estate planning intestate succession intestate succession wills wills trusts trusts class 9
TRANSCRIPT
What is an estate?An individual’s “estate” is any
interest the individual has in any personal or real property.This includes property owned solely by
the individual or owned in common with another.
Probate PropertyProperty owned by the decedent at
the time of deathThis property is distributed by the court
Nonprobate PropertyProperty that was owned by the
decedent at the time of death that passes directly to heirs (or someone else) rather than going through probate
Why make a plan?Provide for spouse or partner at
deathProvide for minor childrenProvide for children of a prior
relationshipDesignate specifically who – person
or entity – will have benefit of one’s property
Avoid taxesAvoid probate
Sources of LawPrimarily statute
In Washington RCW Title 11 is the title governing estate interests
Title 26 governs community property and property of domestic partners
Title 83 governs taxes of estates and gifts
Some common law sourcesAppellate decisionsRestatements
What happens without a plan?
Intestate SuccessionIf the individual does not provide for
property distribution prior to death, the government will decide how to distribute the property.Decedent is called an intestateIncludes property in a will if there is a lapsed
giftIncludes all property if will is invalid
RCW 11.04.015Priority of distribution
Protection of FamiliesHomestead exception
Family allowance
In Washington, the protections for the family are set out in RCW 11.54
EscheatIf a person dies without a will and
without an heir, the estate will pass to the state.RCW 11.08.140
What kinds of plans are there?
Prenuptial agreementsCommunity property agreementsLife insuranceWillsTrustsHealth care directivesPowers of attorney
Prenuptial Agreements
An agreement made in anticipation of marriage. Provide for distribution of property upon
dissolution of marriageAlso provide for agreement as to
distribution upon death of one spouse
Community PropertyOne spouse’s share in community
property (i.e., one-half) may be gifted by will. If an estate is probated, all community
property is subject to probate administration.
Life InsuranceWhole life – these policies are both
life insurance and an investment (premiums are set at the time of purchase)
Universal life – also are both life insurance and an investment (premiums may vary during the course of policy ownership)
Term life – only insurancePurchased for a specified term (with
renewal option)
WillsA will is a legal expression of an
individual’s wishes as to how his or her property should be distributed when that person dies.The person making the will is the
testatorRCW 11.12 governs the making of
wills in Washington
Kinds of WillsFormal will
Written, signed by the testator, witnessed by two witnesses
Holographic (or informal) willUsually handwritten by the testatorThese are NOT valid in Washington
Nuncupative (or oral) willThese are NOT valid in Washington
(however there a limited exceptions)
Requirements of a Valid WillLegal capacity
Must be an adult (18 in Washington)Testamentary capacity (of sound
mind)Knowing what property one ownsKnowing who his or her relations areKnowing what he/she wants to do with
the propertyVoluntarily act (without undue
influence)
Contents of a WillExordium clause
identifies testator, states his domicile and announces that this is his will
Revocation clause revokes all prior wills, codicils
Identification of family clause Dispositive provisions (specific
devises)Minor beneficiary clauses
Testamentary guardian/Trust for minorSimultaneous death clause
Contents of a WillAppointment of personal
representativeStatement of powers and duties
Separate writing clauseAttestation clauseSelf proof clause
Self-Proving ClauseWashington statute provides for a
self-proving clause.Affidavit signed by the witnesses under
oath.This affidavit makes it unnecessary to
call the witnesses in the probate proceeding to prove the validity of the will
Execution of the WillOne of the few formalities left in law
Must be signedMust be witnessed by two witnesses
Witnesses must be able to say They know who the testator isThe testator was competentThe testator was not acting under duress or undue
influence
Testator must ask witnesses to witness; they must both be present at the time the will is signed (presence of testator and presence of each other)
Letters of Instruction Information for the family and
personal representativePreferred funeral arrangementsLocation of assetsLocation of important papers (including
will)Information about insurance policies and
pension plansList of debts, creditorsContact information for key people
(personal representative, CPA, attorney, heirs)
CodicilA codicil is an amendment or
addition to the willThe same formalities are required for
executing a codicil
TrustsA trust is an agreement under which
money or other assets are held and managed by one person for the benefit of another.
Common benefits includeProviding personal and financial
safeguards for the beneficiariesPostponing or avoiding unnecessary
taxesEstablishing a means of controlling
propertyMeeting social or commercial goals
Trust TermsTrustor (grantor or settlor) – the
person who creates the trust Trustee – the person or entity who
holds legal title of the trust property for the benefit of another
Trust Property (principal, corpus or res) – the property placed in trust by the settlor
Beneficiary – person to benefit from trust
Trust purpose – reason why trust is created
RequirementsTo be a valid trust
Settlor must manifest an intention to create it
Trust must have assets (this may include future assets)
Trust must have legal purpose (not against public policy)
Must identify beneficiaryMust be established by written
document or by operation of law
Categories of TrustsInter vivos or living trusts – created
while trustor is aliveTestamentary – created as part of willRevocable living trusts – trustor
retains right to change or terminate the trust
Irrevocable living trusts – trustor gives up right to revoke after creation
Express trusts – intentionally createdImplied trusts – created by operation
of law
Rule Against PerpetuitiesAll interests in property must vest
within 21 years of the life of someone who is alive at that time of the creation of the interest.Insures that someone will own the
property within a reasonable timeRCW 11.98.130
Termination of TrustsTrusts terminate when:
Express terms of trust instrument require termination at a specific time or upon the happening of a specific condition (child reaches age of majority)
Fulfillment of trust purpose The same person owns both legal and
equitable or beneficial title of trust property
Settlor revokes the trust
ProbateProbate is a legal procedure for settling
the affairs of a person who has died and overseeing the distribution of the decedent’s property to the rightful beneficiaries.
The processCollects and protects decedent’s propertyIdentifies beneficiaries and creditorsPays all debts, expenses, taxesDistributes the property of the estate
properly
ProbateJurisdiction of the court is triggered
by Filing Petition to Probate a Will (person
died testate) orPetition for Letters of Administration
(intestate)Personal Representative or
Administrator is appointedCourt’s continued involvement is to
resolve disputes or interpret documents
Duties of Personal Representative
Notify heirs and creditorsTake possession of and inventory
estateDetermine fair market value of estate
assetsDetermine names, locations of heirsCollect debts owed to the decedentRepresent the estate in any challenges
to the will Complete any pending lawsuits in
which the decedent has an interest
Duties of Personal Representative
Prepare tax returns and pay all estate and income tax
Pay the valid claims of creditorsSell property – when necessary – to pay
debts and taxesTransfer title to real property and
certain personal property Distribute the remaining assets to the
designated heirs File a Declaration of Completion of
Probate
Health Care Directive
A document that expresses the individual’s desires regarding the withholding or withdrawal of life support measures
A helpful website discussing the issues that should be considered iswww.agingwithdignity.org www.atg.wa.gov/DealingWithDeath/defa
ult.aspx
www.doh.wa.gov/livingwill/healthcaredirective.htm