Estate Planning:Estate Planning: Wills and TrustsWills and Trusts

Chapter 19Chapter 19

Estate Planning!Estate Planning!

Wills and trustsWills and trusts are LEGAL are LEGAL documents that help us to protect documents that help us to protect ourselves. ourselves. • indicate who will make important decisions indicate who will make important decisions

for us in the future for us in the future • indicate how one’s assets will be distributed indicate how one’s assets will be distributed

upon death. upon death. Considered Considered SMARTSMART financial planning financial planning Watch The Today Show: Watch The Today Show:

• http://www.youtube.com/watch?v=-YWRO7E56XI&feature=relatehttp://www.youtube.com/watch?v=-YWRO7E56XI&feature=relatedd

Living together Living together and estate planningand estate planning

http://www.cnn.cohttp://www.cnn.com/video/#/video/livm/video/#/video/living/2012/03/10/nr-ing/2012/03/10/nr-whitfield-lee-wills.cwhitfield-lee-wills.cnnnn

An Estate is…An Estate is… the net worththe net worth of a person of a person

at any point in time. at any point in time. It is the sum of a person's It is the sum of a person's

assets MINUS all liabilities assets MINUS all liabilities at that time. at that time.

In context of probate, the In context of probate, the estate of a deceased estate of a deceased person consists of all the person consists of all the property, whether property, whether real or real or personal,personal, owned by the owned by the person at the time of person at the time of deathdeath. .

What is a Will?What is a Will? A legal expression, usually in A legal expression, usually in

writing, by which a person writing, by which a person directs how their assets and directs how their assets and property are to be distributed property are to be distributed after deathafter death

DecedentDecedent – deceased person – deceased person

A Will lists specifies….A Will lists specifies….

InheritanceInheritance• the practice of passing on assets, the practice of passing on assets,

property, titles, debts, and rights upon property, titles, debts, and rights upon the death of an individual. the death of an individual.

In law, an In law, an heirheir is a person who is is a person who is entitled to receive a share of the entitled to receive a share of the decedent's propertydecedent's property• A A beneficiarybeneficiary

If there are NO inheritors, If there are NO inheritors, the property of the the property of the deceased is “deceased is “escheats”escheats” (is given to the state)(is given to the state)

Typical DistributionTypical Distribution

1.1. Spouse and childrenSpouse and children

2.2. GrandchildrenGrandchildren

3.3. ParentsParents

4.4. Brothers and SistersBrothers and Sisters

10 Famous People Who Died 10 Famous People Who Died Without a WillWithout a Will

   

http://www.legalzoom.com/legal-headlines/celebrity-lawsuits/10-fahttp://www.legalzoom.com/legal-headlines/celebrity-lawsuits/10-famous-people-who-diedmous-people-who-died

Celebrity Estate BattlesCelebrity Estate Battles

Danielle discusses the case of the $13 million cat, Bob Marley, Martin Luther King, Jr., and more!

http://www.youtube.com/watch?v=ydp3CTtx-wU

THE THE EXECUTORS EXECUTORS OF THE OF THE WILL OF DIANA, PRINCESS WILL OF DIANA, PRINCESS OF WALES DECIDED TO OF WALES DECIDED TO GIVE HER GOD CHILDREN GIVE HER GOD CHILDREN SMALL MEMENTOS, SMALL MEMENTOS, RATHER THAN THE MORE RATHER THAN THE MORE GENEROUS GIFTS DETAILED GENEROUS GIFTS DETAILED IN A 'LETTER OF WISHES'. IN A 'LETTER OF WISHES'. THIS WAS ATTACHED TO THIS WAS ATTACHED TO HER WILL, BUT WAS NOT HER WILL, BUT WAS NOT LEGALLY BINDING.LEGALLY BINDING.

What is a Trust?What is a Trust?

A legal document used to transfer A legal document used to transfer immediate controlimmediate control of property to of property to another person upon death or another person upon death or incapacitationincapacitation• A set of A set of instructionsinstructions for your assets for your assets

Real Estate LawyersReal Estate Lawyers Administer and create Wills and TrustsAdminister and create Wills and Trusts help clients reduce taxes or fees that may be help clients reduce taxes or fees that may be

imposed on an estate, which requires imposed on an estate, which requires tax lawtax law knowledgeknowledge

ensure that clients' wishes are properly ensure that clients' wishes are properly carried out. carried out.

outline the distribution of property and outline the distribution of property and management of assets after a person's death. management of assets after a person's death.

arrange and organize the transfer of assets arrange and organize the transfer of assets from an individual to his or her heirs and from an individual to his or her heirs and beneficiaries.beneficiaries.

Average salary: $95,000 yearly Average salary: $95,000 yearly

Some Estate Planning Some Estate Planning DocumentsDocuments

1.1. Power of AttorneyPower of Attorney2.2. WillWill3.3. Living WillLiving Will4.4. TrustTrust5.5. Assignment of Business Interest Assignment of Business Interest 6.6. Bank accounts, Insurance policies, IRA Bank accounts, Insurance policies, IRA

and 401k and 401k Beneficiary DesignationBeneficiary Designation Form Form 7.7. Final Instructions Form : Final Instructions Form : Funeral and Funeral and

Burial WishesBurial Wishes

CNN AssignmentCNN Assignment

Update on Cell Tower DebateUpdate on Cell Tower Debate

http://philadelphia.cbslocal.com/http://philadelphia.cbslocal.com/2012/05/15/northampton-township-2012/05/15/northampton-township-neighborhood-fights-cell-towers/ neighborhood-fights-cell-towers/

PROBATEPROBATE Probate is a process by which a will of a deceased Probate is a process by which a will of a deceased

person is proved to be validperson is proved to be valid To challenge a Will is To CONTEST it in Probate To challenge a Will is To CONTEST it in Probate

CourtCourt Probate Court decides the legal validity of a will and Probate Court decides the legal validity of a will and

grants its approval by granting probate to the grants its approval by granting probate to the Executor, POA.Executor, POA. • personal representative, generally named in the personal representative, generally named in the

will, as having legal power to dispose of the will, as having legal power to dispose of the testator's assets in the manner specified in the testator's assets in the manner specified in the will.will.

Probate CourtProbate Court

Probate Court also declares Probate Court also declares Guardianship Guardianship

Our investigation exposed problems Our investigation exposed problems with with guardians appointedguardians appointed by by judges judges • http://www.youtube.com/watch?http://www.youtube.com/watch?

v=GzvqiHRWLg8 v=GzvqiHRWLg8

WHAT IS A GUARDIANSHIP?WHAT IS A GUARDIANSHIP? A guardianship is a legal proceeding in A guardianship is a legal proceeding in the the

circuit courts of a Statecircuit courts of a State in which a guardian is in which a guardian is appointed to exercise the legal rights of an appointed to exercise the legal rights of an incapacitated person or a MINOR.incapacitated person or a MINOR.

WHAT IS A GUARDIAN?WHAT IS A GUARDIAN?

an individual appointed by the court to care for an individual appointed by the court to care for an incapacitated or MINOR person -- called a an incapacitated or MINOR person -- called a "ward"."ward".

WHO IS INCAPACITATED?WHO IS INCAPACITATED?

an adult who has been an adult who has been judiciallyjudicially determined to determined to lack the capacity to manage at least some of his lack the capacity to manage at least some of his or her property or to meet at least some of the or her property or to meet at least some of the essential health and safety requirements of the essential health and safety requirements of the person person

Can Go to Probate Court to Seek Can Go to Probate Court to Seek ConservatorshipConservatorship

Conservatorship of a Living PersonConservatorship of a Living Person::arranges for the client's care and arranges for the client's care and protection, determines where he or she protection, determines where he or she will live and makes appropriate will live and makes appropriate arrangements for health care, arrangements for health care, housekeeping, transportation, and housekeeping, transportation, and personal needs.personal needs.

Conservatorship of the Estate:Conservatorship of the Estate:manages the client's finances, locates and manages the client's finances, locates and takes control of the assets, collects income takes control of the assets, collects income due, pays bills, invests the client's money, due, pays bills, invests the client's money, and protects the assets.and protects the assets.

Michael Jackson’s Children Michael Jackson’s Children Guardianship BattleGuardianship Battle

http://www.youtube.com/watch?http://www.youtube.com/watch?v=NOBHROeRjg8&feature=fvst v=NOBHROeRjg8&feature=fvst

If you die with no will or trust in placeIf you die with no will or trust in place IntestateIntestate

• the courts will follow the courts will follow state lawstate law to disburse to disburse your assets—no matter what you may have your assets—no matter what you may have once Verbally promisedonce Verbally promised someone. someone.

If you die with only a will in place, the If you die with only a will in place, the courts will have to give the document a courts will have to give the document a stamp of approval before divvying up stamp of approval before divvying up your estate. your estate. • This is known as This is known as probate,probate, and the cost of and the cost of

this necessary judicial step can eat up this necessary judicial step can eat up more more than 5%than 5% of your estate's value and can take of your estate's value and can take a year or longer to complete. a year or longer to complete.

Death without a willDeath without a will Those who die without a Those who die without a

validvalid willwill are said to have are said to have died died intestateintestate

The court will appoint a The court will appoint a representative known as an representative known as an administratoradministrator to take charge to take charge of the of the intestate’sintestate’s property property

Celebrity ProbateCelebrity Probate Michael Jackson died in mid-2009.  Michael Jackson died in mid-2009.  ongoing probate battle that is happening in ongoing probate battle that is happening in

California. California.  At the center of this probate case is Michael At the center of this probate case is Michael

Jackson’s father, Joe Jackson, who is challenging Jackson’s father, Joe Jackson, who is challenging the administration of the estate. the administration of the estate.  • Interestingly, Michael Jackson excluded his father from Interestingly, Michael Jackson excluded his father from

his will in 2002, so according to the terms of the will his will in 2002, so according to the terms of the will itself, Joe Jackson really does not have an interest in the itself, Joe Jackson really does not have an interest in the estate. estate. 

• But, perhaps because the estate has earned millions of But, perhaps because the estate has earned millions of dollars since Michael Jackson’s death, Joe Jackson has dollars since Michael Jackson’s death, Joe Jackson has been persistent in his challenges.  been persistent in his challenges. 

• However, the court agreed with estate lawyers last However, the court agreed with estate lawyers last week, and found that Joe Jackson lacks the requisite week, and found that Joe Jackson lacks the requisite standing to intervene.  standing to intervene. 

• Of course, Joe Jackson is already speaking about Of course, Joe Jackson is already speaking about appealing the case to the California Supreme Court, so appealing the case to the California Supreme Court, so we are likely to see more of this story unfold.we are likely to see more of this story unfold.

Watch: Watch: http://www.youtube.com/watch?v=Un47_88bnFE&fehttp://www.youtube.com/watch?v=Un47_88bnFE&feature=relatedature=related

A A Pennsylvania Pennsylvania WillWill

can only be made by persons of 18 can only be made by persons of 18 years or more who are of sound mind. years or more who are of sound mind.

To make a legal Will in Pennsylvania, To make a legal Will in Pennsylvania, the instrument must be:the instrument must be:

1.1. In writingIn writing

2.2. Signed by the testator at the end of the Signed by the testator at the end of the Will.  Will.  

3.3. In the presence of two witnesses (who In the presence of two witnesses (who also sign their names to the Will in the also sign their names to the Will in the testator’s presence and in the presence testator’s presence and in the presence of each otherof each other

Living WillLiving Will

A A living willliving will has nothing to do with has nothing to do with where your assets go. where your assets go.

It is a It is a medical documentmedical document that tells that tells doctors and family members what kind doctors and family members what kind of care you want if you become of care you want if you become incapacitated and cannot express incapacitated and cannot express wishes. wishes.

To make sure doctors follow these To make sure doctors follow these orders you need a trusted orders you need a trusted Power of Power of AttorneyAttorney • A person that is leally appointed (in writing) A person that is leally appointed (in writing)

as agent over a Willas agent over a Will

What is a Living will?What is a Living will? Used to direct a Used to direct a physician regarding physician regarding choice of life-support, choice of life-support, terminal illness or terminal illness or vegetative statevegetative state

Facts of Estate PlanningFacts of Estate Planning

1.1. If you do not have a Will, a State If you do not have a Will, a State Judge will use your State’s law to Judge will use your State’s law to determine what is going to happen determine what is going to happen to your property and assetsto your property and assets

2.2. Handwritten, un-witnessed Wills Handwritten, un-witnessed Wills (holographic), are only legal in 25 (holographic), are only legal in 25 StatesStates

Death with a willDeath with a will Those who die with a valid will Those who die with a valid will

are said to have died are said to have died testatetestate

The creator of the will is known The creator of the will is known as the as the testatortestator

ExecutorExecutor – representative named – representative named to carry out the directions of the to carry out the directions of the willwill

Creation and executionCreation and execution

1.1. Testamentary intentTestamentary intent

- clear intention to make - clear intention to make a willa will

Free of all pressure/ Free of all pressure/ undue influenceundue influence

Creation and executionCreation and execution2. 2. Testamentary capacityTestamentary capacity

Must know/understand…Must know/understand…

•The kind and extent of property The kind and extent of property involvedinvolved

•The persons who stand to The persons who stand to benefitbenefit

•That they are making That they are making arrangements to dispose of arrangements to dispose of their property after deaththeir property after death

Creation and executionCreation and execution

3.3. In most states, a will In most states, a will must be in writingmust be in writing

•Signing must be witnessed by Signing must be witnessed by at least two adultsat least two adults

•No witness can be one who will No witness can be one who will inherit under the willinherit under the will

Amendment of a willAmendment of a willCodicilCodicil – formal, written and – formal, written and

witnessed amendmentwitnessed amendment

Wills are to be kept up to date Wills are to be kept up to date with life changes (ie. marriage, with life changes (ie. marriage, divorce, birth of children, etc.)divorce, birth of children, etc.)

Same rules to creating a will Same rules to creating a will apply to a codicilapply to a codicil

Types of willsTypes of willsHolographic willHolographic will – a written will – a written will

created entirely by the makers created entirely by the makers own hand and signed (not own hand and signed (not witnessed)witnessed)

Nuncupative willNuncupative will – oral will – oral will (recognized in some states)(recognized in some states)• Must be witnessedMust be witnessed• Distribution of property limitedDistribution of property limited