Transfers at Death

1. Transfers at Death Wills February 14, 2008 Rachel Kirk

2. Will - Definition • A personal declaration of one's intentions regarding the disposition of property at death. • Legally enforceable at death (not operative until that time) • Prior to death, a will may be amended, revoked or destroyed.

3. Will • People involved • Advantages • Requirements • Modes of distribution • Types • Transfers at Death

4. People involved • Executor/ Executrix: personal representative named by decedent. Must be competent to perform required duties and is trusted by the testator • Decedent: the individual who created the will and who died • Testator: The individual who created teh will

5. People involved • Duties of Executor • gathering assets/ probating the will • filing tax returns • closing the estate • distributing property to intended beneficiaries • paying taxes and other debts of estate • Settling decedent's business interests • providing interim support for the beneficiaries • distributing property to intended beneficiaries

6. Advantages • Control disposition of one's property • Estate plan tool for all probate property • Will is the only way to name an executor • Assure the maximum marital deduction desired for property passing to a spouse. • Can designate a guardian to care for children or other legally incompetent dependents. • Can designate orders of survival of themselves and other spouses in the event of a common disaster.

7. Requirements • Signature of testator at the end of document • Date • Witnesses • Testamentary/legal capacity of testator at time will is executed (not at death) • Self-proving provision – witnesses sign a notarized acknowledgement that they say the testator sign the will.

8. Types • Holographic Wills (handwritten) • Noncupative wills (oral in presence of witnesses). Affadavit is required • Joint – testators want to be able to change their will provisions after one spouse dies. • Mutual (Mirror) Wills – two or more parties agree to have their property distributed in a specific way at their death.

9. Modes of Distribution • Per stirpes distribution - members of a designated class inherit equally. • Per capital distribution – all members share equally .

10. Spouse’s Right of Election Against a Will • Wife or husband can’t be totally disinherited • Spouse can assert a statutory right to claim a certain share of the estate.

11. Contents of wills • Declaration intended disposition of property • Which state the testator considers himself to be a resident of (which state laws will govern disposal of property) • Precatory language to express testator's wishes regarding specific mattters (executor not bound to carry out the specific preferences)

12. Contents of wills (Continued) • Bequests : property passing to others • bequests of specific property • bequests of cash • bequests of cash to be paid from a special source

13. Transfers at Death • By contractLife Insurance and Other Contracts: i.e., Insurance proceeds paid to beneficiary (outside of will) Retirement plan proceeds paid to beneficiary (outside of will) Antenuptial and Postnuptial agreementsAntenuptial means “prenuptial”Agreements provides limitations on transfers of property between them in relinquishment of their marital rights to each other’s property.

14. Transfers of death By operation of law Joint Tenants with Right of Survivorship - Jointly held property passes to surviving joint tenant (Both husband & wife are on deed of home, if one dies, the other becomes sole owner) Family AllowanceA small specified amount for interim support of a surviving spouse and minor children Homestead AllowanceProtects home and property surrounding home out of the reach of unsecured creditors IntestacyOutside of a will, contract, or operation of law. State decides disposition of assets according to state law.

15. Testamentary Trusts • Revocable until death • Provides both security and professional management for beneficiaries. • Tax Benefits • Used when testator wants to keep property during his/her life time, but wants the property to benefit one or more family members after death.

16. Pour-Over Trusts • Property can be transferred or poured over from an estate or trust into a preexisting estate or trustExample A trust was originally set up for a child’s future education. This trusts had some CDS and stocks. Another trust was set up upon the death of a testator in which proceeds from an insurance policy were transferred and invested. The interest earned on the second trust (from insurance policy) can be “poured over” to continue funding the trust for future education.

17. Contesting A Will • Improper execution (ex. no witnesses) • Claim that testator was not legally competent to make a will • Testator was under duress or unduly influenced by another (threats, etc.) • Fraud – outright lies or misleading info • Forgery of will • Will has been revoked by act of the testator before death

18. Indicators of Contested Wills • Created, arranged, or paid for by a primary beneficiary • Has bequests that are very different from prior wills (All of a sudden, all money goes to the Church of Scientology) • Will that disinherits one or more natural heirs. • Any will that disposes of great wealth (Anna Nicole Smith) • Any will created and signed by a testator without the benefit of an attorney • Any unusual dispositions (leaving fortune to a dog) • Will by a physically or mentally weak person • Will passing significant property to other than lineal heirs who represent the state