Planned Giving From the Donors Perspective A Will

Planned Giving From the Donor’s Perspective

A Will Specifies • Who gets your property • Who gives away your property • Who will raise your kids

The Will Must Be in Writing • Typically they are computer printed or typed • Usually will be labeled “Last Will and Testament” or just “Will of ____” • Many times you will find them stapled to a stiff piece of colored paper

The Will Must Be Signed and Dated by the Person Who Made It • Someone who is not physically capable of signing the will can direct someone else to sign for them in front of witnesses • A few courts have allowed electronic signatures • The testator’s signature does not need to be notarized but it is common practice to do so

The Will Must Be Signed by Witnesses • Almost every state requires the will to be witnessed by two individuals • Most states require the witnesses to actually watch the testator sign the will then sign the document themselves • The witnesses do not need to know the contents of the will but they do need to know it is a will • In most states witnesses cannot be a beneficiary of the will

Usually it is Not Required to Have the Will Notarized…but it’s Recommended • If it is notarized with the appropriate self-proving affidavit, then it is called a self-proving will and simplifies the process of proving the will’s validity during the probate process • Without a self-proving affidavit one or more of the witnesses may have to testify in court, or file a written sworn statement, testifying to the authenticity of the will

Holographic Wills • A Holographic will is a handwritten, unwitnessed, but signed will that is clear that it was intended to be a will • About half the states allow this type of will

When Matthew Left Everything to Mary • You may recall that when Matthew Crawley Died he left no will • Or so they thought, a letter was found that was • • • Handwritten Unwitnessed Signed Clearly a will Left Everything to Mary (this was a holographic will)

States that Recognize Holographic Wills • • • • Alaska Arizona Arkansas California Colorado Hawaii Idaho Kentucky Maine Michigan Mississippi Montana Nebraska Nevada New Jersey • • • North Carolina* North Dakota Oklahoma Pennsylvania South Dakota Tennessee Texas Utah Virginia West Virginia Wyoming *(if found after death in place intended for safekeeping)

Provinces that Recognize Holographic Wills • • Alberta Ontario Manitoba New Brunswick Newfoundland Prince Edward Island* Quebec Saskatchewan *The court can recognize a holographic will, but is not required to

Common Terms Found in Wills • Testator – person who writes a will • Testatrix – old-fashioned term for a female will writer • Executor (or personal representative) – person who is named by the will and appointed by the court, to disperse the assets of the estate and complete the probate process • Executrix – a female executor, most wills simply use the term executor whether the person is male or female

Common Terms Found in Wills • Probate – The court supervised process following a person’s death that includes proving the authenticity of the deceased person’s will, appointing an executor to handle the deceased persons’ affairs, inventorying the deceased person’s property, paying debts and taxes, identifying heirs, and distributing the deceased person’s property according to the will or, if there is no will, according to state law

Common Terms Found in Wills • Bequest – a gift of an item of personal property left at death • Devise – a gift of real estate given at death • Devisee – someone who inherits real estate through a will • Heir – Someone who inherits property under state law if there is no valid will

Common Terms Found in Wills • Issue – Direct descendants, including children, grandchildren, and so on. Brothers, sisters, parents, and other relatives are not issue. • Legacy – A gift of personal property left at death • Legatee – Someone who inherits personal property

Common Terms Found in Wills • Per Capita – A way of dividing property among heirs if a beneficiary dies where each heir in a group inherits an equal share. For example, if a testator leaves their estate to their three children per capita, and one of the children predeceases the testator, then the estate would be divided between the two surviving children

Common Terms Found in Wills • Per Stirpes (or by right of representation) – a way of dividing property among the descendants of a deceased heir or beneficiary. For example, if a testator leaves their estate to their three children per stirpes, and one of the children predeceases the testator, then the deceased beneficiaries issue will receive third of the estate that would have gone to their parent and split it equally among the issue.

Common Terms Found in Wills • Personal Property – any property that is not real estate • Real Property – Land things permanently attached to it, such as houses • Residue or Residuary Estate – All property subject to a will that isn’t given away specifically in the will

Common Clauses Found in Wills • Personal Declarations • This gives the personal information of the testator • Testator’s name • Where the testator lives • Spouse’s name • Children and grandchildren’s names

Nomination of the Executor • The executor, or sometimes called personal representative, will be the one who • Handles Probate • Distributes property to the beneficiaries • Often two or more backup executors are named as well • The executor named in the will does have the option of declining to serve • Usually this will require a signed letter • If the next named executor in the will is willing to serve then they will have all the rights as the first named executor

Sometimes Bonds are Needed • Some states require a bond be posted that serves as an insurance policy to cover any losses to the estate from the executor stealing or recklessly managing estate funds. • Some wills state that a bond is not necessary

Gifts of Personal Property • It is possible to give a specific gift to a person through the will • For example, the testator could give their Square Steinway Piano to cousin Billy who is pretty good at playing a melody • Some wills will say the personal property located in their personal residence is to be divided up amongst their children in an equitable manner http: //madrider. es

Gifts of Real Estate • If the real estate was not jointly owned, or the title did not have a transfer on death provision, then it can be passed through the will • Ownership can be given in percentages • For example, if the testator had three children they could leave the real estate to all three and they would be co-owners

Gifts of Money • A gift of a specific dollar amount to be given to beneficiaries without a specified source, is called a “general” bequest • This is sometimes called a pecuniary bequest • For this type of gift to be fulfilled there must be cash in the estate • If the estate has no cash then the executor will need to sell some of the assets to create cash • If there is no cash or assets to sell then the estate cannot fulfill this type of gift

Gifts of the Residuary Estate • Once all the debts have been paid and all the specific and general bequests have been made the residual estate can be given away • Often this is done by naming a beneficiary and the percentage of the residual estate they are to receive • For example the testator may give their three children 25% each of the residual estate and their local conference the remaining 25%

Children’s guardians • If the testator has children who are minors then the will typically names a guardian for the children • If there is a surviving parent and the will names a guardian the court will typically ignore what the will says and give custody to the surviving parent http: //www. bachelorsdegreeonline. com

Appointing a Property Guardian or Trustee • It is possible to appoint a property guardian, or trustee, to manage property the children will inherit when they reach the age of majority • Age of majority is set by each state • Most states the age is 18 • Alabama (19), Mississippi (21), Nebraska (19) • This property guardian can be the same person as the guardian or someone completely different • Uniform Transfers to Minors Act has been adopted in every state but South Carolina and provides for this type of guardianship

When a Guardian is Not Named • If there are minor children and no guardian is named, of if there is no will, then the court will appoint a guardian • The court is supposed to do what is in the children’s best interest • They will typically name a blood relative but it is possible they will name someone who is not related

Pour-Over Clause • If the testator has created a trust to transfer their property at death, you often find a “pour-over clause” in the will. • This clause will give to the trust any assets that were not already in the trust, and are not transferred by contract such as a life insurance policy or retirement account • This is especially useful for estates where the testator intended to put assets into their trust, but never got around to it, or have purchase assets after the creation of the trust and were not titled in the trust’s name • Because these assets are first handled by the will they must go through the probate process before they are placed in the trust

No-contest clause • Some wills contain language that says if beneficiaries challenge the will in court then they will receive nothing • Not every state enforces no-contest clauses • Those who do allow them usually don’t enforce them against immediate family members • If someone successfully challenges a will then the whole will is thrown out taking the no-contest clause with it

Clauses guiding how long a beneficiary must outlive the testator – Simultaneous Death • If one of the beneficiaries were to die at the same time as the testator this clause states what is to happen • This is to prevent someone from becoming a beneficiary that was not intended • For example, if the testator and their son were to die in a car accident this provision would say that the son predecease the testator so that the property that would have been transferred to the son never makes it to his estate • If there is no simultaneous death provision in the will then the state law determines what is to happen

Clauses guiding how long a beneficiary must outlive the testator – Survivorship Period • Very similar to the Simultaneous Death clause • This states how long a beneficiary must outlive the testator before they receive a bequest • Often this is between 5 – 60 days

Ancillary documents to a will - Codicil • A codicil is an amendment to the will and must be signed and witnessed just like the original will • Codicils are becoming more and more rare, usually someone will revoke the earlier will and make a new one • Unofficial codicils are notes attached to the will with some instructions for the executor • Unofficial codicils are not a legal amendment • If all parties agree that the note truly conveys what the testator wanted to happen you may be able to honor it by having the beneficiaries make a gift from their own inheritance

Ancillary documents to a will – P. O. A. s • Power of Attorney, this gives power to another person to act on the writer’s behalf. When the writer dies the power of attorney ceases to be in effect • Medical Power of Attorney, this gives power to another person to make medical decisions on the writer’s behalf, this also ceases to be in effect when the writer dies www. paradigm-wills. com

Ancillary documents to a will – Advance Health Care Directive • A legal document that specifies what types of medical care the writer wants to have or does not want to have if they are unable to speak for themselves • This document is also known as • Living Will • Medical Directive • Advance Directive • Health Directive http: //www. cmlwealth. com

Events affecting the will - Divorce • In most states if the testator gets divorced after writing a will any gifts going to the ex-spouse is automatically revoked • If this happens in a state with such laws then the ex -spouse should be treated as if they predeceased the testator • The property left to the ex-spouse would then go to the alternate beneficiary or to the residuary estate beneficiary

Events affecting the will - Spouse wants more • No one can completely disinherit their spouse • Every state has some laws that ensures a spouse is not left with unfairly small share of the couple’s property • Traditional spousal share, the spouse can go to court and claim a substantial portion of the deceased spouse’s estate • Share of the augmented estate, in some states the spouse can go after property that is transferred outside of the will such as, life insurance, large gifts bank accounts with pay on death beneficiaries, large gifts given during the two years before the death • Community Property States, there are 9 states where spouses own everything they acquired during the marriage 50/50

Events affecting the will - Children want more • Children do not have an automatic right to inherit and they can be written out of the will • A judge can rule that a child should get an inheritance if it appears that child was overlooked • For example, if the child was born or adopted after the will was written

Events affecting the will – Property given away or sold • The Uniform Probate Code (UPC) adopted by many states handles situations when someone makes a will giving a specific asset or property to a beneficiary, but that asset or property has been sold or given away prior to the testator’s death, by still trying to give the beneficiary something • If the testator acquired a new asset or property in place of the specified asset or property, for instance bought a new car, then the new property will be given to the beneficiary • If an item was sold or destroyed then the value of the item will be given to the beneficiary

Events affecting the will - Property given away or sold • If states have not adopted a law covering this situation then nothing is given to the beneficiary • It is possible to give a gift during lifetime, if there is clear evidence that this gift is to be in place of the estate gift, for instance a written statement, then the beneficiary will no longer receive a gift though the estate

What Happens When There is no Will? This is called dying intestate and each state has their own intestacy laws

Intestacy Laws • Each state has their own intestate laws that stipulate who is going to inherit when there is no will • Only items that go through probate will be affected • Most states will give all or most of the property to the surviving spouse • Some states will give some to the children

Intestacy Laws • The state will give the estate to the closest living relative or relatives • If the state cannot find any relatives then the property will go to the state • The court will appoint an administrator, which is the same as an executor • The court will appoint guardians for any minor children