Written documents {will, deceased} can state how testator disposes of {bequeath} property. Wills can save estate taxes and avoid state property disposition. People over 18 years old should make wills and keep them current.
parts
Wills can appoint an executor to carry out will's provisions and dispose of estate. They can designate a guardian for minors. They can designate a trustee to manage estate trust funds while children are minors. Wills list beneficiaries, such as wife, husband, and children, and property or cash that they are to receive.
witnesses
Wills must have two witnesses, and a notary public must notarize it. Complicated wills typically need a lawyer.
legality
Wills become legal only at testator death. Before that time, testator can cancel {revoke}, amend, or destroy a will.
When no will exists, and no wife, children, parents, siblings, grandparents, grandchildren, or other relatives exist, an estate can be forfeit to state government {escheat}|.
People can die without leaving wills {intestate}|. Court legal proceedings dispose of possessions, using distribution plans defined by state law. States distribute real property according to law of place where property is, and personal property according to law of place where deceased resided.
distribution
State laws typically give first to children, then spouse, and then other relatives. States can give equal-relation relatives equal shares {per capita rule} {rule of per capita}. States can give family branches equal shares to divide {per stirpes rule} {rule of per stirpes}.
Legal proceedings {probate}| determine if will is valid and supervise estate distribution. After death, no one can dispose of property until after judge states will is genuine and authentic and reads the will. If someone disputes will, court or a third party holds property in escrow until parties settle dispute.
If someone disputes will, court or a third party holds property {escrow, will}| until parties settle dispute.
Personal property {bequest} {legacy} can be left to legatees.
Laws specify creditors claim priority {priority of claims} {claim priority} against estate. Administrator decides if claims are valid. Questionable claims go to court for determination.
Children receive their father's estate {patrimony}|.
Giving all property to oldest child {primogeniture, estate}| was rarely practiced in America.
right of partner or joint owner to entire ownership after death {survivorship}|.
Tax {estate tax} returns {federal estate tax return} can report estate income after death. Administrator must file Fiduciary Income Tax Return on Form 1041 for estate from day of death to day of estate distribution. It uses an identification number like that used by businesses for tax purposes, obtained by application on Form 554 to IRS.
Administrator can have estate tax imposed on estate value at death or six months after death. Administrator must file Form 706 within six months of death, including copy of will. Administrator is liable for false returns. Administrator does not have to do inheritance-tax work.
Estate administrator or executor pays tax on property value left by deceased, usually excluding life insurance and social security, if estate value exceeds a large amount. Administrator must file federal estate tax return if estate has high-enough value.
will
Wills can reduce estate taxes and estate administration costs.
gifts
Gifts can reduce estate tax, because gift tax averages 3/4 of estate tax. People can avoid gift taxes up to yearly and lifetime limits. Bequeathing to charity reduces adjusted gross estate by full bequest value. Gross estate includes gifts given within three years of death, because gift was in contemplation of death, unless executor can show deceased did not expect to die that soon.
joint ownership
Government presumes jointly owned property to be part of deceased's estate. If survivors can show what property part they contributed, that part does not belong to estate.
States can require estate tax {inheritance tax} returns {state inheritance tax return}.
In wills, testator specifies a person {executor}| to carry out will. People must agree to serve.
qualification
The court qualifies executor and issues a notice {letters testamentary}, stating that executor can administer estate.
administrator
If there is no will, court appoints a qualified person {administrator, estate} to administer estate. States have a relative sequence to appoint as administrator, typically spouse, children, grandchildren, father, mother, brothers, sisters, and next of kin. Administrator receives authorization {letters of administration} {administration letters}.
If executor has died or does not qualify under state law, court names an administrator {administrator cum testamento annexo}, who executes will just like executor. Court can appoint an administrator {administrator de bonis non cum testamento annexo} to complete duties of an incapacitated executor.
actions
Administrator is legal estate representative and is under oath to perform duties well. If will does not reject need for bond, administrator must post bond, often personal-property amount plus two years rent on real property, to protect estate creditors from mistakes. Administrator can pay debts and minor expenses, make charitable contributions, prescribe fund management for minor children, and allow trustee not to have to annually account for fund's principal and interest, as state usually requires. Administrator makes estate inventory, obtains current beneficiary or heirs-at-law addresses, and finds minors. Administrator gathers papers not in safety deposit box, including several copies of death certificate from Department of Health and Vital Statistics or County Clerk. Administrator attaches these to notices sent to life-insurance companies. Both administrator and attorney get fees, by percentages of estate value. Court must approve fees.
estate inventory
Most states require administrator to file inventory appraisals within 60 to 90 days of appointment. Executor inventories stocks, bonds, and cash, along with other property, usually with witnesses present. He consults broker for deceased's account contents, especially for stocks and bonds in accounts {street account} owned by individual but registered in brokerage-house names.
insurance proceeds
Wills can exclude proceeds {insurance proceeds} from personal and group life insurance from probate, if policy names a beneficiary, unless beneficiary is testator's estate. Such beneficiary can get benefits right away. Proceeds are still part of taxable estate if deceased retained rights to change beneficiaries, to borrow against policy, to assign or regain policy ownership, to change from term insurance to permanent, or to select from policy options {ownership incidents} {incidents of ownership}. If person gave these incidents to another person, estate excludes these proceeds. Wills can exclude group policies only if group policy and state law allow not claiming all ownership incidents, and if policy assignment to another person is irrevocable.
vehicles
Executor has vehicles appraised and checks insurance, to see that it covers surviving drivers. Administrator should sell or transfer all vehicles, unless transfer requires court approval, estate cannot pay debts, estate is insolvent, or someone contests estate.
estate assets
Administrator draws up asset-distribution schedule for court approval, in accordance with will and state law. He then distributes estate itself and obtains signed receipts, with two witnesses present. Then he gives full report {final accounting} to the court, which approves report and discharges administrator.
estate debt
Administrator files claims for debts owed to estate, going to court if necessary.
estate finances
Administrator has to pay debts, collect credits, and distribute estate to heirs. Estate management to asset distribution requires good business records. Administrator opens checking account in estate name immediately, to pay debts and hold incoming money from savings, real estate, bonds, and debts. Administrator files income tax return, which can be joint return, for year up until day of death. Administrator gives allowance to spouse and minor children from checking account, under state laws, which typically set maximum and minimum, with court authorizing sum after petition. Administrator operates businesses, under court supervision, if decedent was sole owner. If business was partnership, partnership dissolves. Administrator supervises stock shares, handles investments, and handles real-estate transactions.
safety deposit box
Administrator inventories box, by strict legal procedure, with state tax agents or others present, to attest to contents. If box has joint ownership, opening box requires survivor's consent.
Insurance policies name a person {beneficiary}| to receive funds. Federal marital deduction permits deduction of up to half of adjusted gross estate, if it goes to spouse. This deduction only applies to estate part that is not community property. Only property at full spouse disposal qualifies. This law equalizes other states with states that have community property.
Wills can designate a person {guardian}| to care for children, if they meet standards of state law for guardians.
Bequests can be left to people {legatee}.
People {notary public}| can have authorization to witness and seal documents for state.
Court judges {surrogate, law}| can administer estates.
Will makers {testator}| must be 18 years old and of sound mind. Wills must be in writing. Testators must sign wills. Two or three disinterested witnesses must see signing, sign will themselves, and attest to seeing it signed.
Testators can write wills by hand {holographic will}|, but holographic wills are invalid {null and void} in most states.
Testators can state their wills orally to an authorized person {nuncative will}, but nuncative wills are invalid in many states or have restricted uses.
People can join to make a will {joint will}, which is irrevocable and is not amendable after one person dies, unless will has such a provision.
Two wills {mutual will}, usually husband and wife, can leave everything to the other, with other provisions the same.
Wills {conditional will} can require a condition, but conditional wills can face legal problems.
Additions {codicil}| to wills follow same rules as wills.
Wills can have statements {final wishes} about funeral arrangements.
Testators can leave instruction letters {instruction letters} {letters of instruction}, which are not legally binding, to executors.
Testators can cancel wills {revocation}|. States can revoke wills that do not reflect testator's wishes, as evidenced by his or her present circumstances {revocation by circumstances}, and then testator dies intestate. Testator can partially revoke a will, if part revoked is clear. Testators can revoke wills by destroying, executing another will, or formally revoking a will.
Legacy cancellation {ademption} can happen if testator's action is an intentional revocation.
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Date Modified: 2022.0225