents of ownership
An element or right of ownership or degree of control over a life insurance policy.
Cy-pres doctrine
An equity court may order a gift intended for a charity that is now nonexistent to be given to another charity whose purpose is as near as possible to the purpose of the original charity named by the settlor.
Leasehold estate
An estate in real property held under a lease.
Freehold estate
An estate in real property of uncertain duration. Examples include fee simple and life estates.
Fee simple estate
An estate in real property that is the largest, best, and most extensive estate possible. Also known as a fee simple absolute, an estate in fee, or simply a fee.
Por autre vie
An estate lasting for the life of a person other than the life tenant.
What are the elements that make a "good" estate plan?
An estate plan should first meet meet all the individual's objectives and second, provide the following: a comfortable retirement income, financial protection for the family, proper custodial care if incompetency or any serious physical or other mental health problems occur, a minimum of taxes and expenses throughout the implementation of the plan, and expedient/efficient/harmonious distribution of the estate according to the individual's wishes after death.
Bypass trust
An estate planning device whereby a deceased spouse's estate passes to a trust as a life estate for the surviving spouse rather than entirely to the surviving spouse, thereby reducing the likelihood that the surviving spouse's estate will be subject to federal estate tax.
What is the difference between an express trust and an implied trust?
An express trust is created in explicit terms for an express purpose; an implied trust is treated by operation of law based on implied intent.
How do the meanings of the terms heir and devisee differ between orthodox and UPC terminology?
An heir in orthodox terminology is a person entitled by statute to receive real property of an intestate. According to the UPC, an heir is a person entitled by statute to receive real and/or personal property of an intestate. According to orthodox terminology a devisee is a gift of real property by will. The UPC uses the term devisee for all gifts by will, including gifts of money, personal property, and real property.
Federal employer identification number
An identification of the fiduciary responsible for preparing the fiduciary income tax return and for paying any tax due.
Resulting trust (implied trust)
An implied trust created by operation of law from circumstances implied from the intentions of the parties. Can be a remedy to litigation.
Skip person
An individual (such as a grandchild) who receives the property in a generation-skipping transfer and is two or more generations below the generation of the transferor.
Using informal probate, how is an estate administration closed?
An informally-appointed PR may close the estate informally and be discharged by signing a sworn closing statement to the effect that they believe the estate's assets have been distributed correctly and its business transacted. If no proceedings involving the personal representative are pending in the court one year after the closing statement is filed, the personal representative's authority is terminated.
Constructive trust (implied trust)
An involuntary trust created by operation of law to recover property from a person who obtained possession or legal rights illegally or improperly.
Probate registrar
An officer of the probate court who keeps records and at times acts on behalf and in place of the court. Can answer questions about forms and procedures.
Inflation protection
An option that provides for increases in benefit amounts to help pay for expected future increases in the costs of long-term care services.
Nuncupative will
An oral will.
Surcharge
An overcharge beyond what is just and right, e.g., an amount the fiduciary is required by court order to make good because of negligence or other failure of duty.
Testament
Another name for a will.
Waste
Any act or omission that does permanent damage to real property or unreasonably changes it character or value.
Residue
Any additional property that may come into the estate after the will has been executed or after the testator's death. Generally, the bulk of an estate falls within this.
Taxable distribution
Any distribution of income or principal from a trust to a skip person that is not a taxable termination or direct skip.
Demandant
Any person who has a financial or property interest in a decedent's estate and who files with the court a demand for notice of any order or filing pertaining to the estate.
Separate property
Any property acquired by a spouse as a gift after marriage, acquired prior to marriage, or acquired through inheritance after marriage.
Community property
Any property acquired by the spouses in the course of their marriage. The property is divided equally between them if they divorce, or in the case of death of one of the partners.
Taxable termination
Any termination of an interest in property held in trust.
Property
Anything subject to ownership; classified as real (land, buildings, things permanently attached to them) or personal (stuff you can move and usually carry with you).
What are things that you, as a paralegal, would list as a client's asset? What about as a client's liability?
Assets: real property, tangible/intangible personal property, insurance policies, employee benefits (ex. pension plans, SS or veteran's benefits), business interests. Liabilities: debts owed such as mortgages and payments owed on contracts for deed.
Dower
At common law, the right of the surviving wife to the life estate in one-third of all real property her husband owned during the marriage.
"Prima facie" case
At first sight; on the face of it. A fact presumed to be true unless disproved by evidence to the contrary.
What remedies are available to beneficiaries for a trustee who breaches trust?
Breach of trust may result in: removal, recovery of wrongfully taken assets, B suing T to compel the trustee to perform duties, or B suing T for breach of loyalty.
What role might checklists play in drafting a will?
Checklists ensure that accurate, complete, and requisite information is obtained. They're often used for family data, family advisers, assets, liabilities, life insurance policies, & locations of important documents.
Commingling
Combining community and separate property, e.g., into the same account or by using both to acquire a different item of property.
Letters of appointment
Conclusive proof and evidence that the person named therein is the duly appointed, qualified, and acting personal representative of the estate with the powers, rights, duties, and obligations conferred by law.
Probate
Court procedure by which a will is proved to be valid or invalid. Can be formal (court-supervised administration of decedent's estate) or informal (court proceeding w/limited or no court supervision).
Since informal probate procedures are not supervised by the court and do not require that notice be given, what rights and procedural steps are available to creditors?
Creditors can file a demand to be notified of the petitioner's application for informal probate or appointment. Once a demand is filed, the registrar notifies the personal representative to keep the demandant informed of proceedings related to the estate. If the demandant objects to any part of the informal proceedings, they can request formal or supervised administration when necessary. If the demandant isn't notified & suffers damages as a result, they may have a cause of action against the PR.
Does the cy-pres doctrine apply to all trusts? Explain.
Cy-pres doctrine only applies to public/charitable trusts. With private trusts, where the settlor intended the trust to be performed exactly as indicated, the trust fails when it is not possible to follow such direction. However, in the absence of clear intent by a settlor of a public trust, the law will not permit a public charitable trust to fail even though the beneficiary no longer exists or the original purpose has been accomplished or can no longer be achieved. Instead, the court will apply the cy-pres doctrine and direct the trust fund be held for another purpose that will be "as near as possible" to that intended by the settlor. The rationale behind the application of cy-pres is that the law tries to continue the operation of a charitable trust so as not to terminate public benefits.
Intestacy
Death without a valid will; property passes to heirs according to state laws called instate secession statutes.
Receivables
Debts established in the course of business that are currently due from others
Probate property
Decedent's property that is subject to estate administration by the personal representative.
What are the disadvantages of a living trust?
Disadvantages of a living trust: they are costly to create and the settlor must transfer assets to the trust and give up control of them during his or her life.
What is the difference between domicile and residence?
Domicile is the legal home; the fixed permanent place of dwelling. Residence is a temporary place of dwelling. DOMICILE determines venue.
Testacy versus intestacy
Dying with a valid will versus dying without one
Long-term care insurance
Enables the insured to pay expenses of long-term care, maintain and protect estate assets, and leave an inheritance to family. Pays fixed monetary benefit during the period in which the insured receives care at home or in a nursing home. Not subject to federal taxation.
When is estate administration NOT needed?
Estate administration isn't needed when: there's no property in registered form (EX: no real property deeds), there's no individually-owned property in possession of third parties, there's no creditor claims, the estate isn't a "small estate" consisting entirely of exempt property, the decedent's assets are nonprobate property.
Under what circumstances does estate equalization between spouses become important?
Estate equalization is important because it allows for maximum use of the marital deduction; however, if there is any possibility of the marriage being subsequently dissolved, there is an ethical question for the attorney who advised one spouse to make substantial gifts to the other spouse.
What are the objectives of estate planning?
Estate planning aims to 1) transfer assets at death consistent with decedent wishes and 2) transfer assets intact without losing much to estate and gift taxes.
What's something a couple can do to minimize estate costs and taxes?
Estate taxes and costs can be reduced by buying a life insurance policy w/in an irrevocable life insurance trust (ILIT). Revocable trusts are tax-neutral; estate property can't be declared as gifts. Over-qualifying the estate for a marital deduction would save estate taxes at the first spouse's death, but would be taxed in the surviving spouse's estate.
What is the difference between estate and inheritance taxes?
Estate taxes are levied on the privilege of transferring property at death and are levied on the estate itself, not on the successors. An inheritance tax is levied on the privilege of receiving property from a decedent at death. The federal government levies an estate tax. Seventeen states impose an inheritance tax on successors.
What ethical problems might arise for an attorney drafting a will?
Ethical problems may arise if: the att'y or their family are named a beneficiary of the will, the att'y is appointed in the will to be the personal representative, the att'y is named in the will as the testator's choice to assist the personal representative.
What are factors to consider when selecting a long-term care insurance policy?
Factors to consider: amount of maximum benefit, duration of coverage, types of coverage, policy cost, housing facilities and services provided, waiting period, inflation protection, preexisting condition limitation, nonforfeiture benefit, waiver of premium payment, third-party notification, and premium refund on death.
Lapse
Failure to distribute a gift in a will because the beneficiary or devisee dies before the testator.
Natural objects of the testator's bounty
Family members and other persons and institutions (charitable or religious organizations) for whom the testator has affection.
Give examples of situations that would call for formal probate.
Formal probate would be needed if: some beneficiaries are minors, someone intends to challenge the proceedings, beneficiaries in a testate case can't be located, tax law difficulties are involved.
Summary administration
Generally limited to small estates that have survivor, spouse, and minor children along w/ insufficient assets to pay creditors. The PR distributes estate assets according to the will or in order of priority set by an intestate statute and files a sworn closing statement w/ probate court. Used if the value of the entire estate does not surpass the amount payable for exempt property and etc.
Chattel
Generally, any item of personal property.
What is the proper way of creating a Totten trust, and can it be used to disinherit a surviving spouse? Explain.
Generally, money is deposited in a depositor's name as trustee for another person named as beneficiary. The requirements for the creation and distribution of Totten trusts vary from state to state. Whether this may be used to disinherit a surviving spouse may depend on each particular state's laws, but, generally, the money in a Totten trust is a nonprobate asset and as such not part of the depositor's estate and not reachable by a surviving spouse.
How are gifts made between spouses taxed before and after death? Explain gift splitting.
Gifts btwn spouses are not taxed either before or after death b/c they qualify for the unlimited marital deduction. Any person can give a gift of up to $ $14,000 per year tax-free to each donee, and if the donor's spouse joins in the gift, the exclusions of both spouses may be used, resulting in an exclusion of $28,000. This is called gift splitting.
In addition to direct transfers, what other forms might a gift take?
Gifts can take the form of direct transfers, forgiveness of a debt, foregone interest on an intra-family interest-free or below market loan, the assignment of the benefits of an insurance policy or the transfer of property to a trust. Assignment of income or property done only for tax purposes is not considered a gift.
What are the appropriate reasons or grounds for contesting a will?
Grounds for contesting a will: will wasn't properly executed, no notice of will probate given to heirs or creditors, will or testator's signature is forged, testator lacks testamentary capacity, will has been revoked, testator is induced by fraud to write or change the will, will contains material mistakes/contradictions/ambiguities, testator is forced by duress or persuaded by undue influence to sign the will.
Explain the guidelines you should follow when preparing a will.
Guidelines for preparing a will: avoid pre-printed will forms, use the same word-processing software & typeface, avoid ambiguous words, use simple language, place small estates in joint tenancy, sign will according to state statutes but don't sign copies, include a residuary clause, choose witnesses carefully, don't make additions after execution.
Collateral relatives (heirs)
Heirs who do not ascend or descends from each other but descend from the same ancestor. Sisters, aunts nephews, cousins.
What information might a paralegal need to get from a client, to assist their attorney?
Important information: names, addresses, marital status, family tree chart, assets and liabilities, name beneficiaries/fiduciaries/creditors, & of course client wishes.
What is the difference between an active versus passive trust?
In an active trust, the trustee actively manages the trust. In a passive trust, the trustee has no active duties.
What are some elements of an express trust?
In an private express trust: trustee and beneficiary are named, settlor intends to create a trust, and transfer of property is involved. A public express trust has the same elements, except that a social benefit or charitable purpose is set forth and there is an indefinite class of beneficiaries.
What function does a registrar or surrogate perform in an informal or common probate administration?
In informal probate administration a registrar or surrogate takes the place of the judge and has the power to do whatever the judge normally would do, e.g., appoint the personal representative and make findings of fact in relation to the will.
Publication
In law regarding wills, the formal declaration made by a testator at the time of signing a will that is his last will and testament.
Principal
In trust law, the capital or property of a trust, as opposed to the income, which is the product of the capital.
When is individual ownership appropriate?
Individual ownership is appropriate: if an owner has a small estate, if an owner wants to retain ownership but lets others enjoy and use the property, or if owner wants absolute control over the property.
Name three ways non-probate property differs from probate property.
Is real or personal property that is not part of the decedent's probate estate except for figuring the decedent's gross estate for federal and state death tax purposes. Not distributed according to the decedent's will or by intestate succession. Not subject to a spouse's claims.
What is the difference between jurisdiction and venue?
Jurisdiction is abstract, meaning the power or authority of a court to act; venue is concrete, meaning the physical place of a trial and is the territorial jurisdiction of a court within a particular county.
Power of attorney
Legal instrument where a principal designates another, the agent or attorney-in-fact, to have authority to make legal decisions for and otherwise act on behalf of the principal. May be limited or general.
How do Letters Testamentary and Letters of Administration differ?
Letters Testamentary are granted to an executor/executrix; Letters of Administration are granted to an administrator/administatrix.
Why is life insurance such an important planning device for an estate plan? What is the function of an irrevocable life insurance trust?
Life insurance is such an important planning device because it conserves the value of the estate. The irrevocable life insurance trust enables the settlor to direct the trustee to pass the proceeds to the trust's named beneficiaries and keeps the proceeds from being included in the settlor's taxable estate for federal estate tax purposes.
What are the requirements for a valid living will?
Living will requirements: signed by testator & two witnesses or signed by testator & notarized, no conflict of interests with witnesses, copies should be placed in testator's medical record file + given to family members and personal representative, a copy should be placed w/testator's will and notated in the letter of instructions.
Garnish
Make a claim against.
Who is prohibited from being a personal representative?
Minors, incompetent persons, convicted felons, and judges of a court are prohibited from being personal representatives.
Advancement
Money or property given by a parent to a child in anticipation of the share that child will inherit from the parent's estate and prior to the parent's death.
Must a person have contractual capacity to be a beneficiary of a trust? Explain.
No, beneficiaries do not need to have capacity to hold property or to make a contract, since the trustee has legal title to and control of the trust property. In fact, many trusts are created specifically because the beneficiary lacks legal or actual capacity to manage property without assistance. However, incompetents and minors generally require guardians to act as beneficiaries for them.
What are the three non-tax advantages of lifetime gifting?
Non-tax advantages of lifetime giving: watching the donee enjoy the gifted property, allowing the donor to witness how a donee utilizes the gifted asset, and making the donor feel good about being able to make a gift.
What is the difference between a property guardian and a conservator?
Often the terms are used interchangeably; however, a property guardian is appointed to hold and manage the property of a minor or incompetent person, whereas a conservator holds and manages the property of an incompetent person.
When do advance directives take effect?
Only when a patient is no longer able to make or communicate healthcare decisions for themselves. As long as a patient is still able to make and express decisions, the existence (or lack) of an advance directive is irrelevant. Regardless of the contents of any existing advance directive, healthcare providers must honor the direct instructions of a competent patient. Moreover, healthcare facilities must provide equal access to care, treatment, and services, regardless of the presence or lack of an advance directive.
Parol evidence
Oral testimony or written evidence.
Severalty (tenancy in severalty)
Ownership of property held by one person only.
Name and explain the different types of power of attorney.
P.O.A. may be: nondurable (starts when signed by the principal and lasts until a specified event occurs), durable (starts when signed by the principal and continues even if they become mentally incapacitated--lasts until death or revocation), or springing (tied to specified situations--when the anticipated event occurs, the authority of the attorney-in-fact to act is triggered and lasts until death/cancellation/occurrence of a stated event).
Right of survivorship
Passes of the decedent joint tenant's interest in property automatically to the surviving joint tenant(s) by operation of law without the need for probate.
How is a personal representative appointed?
Person seeking appointment files a Petition for Probate of Will or Petition to Prove a Will. An Order for Hearing the Petition to Prove a Will is obtained, Notice of Order for Hearing is published, and Affidavit of Publication is completed and filed w/ the court. Notice of Order for Hearing is mailed to all interested parties, including creditors, & Affidavit of Mailing Notice is filed. Notice of Rights is mailed to the spouse and minor children and Affidavit of Mailing is filed. Hearing to Prove a Will is held and, if necessary, subscribing witnesses testify. The petitioner, or someone w/ knowledge, testifies to facts of the will. If no objections, court issues an order admitting the will & approving the PR.
What are the four types of fiduciaries appointed in a will?
Personal representatives (act for beneficiaries or heirs of estates), trustees (act for beneficiaries of trusts), guardians (act for minors), conservators (act for incompetent persons).
How do potential adverse factors diminish the value of an estate? List at least three such factors.
Potential adverse factors diminish the value of an estate generally by increasing the amount and types of debts that the estate must pay. Such factors include: federal death (estate) tax, state death taxes, administrative expenses, forced liquidation, and loss of management.
What problems might possibly occur upon attempting to execute a will?
Potential problems: can't find a beneficiary/heir, beneficiary/heir challenges personal representative's authority, contests, someone challenges personal representative's payment to creditors or distribution to beneficiaries.
What are some pre-probate responsibilities of a personal representative?
Pre-probate responsibilities of personal representative: help find & review existing will, contact decedent's financial advisors, convene conference of family members, determine whether guardians/conservators are needed, notify witnesses of the testator's death, determine whether probate should be formal or informal.
When is a precatory trust declared valid?
Precatory words will usually invalidate a trust because the settlor's intent to create a trust is not clear. The early English used precatory words as a courteous means of creating duties enforceable by the courts. Today, both English and American courts hold that such words do not create a trust unless other sections of the instrument or extrinsic circumstances make the testator's intent clear.
Georgia Banking Affidavit of Surviving Relative
Presents current financial obligations of the decedent. If the decedent had no will and the only asset is money deposited in a bank or other financial institution, and the amount is less than $10,000, an heir-at-law may claim those assets by completing this form. Letters of Administration are not required.
Uniform Anatomical Gift Act
Prevents conflict with anatomical gifts by providing that the testator may legally determine in a will the disposition of all or any part of the body for organ transplant, medical research, or educational purposes.
What is the order of priority for persons who could qualify as a PR?
Priority for qualification as a PR: person named in the will, surviving spouse of the decedent who is a devisee of the decedent, other devisees of decedent, other heirs of decedent, any of decedent's creditors if no one else claims w/in 45 days of death.
Explain the difference between probate and nonprobate assets.
Probate property is owned by a decedent that can be passed by a will. It includes all real or personal property that the decedent owned individually as a single or sole owner, in severalty, or as co-owner with another person or persons as tenants in common. Nonprobate property is any real or personal property that is not part of the decedent's estate and cannot be distributed according to the decedent's will or be distributed according to intestate succession statutes if there is no will. It usually includes property that is held as co-owner with another person or persons as joint tenants.
Informal (common) probate
Proceedings that involve limited court supervision, if any, and are primarily used for smaller estates.
Formal (solemn) probate
Proceedings that require court supervision throughout the administration of the decedent's estate.
Inheritance
Property that descends (passes) to an heir when an ancestor dies intestate.
Quasi-community property
Property that is acquired in a common law state and then moved into a community property state or that is owned by spouses who have moved into a community property state.
Separate property
Property that the husband or wife owned prior to their marriage or acquired during marriage by gift, will, or inheritance.
Uniform Simultaneous Death Act
Provides where the inheritance depends on the priority of death, and there is no sufficient evidence that the decedents have died other than simultaneously--the property of each decedent shall be distributed as if he/she had survived the other.
What is QTIP property?
QTIP property is qualified terminable interest property, property that passes from the decedent spouse in which the surviving spouse has a qualified income interest for life. QTIP property qualifies for the estate and gift tax marital deduction when the QTIP property is a trust with a life interest to the surviving spouse and the remainder to the children or other beneficiaries, and when it is a legal life estate to the surviving spouse and the remainder to others.
What are some examples of non-probate property?
Real and personal property owned in joint tenancy, real and personal property transferred into an inter vivos trust, U.S. saving bonds payable on death to named beneficiary (not the estate).
What are some examples of probate property?
Real property owned in severalty or in tenancy in common life insurance proceeds payable to the estate, gain from the sale of a business, social security benefits.
List potential reasons for removing a trustee.
Reasons a trustee would be removed: lack of capacity, serious breach of trust, refusal to post bond when required, refusal to account for expenditures, crime of dishonesty, prolonged absence from the state, unreasonable failure to cooperate with any existing co-trustee, showing favoritism to one or more beneficiaries.
Which are some reasons to review and possibly adjust estate plans?
Reasons for changing an estate plan include: changes in estate tax law, change in size of estate, birth of children, changes in marital status, and changes in state of residency.
Descent and distribution
Refers to the distribution by intestate succession statutes.
What are some reasons why a registrar might deny informal probate?
Registrar may deny informal probate if: will is alleged copy of one that was lost or destroyed, will is a series of testamentary instruments, another person applied for probate earlier, another PR has already been appointed & hasn't dropped dead yet, there's a possibility that a later will exists.
What must be satisfied for a registrar to accept submitted forms for informal probate?
Registrar must trust that: applicant carried out UPC requirements, applicant affirmed as true all statements made in the application, applicant is an interested person, applicant has chosen proper venue for the will to be probated in, persons who demanded notice of proceedings have been notified, 120 hours have elapsed since decedent's death.
Collection by affidavit requirements
Requirements for collection by affidavit: value of the entire estate doesn't exceed the state's max limit, minimum # of days (30-45) have elapsed since decedent's death to allow creditors to present their claims, no application or petition for a personal representative is pending or granted in another state, claiming beneficiary or heir is legally entitled to inherit the decedent's estate.
What are some ethical issues and responsibilities for estate planners?
Responsibilities will include gathering information, maintaining records, and communicating by phone or letters to update and keep the client and planners informed. These responsibilities require you to neither divulge confidential information nor submit or propose unauthorized legal advice even in response to a specific request.
Ambulatory
Revocable and subject to change.
Operation of law
Rights pass automatically to a person by the application of the established rules of law, without the act, knowledge, or cooperation of the person.
Operation of law
Rights pass to a person by the application of the established rules of law without the act, knowledge, or cooperation of the person.
Who can receive Social Security benefits?
SS benefits are paid to retired workers (aged 62+) and their dependents; disabled workers who qualify for disability & their dependents; surviving dependents of deceased workers; surviving dependents of deceased disabled workers; and former spouses if married > 10 years.
Mutual (reciprocal) wills
Separate and identical wills made by spouses that contain reciprocal provisions and agree that neither spouse will change his or her will after the death of the first spouse.
Why is a letter of instructions preferred over a will for expressing burial wishes?
Several reasons: a will may not be found in time, some states have the surviving spouse or next of kin wishes supercede decedent instructions, conflicts often arise when testator wants cremation.
Give examples of trust restrictions that are "reasonable restraints" and do not violate public policy.
Some reasonable restrictions on trusts are: marriage to a particular person, marriage before reaching majority, marriage before reaching majority w/o the consent of the trustee or someone else, marriage to someone of a particular religious faith, marriage to someone whose faith differs from that of the beneficiary.
Fixture
Something so attached to land as to be deemed a part of it, e.g., real property that may have once been personal property but now is permanently attached to land or buildings.
Living will
States that if a person becomes incompetent with no reasonable expectation or hope for recovery, and because of the disability is unable to take part in decisions, the person can request that he or she not be kept alive by artificial life-support treatment.
Ambulatory
Subject to change and revocation anytime before death; e.g., a will is ambulatory.
Portability
Surviving spouse's right to carry over the unused portion of a predeceased spouse's estate or gift tax exemption and combine it with his or her own exemptions at death.
Form 4868
The Application for Automatic Extension of Time to File a United States Individual Income Tax Return.
Form 4768
The Application for Extension of Time to File a Return and/or Pay United States Estate Taxes.
Personal representative
The UPC term that refers to anyone empowered or authorized to administer the estate of the deceased, whether the deceased died testate or intestate.
Form 706
The United States Estate Tax Return.
Form 709
The United States Gift Tax Return.
Form 1040
The United States Individual Income Tax Return.
Disinheritance by will
The act by which a testator specifically excludes another, who would otherwise be the testator's legal heir, from receiving the estate.
Succession
The act of acquiring property of a decedent by will or by the operation of law when the person dies intestate.
Domiciliary administration
The administration of an estate in the state where the decedent was domiciled at the time of death.
Marshaling of assets
The arrangement or ranking of testamentary gifts unto a certain order to be used for the payment of debts.
Jurisdiction
The authority by which a particular court is empowered by statute to hear and decide a certain kind of case and to have its decision enforced.
In rem jurisdiction
The authority of the court over the decedent's property.
Restatement of the American Law of Trusts
The authority on trust law in most states.
Explain the effect the baby boomer generation will have on long-term care.
The baby boomer generation (those born between 1946 and 1964) will affect long-term care since they accounted for the largest percentage increase of any age group during the 1990-2000 decade. The first half of the 21st century is being called the "Era of the Seniors," and we will continue to have a dramatic increase in the number of elderly persons who will require special housing and long-term medical care.
Transferee
The beneficiary who receives the benefits of a generation- skipping transfer trust.
Transferor
The decedent or donor who creates a generation skipping transfer trust.
When preparing the federal estate tax return, how are the decedent's gross estate and taxable estate determined?
The decedent's gross estate includes all assets owned by the decedent at death and the value of any interest the decedent held in any property. It will also include lifetime gifts of property in which the decedent retained "incidents of ownership" and all taxable gifts made after December 31, 1976, which are given the technical name of adjusted taxable gifts. The taxable estate is determined by taking the gross estate and subtracting the various exemptions, deductions, and claims allowed by statute.
Exempt property
The decedent's personal property up to a specific dollar amount that is given to the surviving spouse and/or minor children and is exempt from creditors' claims.
Severance
The destruction of a joint tenancy by one of the joint tenants transferring while alive his interest in real property to another person by deed, thereby creating a tenancy in common with the new owner and the other remaining joint tenants(s).
Disposition
The distribution, transfer, or conveyance of property.
Partition
The division of real property held by joint tenants or tenants in common into separate portions so that the individuals may hold the property in severalty, i.e., in single ownership.
What happens to an estate if a will is declared invalid?
The estate is divided in accordance with laws of intestacy. If a will is invalid, the estate is distributed by the courts under the state's laws of intestacy. A will may be found invalid if its execution didn't follow the guidelines under state law, or was improperly witnessed or signed.
Homestead
The family home and adjoining land where the head of the family lives; it is the family's fixed place of residence.
Legal title (of a trust)
The form of ownership of trust property held by the trustee, giving the trustee the right to control and manage the property for another's benefit, i.e., the holder of the equitable title.
What are the four types of wills?
The four types of wills are: holographic (handwritten by maker), noncupative (oral), statutory, and joint/mutual (one document that is the will of two people who are usually spouses).
What are the incidents of ownership of a life insurance policy?
The incidents of ownership of a life insurance policy include the rights to: change the named beneficiary of the policy, cancel or surrender the policy, transfer or assign ownership of the policy to another person or to a trust, pledge the policy as collateral for a loan, and obtain a loan against the cash value of the policy from the insurer.
Ademption
The intentional act of the testator, while alive, to revoke, recall, or cancel a gift made through the will or deliver the gift or a substitute to the beneficiary.
Reversion or reversionary interest
The interest in real property that a grantor retains when a conveyance of the property by deed or by will transfers an estate smaller than what the grantor owns, e.g., when the grantor has a fee simple estate and conveys to the grantee a life estate. At some future time the real property reverts back to the grantor.
Citation
The legal form, used in some states, that is the court's order fixing a date, time, and place for hearing the petition to prove a will or for administration; the petitioner is required to give notice of the hearing to all interested persons.
Adoption
The legal process by statute that establishes a relationship of parent and child between persons who are not so related by nature.
Will
The legally enforceable written declaration of a person's intended distribution of property after death.
Domicile
The location (state) of a person's true and legal home.
Executor/executrix
The man or woman named in the will to carry out its provisions.
How does the use of the marital deduction save estate taxes?
The marital deduction saves estate taxes because it allows for an unlimited federal estate tax marital deduction for transfers between spouses.
Applicable exclusions amount
The maximum value of property that can be transferred to others without incurring any federal gift or estate tax because of the application of the applicable credit amount (unified credit).
Disposition
The parting with, transfer of, or conveyance of property.
Administrator/administratix
The party appointed by the probate court to administer the decedent's estate when there is no will.
Escheat
The passage of an intestate's property to the state when there are no surviving blood relatives or a spouse.
Life tenant
The person holding a life estate.
Personal representative
The person or corporate institution, such as a bank or trust department, appointed by the proper court to administer the estate of the decedent who died with or without a will.
Guardian
The person or institution named by the maker of a will or appointed by the court when there is no will to care for the person and/or property of a minor or a handicapped or incompetent person. Can be personal (over the person) or property guardian.
Grantee
The person to whom a conveyance or real or personal property is made.
Grantor
The person who makes a conveyance (transfer) of real or personal property to another.
Affiant
The person who makes, subscribes, and files an affidavit.
Special administrator/administratrix
The personal representative appointed temporarily by a probate court to handle certain immediate needs of an estate, such as managing a business in the place of the decedent, until a general administrator or executor can be appointed.
What is the alternate valuation election? Under what circumstances is it used?
The personal representative may value assets at date of death or six months after date of death. It is used to minimize either the positive or negative effects of the decedent's death on the value of property.
Estate administration
The process of appointing a personal representative to collect, preserve, manage, and inventory the decedent's estate.
Abatement
The process that determines the order in which gifts made by the testator in the will shall be applied to the payment of the decedent-testator's debts, taxes, and expenses.
In context of probate court, what is the purpose of a bond?
The purpose of a bond is to protect beneficiaries, heirs, creditors, and government tax collectors from losses due to improper, negligent, or fraudulent administration of the estate.
Trust property/corpus
The real or personal property of the trust that the trustee holds subject to the rights of one or more beneficiaries.
How do the functions of a registrar and a court clerk differ?
The registrar is an officer of the probate court and designated by the court to act on behalf and in place of the court in informal proceedings. The clerk is an administrative assistant to the judge and administers oaths and authenticates and certifies copies of instruments, documents, and records of the court. Neither the registrar nor the clerk can give legal advice.
What are the requirements for informal probate?
The registrar must possess the original will, the statutory time limit for probate must not have expired, and the will must be the kind that may be probated informally.
Degrees of kindred
The relationship between a decedent and his or her survivors that governs descent and distribution. A genealogy chart.
Long-term care partnership
The relationship, in certain states, that allows resident purchasers of a long-term care insurance policy to go on Medicaid when the policy benefits are exhausted without first having to deplete (spend down) their own assets to become eligible.
Residuary estate
The remaining assets (residue) of the decedent's estate after all debts have been paid and all other gifts in the will are distributed.
Standing
The requirement that only a person who stands to lose a pecuniary interest in a decedent's estate if a will is allowed may contest the will.
What are the statutory or formal requirements for executing a will?
The requirements for testamentary capacity are: that wills must be in writing, unless covered by the state statute allowing nuncupative wills; that the will must be signed by the testator; that some states require the will to be dated; that the will must be attested to and subscribed by the required number of witnesses, generally, either two or three witnesses.
Right of representation
The right of a child to receive the share of an intestate's property the child's deceased parent would have received if the parent were still living.
Equitable title
The right of a party who holds a beneficial interest in a trust to the benefits of the trust.
Right of election
The right of a surviving spouse to choose to take, under the decedent's state law, his or her statutory share in preference to the provision made in the deceased spouse's will.
Curtesy
The right of the surviving husband to a life estate in all of his wife's real property owned during the marriage, but only if the married couple had a child born alive.
Dividend
The share of profits or property to which the owners of a business are entitled.
Testamentary capacity
The sound mind requirement for a person to make a valid will.
Spouse's statutory, forced, or elective share
The spouse's statutory right to choose a share of the decedent spouse's estate instead of inheriting under the provisions of the decedent's will.
Long-term care
The support that disabled, frail, or chronically ill people need when they can no longer care for themselves. They may be cared for in their home, nursing homes, adult day care centers, or in assisted living facilities such as continuing care retirement communities.
Under what circumstances can tenancy by entirety be partitioned?
The tenancy by the entirety cannot be partitioned except with the consent of both parties or through divorce. A tenancy by the entirety cannot be severed by the act of a single spouse.
Elimination period
The time that people must wait from the date they are certified as chronically ill until the date on which benefit payments for covered services begin.
Surviving spouse
The traditional meaning/usage of wife or husband based on legal marriage and expanded in some states to include same-sex conjugal couples.
Sprinkling trust
The trustee has authority and discretion to accumulate or distribute income or principal, or both, among beneficiaries in varying amounts.
What to remember for an initial client interview?
Things to remember during a client interview: be positive/cooperative/professional in appearance and demeanor (no reaction), reassure clients of strict confidentiality & the importance of frank discussion of complete financial data, develop checklists and questionnaires and thoroughly review them with clients.
Briefly explain the Uniform Transfers to Minors Act.
This act provides a means of transferring any kind of property to a minor by creating a custodianship to manage the property for the benefit of the minor. It is created by registering the property transferred in the name of the custodian "as custodian for the minor under the UTMA." A gift under this act is irrevocable and the custodianship ends when the minor reaches age 21, or 18 in some states, at which time the property and any undisposed income must be given to the minor.
Testimonium clause
This clause contains a statement by the testator that it has been freely signed and that a request has been made of the proper number of witnesses to do the same.
"In and out" method
This method of settling estates is partly "in" the probate court formally, even though most of the administration takes place "out" of it informally. Allows flexibility for PR, who can request court supervision @ any time.
Can an attorney or paralegal draft a will for someone who lacks competency? Explain.
This question should illicit a discussion of soundness of mind at the time the testator is preparing and executing the will. The student should discuss such issues as the testator's capacity at the time of preparation and execution/drafting of the will. The issue of mental illness, senility, or delusions should be mentioned in the ideal answer. Basically, the student should conclude that if a testator lacks testamentary capacity at the time of preparing and executing the will, then the attorney and/or paralegal cannot prepare and draft the will.
What are three types of property ownership that avoid probate?
Three types of property ownership that avoid probate: assets jointly owned with rights of survivorship, assets transferring under a beneficiary designation, & assets owned w/in a trust prior to death.
What are three ways to revoke a will?
Three ways to revoke a will are: a deliberate physical act such as burning/tearing or consenting to have another person do the same, operation of law (marriage or divorce), or replacing it with a written document execute w/the same formalities required of a will.
How are personal representatives appointed (authorized to act)? In general, what are the powers granted to them?
To acquire the powers and authority of a personal representative, a person must be appointed by a court. The court approves and appoints the person named in the will unless the person is unqualified. Generally, the powers granted are to collect and preserve the estate assets, pay all allowed debts of the decedent as well as estate expenses and taxes, and distribute the balance to devisees named in the will.
What are the qualifications required for a person to become a settlor, the creator of a trust?
To be a settlor, a person must own a transferable interest in property, have the right or power of disposing of a property interest, and have the ability to make a valid contract.
Attest a will
To bear witness and to affirm or verify a will as genuine.
Attest
To bear witness; to affirm or verify as genuine e.g. the witness who attests the testator's intent, capacity, and signature on a will.
What does it mean to prove a will?
To prove a will means to acknowledge its existence and validity as the properly executed last will of the decedent. A proved will is said to be admitted to probate.
Subscribe
To sign one's name, generally at the end of the will.
Adeem
To take away, extinguish, revoke or satisfy a legacy or devise by delivery of the gift or a substitute to the beneficiary by the testator before death.
Heir
Traditionally, a person, including a spouse, who is entitled by statute to the real property of an intestate. Today, a person entitled to any gift (real or personal property) of the intestate or in the decedent's will.
What are trust administration duties pre-death? What about post-mortem?
Trust administration duties before death: manage trust property, preserve and maintain trust property, file tax returns. Trust duties after death: obtain federal employer identification number, notify beneficiaries, open a checking account for the trust, transfer funds, collect/preserve/value assets, pay creditor claims, file tax returns, distribute income or principal to beneficiaries.
What are some of the most common reasons for creating trusts?
Trust can be created for any lawful purpose. Most are created to distribute income from the trust property to family members, friends, or a charity and/or to preserve the trust property for later distribution to such persons on termination of the trust. Other common purposes for establishing trusts are avoiding probate, funding childrens' college education, or supporting disabled family members.
What powers does a trustee have?
Trustees can: sell assets, lease property, carry on a business, lend or borrow money, and hire professionals.
What responsibilities does a trustee have?
Trustees have the duty: of performance and due care, of loyalty, to preserve and possess trust property, to invest trust property, to make payments of income and principal to beneficiaries, to account for profits and losses.
What are two ethical issues paralegals should consider when interviewing a client?
Two ethical issues to consider: if a client lacks mental capacity the firm cannot accept the case, avoid taking an active role in suggesting or requesting what the client should do with his or her estate.
Joint tenants
Two or more persons who own or hold equal, undivided interests in property with the right of survivorship.
Charitable deduction
Under tax law, a contribution to a qualified charity or other tax exempt institution for which a taxpayer may claim an income tax deduction. Also applicable to trusts.
What would you find among a paralegal's pre-probate responsibilities?
WRT pre-probate responsibilities, a paralegal might: schedule a family conference, assist in reviewing the will or intestacy procedures w/ the family, explain the tickler system & probate procedures to the client, set up the tickler system w/ the personal representative.
What tasks concerning trusts might a paralegal undertake?
WRT trusts, a paralegal might: obtain client information, draft a preliminary trust, review the draft with att'y & client, and assist in the trust's final execution.
What tasks concerning wills might a paralegal undertake?
WRT wills, a paralegal might: collect necessary info for making a client's will, discuss contents of the will with att'y, prepare a preliminary draft of the will, review the draft with att'y & client, and assist in executing the final draft of the will.
Execute
What we do to traitors. Loljk, to perform or complete e.g. to write and sign a will.
When does a medical power of attorney take effect?
When a patient is unable to make or communicate healthcare decisions. Unlike the living will, a patient does NOT need to also be terminally ill.
Ancillary administration
When separate court proceedings must be undertaken b/c the court in the county of the decedent's domicile has no jurisdiction over real property located in a "foreign state." Property is administered under the laws of the state where it is located.
Why would a settlor create a revocable trust, and what are the advantages of making the trust irrevocable?
While alive, the settlor must expressly retain the power to revoke or cancel the trust. There are many reasons why a settlor would create a revocable trust. First, the settlor may do it to retain control over the terms of the trust. Another is that the settlor may want it revocable to see how well it works and what changes, if any, are necessary before the trust is made irrevocable. The advantages of making the trust irrevocable are that the trust income and principal are excluded from the settlor's gross estate and it is not subject to estate and inheritance taxes.
What are the advantages of a typewritten or computer-printed will versus a holographic will?
With a holographic will, uncertainties can arise due to the illegible handwriting of the testator. Typed wills are easier to read and errors are more readily identified than in handwritten wills.
How are small estates different from their counterpart?
With small estate procedure: death taxes usually aren't owed, debts are minimal & promptly paid, court fees are reduced, collection of assets is easier/quicker, assets can be distributed almost immediately.
