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Wills, Trusts and Estates

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1 Wills, Trusts and Estates
Business Law – Chapter 19 Wills, Trusts and Estates

2 Chapter 19 Ashley lived in Palatine her entire life. She never married and worked at McDonald’s until retirement. Then she lived on her Social Security checks. Ashley was an avid and conservative saver. When she died the value of her property totaled more than $800,000 but she had never made a will. How will her property be distributed?

3 Chapter 19 When a person dies, the law looks for instructions on how to resolve basic legal issues that can arise such as how to pay outstanding debts (medical bills, charge cards, etc) and distribute any remaining assets of the deceased. Decedent is the person who has died Intestate is when a person died without a will. In this case, the state has rules (statutes) that will settle the affairs. Court appoints an administrator to oversee the debt collections and estate division. Without a will, there are considerable expenses and taxes that will need to be paid.

4 Ch. 19 Intestate laws vary from state to state. In general, a surviving spouse receives 1/3 to ½ of the estate with the reminder going equally to children. If there was a valid will (called testate), it directs how the estate should be handled upon death. The maker of the will is called the Testator. The testator has named an Executor who will carry out the directions of the will. A will can name a guardian for minor children. Living Will is a document that directs doctors about their choices regarding life support. This is a will while a person is living regarding their medical treatment. The term “Power of Attorney” can also be used.

5 Ch. 19 State laws govern valid wills. The basic requirements are:
testator must have clear intention when making the will cannot be pressured into signing document; undue influence of others cannot be misled into thinking the document is something different the testator must be of legal mental capacity – must know what they are doing signed and witnessed by at least two legal adults. Some states there must be 3 witnesses and they must sign also.

6 Ch. 19 Amending a valid will is possible. Life changes and wills are can be updated to reflect those changes. Divorce, marriage, children all require amending of a will. A Codicil is a formal, written and witnessed amendment to a will. Holographic Will – will without a witness. Written entirely by the decedent’s own hand and signed by them. Nuncupative Will – oral will. Recognized in some states if it was said during the maker’s illness. This type of will MUST be witnessed.

7 Ch. 19 Remember that a will only takes affect upon the testator’s death. Anytime before death, the will can be amended or completely revoked. Marriage or birth/adoption of children automatically terminates a will. Divorce does NOT automatically revoke a will. A divorce settlement does revoke the parts of a will which the settlement conflicts one the divorce occurs.

8 Ch. 19 Typical distribution intestate distribution (without a will)
with no spouse but children – children share equally with spouse and children, spouse gets ½ and children share equally the other ½ with spouse no children, spouse gets ½ and the deceased’s parents get the remainder. If the deceased’s parents are not alive, brothers/sisters get the other ½ with no spouse, children – the deceased’s parents get ½, if only one parent surviving, they get all. If both parents deceased, brothers/sisters split it equally.

9 Ch. 19 A trust is created (as opposed to a will) so that immediate control of some or all of property can be transferred. A trustee must utilize the property in the trust as to meet the trust’s objectives. Creator of a trust is the settlor. The party for whose benefit the trust is managed is called the beneficiary. The trustee has a fiduciary (highest care and loyalty) to the beneficiary. Trustees have the right to be paid for their services.

10 Ch. 19 Types of trusts: inter vives – created when the settlor was alive testamentoary – created after the death of the settlor according to a will charitable – money to go to a charitable organization express – written and clearly stated

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