Wills, Estates, and Trusts
Three core topics:
Driven by statute
state will decide where your stuff will go
Wills: What it takes to make a Will and the Testate process
Trust from the Estate planning perspective
Testate— Having left a valid will at death
Heir— A person who, under the laws of intestacy, is entitled to receive an intestate decedent’s property.
Devise— When used as a noun, a testamentary disposition of real or personal property.
Residuary Devise (clause)— whatever’s leftover
Specific Devise— specifically name the property
Devisee— A person designated in a will to receive a devise
Decedent— dead guy
Descendant— generally, dead guy’s children, grandchildren, great grandchildren…
Testator— one who makes a will
Will— an instrument or declaration by which one directs the disposition of one’s property after death. Also called a testament (old days testaments for personal and wills for real). Don’t have to say “Will and Testament,” but many still do.
Codicil— Amendment to an existing will.
The courts will attempt to honor the wishes of the decedent.
The decedent is no longer with us; therefore, we may need extrinsic evidence to determine his or her wishes.
Without any evidence, the law will make presumptions.
Gifts Causa Mortis Elements
Normal Elements of a Gift;
Donor believed that she was facing death from a specific illness or event at the time of the gift; and
The gift is either expressly or impliedly conditioned on the donor’s death.
Restatement 2nd Gift Causa Mortis
If the owner of personal property makes a gift … the fact that the delivery is made by the donor in apprehension of imminent death creates a presumption that the donor intends that the gift is revocable.
A failure to revoke within a reasonable time after the donor is no longer in apprehension of imminent death eliminates the right of revocation.
Acceptance of the gift by the donee is required to complete the gift.
Gift Causa Mortis Problems
Problem #1 answer: Robert
Problem #2 answer: can be argued either way. It really depends if there has been a reasonable amount of time that David has recovered. Just because you’ve been discharged from the hospital, that doesn’t mean you’ve made a recovery. DUH!
Problem #3 answer: Lisa, because a valid gift causa mortis is revocable until the time of death.
3 Types of Assets
Non-probate (will substitutes), and
Inter Vivos Trusts (property put into a trust).
How Do The Decedent’s Assets Pass?
Testate (the will)
Operation of Law or Contract
Inter Vivos Trust Assets
Terms of the Trust
Non-Probate Assets (will substitutes): Definition. Assets of the decedent that pass automatically either by operation of the law or by contract.
Life insurance— Contractual agreement wherein the beneficiary receives payment from the insurer upon the death of the insured.
Joint tenancies— Property passes to surviving joint owners
Tenancy by the Entireties— Property held as husband and wife.
Paid on Death (POD/TOD) Accounts— Can be used with investments and bank accounts. Should always have a beneficiary designated.
Qualified Monies (IRAs, 401(k)s…)— Should always have a beneficiary designated.
Annuities— Operate like life insurance but may have income tax consequences.
Types of Trust Property
An inter vivos (living) trust res
ribute shares allocated to dead people by repeating step 3:
combine the shares allocated to predeceased heirs
do not distribute shares to descendants of living people
descendants of dead people will split the combined number evenly
Week 2 Class Notes
Two different routes for Probate: formal and informal
Administration (formal or informal)
Letters of authority
Collect and inventory assets
“Gross estate” assets
Notice to creditors
After paying creditors, the remaining assets are considered the “net estate”
Pay creditors and estate taxes, if applicable
Accounting to court
Partial and final distributions
Permission to terminate estate
§ 700.3805 Priority of Claims; Insufficient Assets (EPIC)
If the estate is insufficient to pay all claims and allowances in the full, the PR shall make payment in the following order of priority:
Costs and expenses of administration
Reasonable funeral and burial expenses
Homestead allowances ($15,000)
Family allowance ($18,000)
Exempt property ($10,000)
Debts and taxes with priority under federal law
Such as payments to the IRS
Reasonable and necessary medical and hospital expenses of the decedent’s last illness, including a compensation of persons attending the decedent
In Re Estate of Carpentiero
Last Illness is defined as “illness terminating in person’s death.”
Debts and taxes with priority under state law
Such as payments to the MI Treasury Department