Chapter 53 Decedents’ Estates and Trusts Twomey, Business Law and the Regulatory Environment (14th...

Chapter 53Chapter 53

Decedents’ Estates and TrustsDecedents’ Estates and Trusts

Twomey, Business Law and the Regulatory Environment (14th Ed.)

(c) 2000 West Legal Studies Chapter 53 2

Will Terminology Will Terminology [53-1][53-1]

TESTATOR/TESTATRIX:

Maker of the will

LEGATEE:

Person to whom personal property is left

DEVISEE:

Person to whom real property is left

WILL:

Document used to transfer property at death

CODICIL:

Addition to will

HOLOGRAPHIC WILL:

Handwritten will

LIVING WILL:

Document that covers wishes regarding life-sustaining medical treatment


Estate Terminology Estate Terminology [53-2][53-2]

EXECUTOR/EXECUTRIX:

Person named in a will to administer an estate

ADMINISTRATOR/ADMINISTRATIX:

Person administering an intestate estate

PERSONAL REPRESENTATIVE:

Name for party administering any estate under the UPC

PROBATE:

Act of a court in declaring a will valid

WILL CONTEST:

Challenge to validity of a will


Common Pattern of Common Pattern of Interstate DistributionInterstate Distribution

[53-3][53-3]Decedent

spouseand

children

other lineals

Grandchildren, other direct descendants

parents

collateral heirs

Siblings, cousins,other descendantsfrom a commonancestor (subject toexclusion of remoteheirs in some states)

the state


Definitions of TrustsDefinitions of Trusts [53-4][53-4]

beneficiary n.: person for whose benefit a trustee holds property

cestui que trust n.: (Anglo-French, literally, he for whose use something is held): BENEFICIARY

donor n.: SETTLOR

inter vivos trust n.: (Latin, literally, between living persons): LIVING TRUST

living trust n.: a trust created to take effect within the lifetime of the settlor—compare TESTAMENTARY TRUST

settlor n.: (from old legal language settling the property in trust): property owner who creates a trust

testamentary trust n.: a trust provided for in a settlor’s will to take effect after the settlor dies—compare LIVING TRUST

trust corpus n.: person to whom property is transferred in trust

trustee n.: property held in trust

trust estate n.: property held in trust

trust fund n.: property held in trust

trustor n.: SETTLOR

trust res n.: (res Latin for real): property held in trust


Living WillLiving WillLiving WillLiving WillINSTRUCTIONS:

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

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

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

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

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


Living WillLiving Will (cont’d)(cont’d)

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

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

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

Signed: John Jones .

Witness: Earl Hummel .

Address: 7852 Bailey Avenue .

Buffalo, New York .

Witness: Ramona Valey .

Address: 8921 Clinton Street .

Buffalo, New York .

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

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


Distribution Per Capita and Per StirpesDistribution Per Capita and Per StirpesDistribution Per Capita and Per StirpesDistribution Per Capita and Per StirpesPer Capita Per Stirpes Per Capita

Decedent (D) Decedent (D) Decedent (D)

A B C A B A BC(predeceases D)

C(predeceases D)

1/3 of estate

1/3 of estate

1/3 of estate

1/3 of estate

1/4 of estate

1/3 of estate

1/4 of estate

D’s surviving children take equal shares

Surviving

Deceased

X Y Z X Y Z

1/4 of estate

1/4 of estate

1/6 of estate

1/6 of estate

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

share

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

share


Trust Principal/Income AllocationTrust Principal/Income AllocationTrust Principal/Income AllocationTrust Principal/Income Allocation

Principal Payable from Principal

Original Trust Property Loans (Principal)

Proceeds and Gains from Sale Litigation Expenses

Insurance Payments Permanent Improvements

New Property Purchased with Principal Costs of Purchase

Stock Dividends

Stock Splits

Income Payable from Income

Rent Loans (Interest)

Interest Taxes

Cash Dividends Insurance Premiums

Royalties Repairs


Chapter 53 SummaryChapter 53 SummaryChapter 53 SummaryChapter 53 Summary

A will is a writing that provides for a disposition of property to take effect upon death. A man who makes a will is called a testator; a woman, a testatrix. The person to whom property is left by will is a beneficiary. A legacy is a gift of personal property by will; a gift of real property by will is a devise.


A testator must have testamentary capacity to make a will and must manifest some intention that the will is to be effective only upon death. The will must be signed by the testator and be witnessed.

A will may be modified by a codicil or revoked either by the act of the testator or by operation of law.

Chapter 53 Summary Chapter 53 Summary [2][2]Chapter 53 Summary Chapter 53 Summary [2][2]


Probate is the process by which a proper court official accepts a will. Probate may be refused or set aside on grounds that the will is not the free expression of the testator.

A holographic will is an unwitnessed will written entirely in the handwriting of the testator. A self-proved will may be admitted to probate without the testimony of subscribing witnesses. A living will allows a person to make wishes known regarding life-sustaining medical treatment.



If there is a valid will, the last phase of administration of the estate is the distribution of property after the payment of all debts and taxes. General legacies are bequests of money, whereas specific legacies or specific devises are gifts of identified personal or real property. Legacies abate in the following order: residuary, general, and specific.



If a beneficiary named in the will has died before the testator and no alternate provision has been made for such beneficiary, antilapse statutes provide that the gift will not lapse. In that event, the children or heirs of the beneficiary may take the legacy in the place of the deceased beneficiary.



If the decedent does not dispose of all property by will or does not have a will, the property will be distributed according to state intestacy statutes. A surviving spouse may generally elect to take the statutory allocation instead of that provided in the will.



The estate of the testator will be administered by the person appointed in the will (the executor) or, if there is no will, by a person appointed by the court (an administrator). Creditors who have claims against the estate are required to give notice of their claims to the personal representative; otherwise, the claims will be barred.



A trust is a legal device by which property is held by one person for the benefit of another. The settlor creates the trust, and the person for whose benefit the trustee holds the property is the beneficiary. Property held in trust is called the trust corpus, trust fund, trust estate, or trust res.



A trust is usually created by a writing called a trust agreement or deed of trust. No particular form or language is required. A trust is not created unless an active duty is placed on the trustee to manage the property in some manner. A trustee’s acceptance of duties is presumed.



Legal title to trust property is given to the trustee, but equitable title is held by the beneficiary. A beneficiary may transfer an interest in the trust except in the case of a spendthrift trust.



The trustee can exercise only those powers that are given by law or the trust instrument. The trustee must administer the trust and carry out the trust in a proper manner. A trustee may be sued for breach of the terms of the trust agreement. A trust comes to an end when its terms so provide or when it becomes impossible to attain the object of the trust.


Chapter 53 Decedents’ Estates and Trusts Twomey, Business Law and the Regulatory Environment (14th...

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Transcript of Chapter 53 Decedents’ Estates and Trusts Twomey, Business Law and the Regulatory Environment (14th...