Estate PlanningChapter 36.2

Making a Will

A document that is signed during your lifetime that provides for the distribution of your property upon death

Each state has it’s own requirements Those who receive property by will are

referred to as beneficiaries Heir refers to one who inherits property

under a will or from someone dying without a will

Who may make a will?

Any person of sound mind who has reached the age of adulthood (18 yrs)

To be found of ‘sound mind’ you must have sufficient mental capacity to do the following:› Understand the nature and extent of your

property› Know who would be the natural persons to inherit› Know that you are making a will› Be free from delusions that might influence your

decision

Formal Requirements of a Will

To be valid, a will must conform to the law of the state that it is written

A will that is legally made in one state will be valid in every state

Must be in writing Must be signed Witnessed by at least 2 people In many states, a holographic will, that is,

a will written entirely by hand of the testator is valid without witnesses

Revoking or Changing a Will

My be revoked by › Burning › Tearing› Canceling› Obliterating › Executing a new one› Marrying after the will was created› Divorce

Codicil – a formal document used to supplement or change a will

Family Protection

State laws contain provisions designed to protect surviving family a family member dies

Protection of Spouses – surviving spouses can choose to take a different portion of the estate instead of what was appointed

Protection of children – sometimes children may be left out of a will› Forgotten children have rights› Those left out on purpose, do not

Dying Without a Will

Called intestate Deceased’s personal property is disbursed

according to the laws of the state In general, surviving spouse is entitled to 1/3 or

½ of the estate The balance is divided equally among children –

if no children, then grandchildren If there are no children or grandchildren, goes to

deceased parents If none of the above apply, it goes to siblings If no siblings are alive, it goes to their children

Settling an Estate

When people die owning assets their estate must be probated – settled under the supervision of the probate court

Validity of the will must be established first

If no one opposes the will – done deal Those who oppose are able to contest it A will usually names a personal

representative› Executor (male) or Executrix (female)

POP Quiz

Sue Smith died without a will. Her husband Stan had preceded her in death, and they had no children. Sue had a sister Daisy and a brother Duke. Daisy was still living but Duke was dead. Duke had 3 children, all of whom were still living. Both of Sue’s parents were dead, but she had one living uncle, Trey. Trey had two sons, both living. After Sue’s debts and taxes are paid there is $1,000,000.

Question

Who inherits from Sue if you follow the general guidelines from the notes?

ANSWER Dukes 3 children

How much does the heir or heirs inherit?

ANSWER Daisy inherits

$500,000 and Duke’s 3 children divide the other $500,000 equally