Chapter 20 Wills Trusts and Estates 20 1

Chapter 20 Wills, Trusts, and Estates 20 -1 Property Distribution Upon Death 20 -2 Trusts Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 Slide 1

20 -1 Property Distribution Upon Death GOALS n Differentiate between dying testate and dying intestate n Describe how a decedent’s property is distributed Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 2

LEGAL ALTERNATIVES IN PROPERTY DISTRIBUTION n Death without a will n Death with a will n n Creation and execution of a valid will Amendment of a valid will Special types of wills Revocation of a will Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 3

What does it mean to die intestate? Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 4

DISTRIBUTION OF THE DECEDENT’S ESTATE n Procedure prior to distribution n Distribution n Without a will n With a will n If there are no inheritors Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 5

What are the terms for the two ways in which the testator can distribute the estate among the lineal descendents? Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 6

20 -2 Trusts GOALS n Recognize the value of the trust instrument n Identify the various types of trusts Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 7

PURPOSE AND CREATION OF TRUSTS n n Trustee Settlor Beneficiary Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 8

What is the legal term for the creator of a trust? Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 9

TYPES OF TRUSTS n Inter vivos v. testamentary trust n Charitable v. private trust n Express v. implied trust Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 10

What is the difference between an inter vivos trust and a testamentary trust? Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 11

PREVENT LEGAL DIFFICULTIES In making provision for the distribution of your assets. . . n Be sure to make a legally proper and clear will. Dying intestate will result in the needless payment of various taxes and fees. Plus it will bring about the distribution of the assets of the estate in accordance with the state intestacy statute. n Keep your will updated. An unclear or out-of-date will may cause conflicts among your potential beneficiaries. This may leave lifelong hard feelings and cost a great deal in legal fees. Continued on the next slide Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 12

PREVENT LEGAL DIFFICULTIES n A will can be changed or canceled at any time during the maker’s life. Avoid confusion as to which is the effective will by using an attorney. Be sure that any subsequent changes are properly executed and, if appropriate, nullify any existing will. n Consider utilizing a trust to insure fulfillment of your wishes for the management of your assets; both before and after death (inter vivos and testamentary trusts). Trusts are flexible, professional management can be utilized, and they can outlast the settlor. Law for Business and Personal Use © South-Western, a part of Cengage Learning Chapter 20 13