1. Chapter 21.2: Estate Planning

2. Estate Planning
A process of assuring that a person’s assets remain intact to protect the family before and after death.
Estate planning includes contributing to one’s retirement income as well as using certain legal instruments such as wills and trusts.
Estate Plan Vs. Will Vs. Trust

3. Wills
A will is a document that is signed during your lifetime that provides for the distribution of your property upon death.
Each state has its own requirements for making Wills
Testate means to die with a will
A testator is a male who dies with a will
A testatrix is a female who dies with a will

4. Wills
A gift of personal property made by a will is called a bequest or legacy.
A gift of real property made by a will is called a devise in most states.

5. Who can make a will?
Anyone who has reached the age of 18 and has both testamentary intent and testamentary capacity
Testamentary intent
Intention that the documents is meant to be a last will and testament
Testamentary Capacity
The mental ability to create a will

6. Testamentary Capacity
Sound Mind is defined as the following:
Understand the nature and extent of your property
Know who would be the natural persons to inherit your property, even though you may leave your property to anyone you choose
Know that you are making a will
Be free delusions that might influence the dispensation of your property

7. Requirements of A Will
Will must conform exactly to requirements of the state where it is made.
To be valid, a will must be
Published- written and must reflect the true intentions of the parties writing the will
Oral wills of personal property are acceptable for soldiers and mariners
Attested- Must be witnessed by the number of people required by state, usually 2 people
And signed- If someone cannot write, someone else can sign it for them in their presence and with their consent.

8. Revoking or Changing a Will
A will can be revoked in the following ways:
Burning, tearing, canceling, or obliterating it with intent to revoke it
Making a new will
Marrying after the will was created.
Divorce usually revokes gifts made under a will to a former spouse.
Codicil- A formal documents used to supplement or change an existing will. It must be signed and witnessed to be valid.

9. Family and Spouse Protections
Children who can prove they were mistakenly left out of the will also have certain rights of protection in most states.
Forgotten children may receive the same amount they would have received if their parents would have died without a will.
Adopted children are also treated as naturally born children
If a will specifically states that a child has been intentionally omitted from a parent’s will, then the will must be followed.

10. To be without a will Intestate Succession
Can have serious consequences
The people you want to inherit your estate may not be able to do so…

11. Intestate- Without a Will

12. Intestate Succession
Distribution of property is done according to relationship to the deceased.
A surviving spouse is usually entitled to one-third or one-half of the estate.
The balance is divided equally among children.
If a child has died since the will has been written, then his or her children share that portion.

13. Probate and Estate Settlement
Process of validating and executing a will.
Probate court supervises the process
Its first job is to validate the will, if no one opposes – the settlement is simple
This is where people can contest the will if they were left out or disagree
When you make a will you can put a clause in contesting certain people from inheriting anything.

14. Probate and Estate Settlement
Executor
Male designated in the will to carry out its terms
Executrix
Female designated in the will to carry out its terms
If no one is named, or the person named refuses to take that role, the court will appoint an executor to carry out the will
That person is called an administrator or administratrix.
Role: inventory assets, pay any debts and taxes, and distribute remaining assets as stated in will or by state law

15. Power of Attorney
A power of attorney grants power to a representative to legally act on your behalf.
The person giving power or attorney is the grantor or principle.
The person receiving the power of attorney is the attorney-in-fact.
Powers of Attorney can make decisions on your half.
Powers of Attorney

16. Medical Directives
A special power of attorney that deals solely with medical care
They allow the attorney-in-fact to make decisions on behalf of the person instead of the court making that decision.

17. Living Will
Documents that directs whether your life should be prolonged by artificial means if you become incapacitated with no reasonable expectation of recovery.
Because technology allows people to stay alive for a long time, living wills give their representative the authority to make health care decisions according to the directives in the living will.

18. Trust
A legal device by which property is held by one person for the benefit of another.
A trustee is a person who holds title to the property for another’s benefit.
The beneficiary is the person for whose benefit the property is held in the trust.
A trust allows to provide for your children
Wills Vs. Trusts

19. Types of Trusts
Private Trusts- involves individual settlers and beneficiaries. Most common!
Testamentary Trust- Created by a will. Only comes into existence upon death.
A living Trust- Comes into existence while the settler is alive. Can be revocable or irrevocable
Spendthrift Trust- Protects assets from being spent recklessly.
Charitable Trust- Fund a charity upon death

20. Rights and Duties of Parties
Trustees are obligated by law to use a high degree of care in investing the trust funds.
They cannot take extraordinary risk