Chapter 24Wills, Estates, and Trusts

Lesson 6-1 Legal Consequences of Death

Death and the Law

When a person dies, the law looks for his or her instructions to resolve some basic legal issues that arise.

These issues include how the debts of the person who dies are to be paid and what is to be done with the remaining property.

Decedent – The person who dies.

Death and the Law

The necessary instructions are found either in the wishes of the decedent as expressed in a will, in statutes (if the decedent did not leave a will), or in both.

Death without a Will

Those who die without a valid will are said to have died intestate.

The courts appoint a personal representative know as the administrator (if male) or administratrix (if female) to take charge of the intestate’s property.

Estate – Property of the deceased

Death without a Will

The representative uses the estate to pay all debts, including the costs of administering the estate.

The remainder of the property will then be distributed in accordance with the state’s intestacy statute.

Statutes vary from state to state.

Death without a Will

Generally, the surviving spouse will receive 1/3 to 1/2 of the estate and the remainder will be divided equally between the children or grandchildren.

If there are no children or grandchildren, then the decedent’s parents or siblings will receive the remainder.

Death with a Will

It is usually much to the advantage of all concerned if the decedent dies testate – leaving a valid will.

A will is a legal expression, usually in writing, by which a person directs how her or his property is to be distributed after death.

Death with a Will

The maker of the will is called the testator if male and the testatrix if female.

With a will, a person can direct his or her estate to where they can do the most good.

A will also allows its maker to name a personal representative – executor if male and executrix if female – to carry out the directions in the will.

Death with a Will

Living Will is a term used for a document directed to attending physicians regarding a person’s choices about the use of life-support systems in treatment for terminal illness or vegetative state.

Don’t mix the two up.

Creation and Execution of a Valid Will

To counteract the possibility of forgery, the law has strict requirements regarding the preparation and execution of valid wills.

To be valid, a will must conform to the state laws regarding creation and execution.

Most basic requirements in almost ever state are on page 361 and 362.

Amendment of a Valid Will

A will takes effect only upon the death of the maker.

It can be changed or canceled at any time during the maker’s life.

It is important that the maker of a will keep it current. Marriage, divorce, birth of children, and other significant changes should be reflected by amendments.

Amendment of a Valid Will

Codicil – a formal, written, and witnessed amendment.

A codicil must be executed with the same formalities as a will.

Special Types of Wills

Holographic Will – is valid without witnesses. One that was written entirely by the

decedent’s own hand and signed by him or her.

Nuncupative Will – Oral will recognized in some states if proclaimed during the maker’s last illness or by service personnel on active duty.

Revocation of a Will

A will is subject to partial or total change at the desire of the testator and is only intended to take effect upon the testator’s death.

A will can be completely revoked.

Distribution of the Estate Whether a person dies with or without a

valid will, a probate court will supervise the handling of the decedent’s estate.

First item of business on the executor’s or administrator’s list is to offer proof of death to the courts. Death Certificate Official notification of death from armed

services Testimony of presence in a disaster for

unidentified bodies or irretrievable bodies.

Distribution of the Estate If a person simply vanishes without a

trace, after several years he or she can be declared dead under the Enoch Arden Laws.

This law was named for a poem by Tennyson about a seaman who returns home after a long absences to find his widow married to another.

Time required is either 5 or 7 years of absence in most states.

Distribution of the Estate After proof of death, duties are:1. Assembling, preserving, inventorying,

and appraising the assets of the estate and collecting the debts owed to it.

2. Giving public notice of the estate and the necessity for filing claims against it within the statutory period

3. Paying valid claims against the estate4. Distributing the remaining property

according to the will or statute.

Distribution Without a Will

Laws vary from state to state Read the state of Hawaii’s laws of

intestate on page 364.

Distribution With a Will

If there is a valid will, its terms are to be followed.

There may be statutory provisions allowing certain relatives to override the will’s terms and receive more of the estate than the will provided such as a surviving spouse may elect to receive 1/3 or 1/2 of the property.

Distribution With a Will

The most complex will related issues is the split of property among the lineal descendants. Children, grandchildren, surviving spouse.

If there are no inheritors, the property of the deceased escheats or reverts to the state unless otherwise stated in a will.

Chapter 24Wills, Estates, and Trusts

Lesson 6-2 Trust

Creation of Trusts

Trust – when the transferee of the property is a separate entity under the law, a trust has been created.

A trust can be created to accomplish any conceivable legal purpose.

Trustee – the legal entity that has the title to the subject property

Trustee must accomplish the trust’s objectives

Creation of Trusts

Settlor – the creator of a trust Beneficiary – the party for whose benefit

the trust is managed in accordance with the settlor’s wishes.

Trustee has a fiduciary duty requiring the highest care and loyalty to the beneficiary.

Trustee cannot cause the beneficiary to acquire liability to third parties.

Creation of Trusts

Go to page 367 and discuss the tables for per stripes and per capita divisions of an estate.

Trustees have the right to be paid for their services.

Probate courts will determine how much the trustee’s fee might be.

Settlor may also detail in the trust document how much the trustee will receive.

Types of Trust

Inter vivos trust – A trust created during the lifetime of the settlor.

Testamentary trust – a trust created after the death of the settlor in accordance with directions in his/her will.

Charitable trust – A trust created for the fulfillment of an altruistic purpose.

Types of Trust

Private trust – a trust created for a private purpose. Spendthrift trust – private trust that

protects the beneficiary’s interest in the subject property from the beneficiary’s creditors.

All these trust are written or oral statements in terms stated by the settlor and are all known as express trust.

Types of Trust

Implied trust:1. Resulting trust – trust formed when the

entity intended to receive the benefit of an express trust cannot do so.

2. Constructive trust – trust created to require a person holding property to transfer it to another because retention of the property would be wrongful and unjust enrichment of the holder.