Estate
Documents
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 Estate
Documents
o Three Minimum Documents for All Clients
• Will (Last Will and Testament)
• Handles Distribution of Assets at Death
• Power Of Attorney
• Handles Financial Issues Prior to Death
• Health Directives
• Handles Health Wishes when Incapacitated
 Learning
Objectives -- Wills
o Describe a Will and its essential parts
o Define: testate and intestate
o Explain advantages and disadvantages of a will
o Identify the three types of wills
o Distinguish between per capita and per stirpes
o Explain side letters and their uses
o Identify issues affecting wills
 Why
is a Will considered a basic (essential)
document for estate planning?

Definition of Will and Essential Parts
o A will gives the testator (originator of the will) the legal means to
control the distribution of his or her assets after death
o To Die with a valid Will is to die “testate”
o To Die without a valid Will is to die “intestate”
• The laws of the state are used to distribute the assets of the deceased
• The laws are different in different states
• The laws may distribute the assets in a way that is contrary to the
wishes of the deceased
o To Die with a valid Will that does not cover all the assets of the
deceased is to die in “partial intestate”
• Named assets are distributed according to the Will
• Unnamed assets are distributed according to the laws of the state
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Definition of Will and Essential Parts
o Introductory Clause
• Identifies the testator and state of domicile
• Identifies the next of kin
o Example of opening statement
“I, Thomas Parry Monroe, living at 1010 South Union Street, Houston,
Texas 77040 do hereby declare this my last will and testament.“
o Will also typically include
• Revocation of all previous wills
• Name of spouse (current)
• Name of children from marriage
o May include previous marriages, adopted children, etc.

Definition of Will and Essential Parts
o Bequest Clause
• Identifies specific assets and or amounts to be distributed to a specific
individual
• Example
“ I leave my 1972 Datsun 240 to my oldest son Patrick.”
o Residual Clause
• Transfers unnamed assets to specific individuals
• Failure to have a residual clause may leave the deceased in “partial
intestate” on the unnamed assets.
• Example
“I leave all remaining property owned by me and not previously mentioned
in this will to my residuary estate. I leave my residuary state in the
following manner, 50% to my wife and 25% each to my two children.”

Definition of Will and Essential Parts
o Appointment of Executor (Executrix) Clause
• Names executor and succession of executors if first named executor
refuses or is incapable of performing duties of the executor
• States the powers granted to the executor in fulfilling the instructions of the
will
• May wave the surety bond for the executor
• May provide specific compensation for the executor (executor may elect to
forego compensation that is a taxable distribution to the executor)
o Guardianship Clause
• Identifies individual(s) to raise minor children (and typically will have
provisions for the cost of raising the minors)
• Can also name successor for guardianship if original refuses or is not
capable of fulfilling the duties of the guardian
• Absent this clause, the court will appoint the guardian for surviving minors

Definition of Will and Essential Parts
o Tax Appointment Clause
• If specific assets are to be used for paying estate and gift taxes
• Can reduce the overall taxes against the estate and increase total
distribution of assets to heirs, legatees, and devisees
o Attestation Clause
• Statement at the end of the will attesting to the document as the will of
the testator
• Usually signed by two or three qualified witnesses
• Can be notarized
• Legatees typically should not be witnesses as it may jeopardize the
validity of the will
• Example
“On this day of January 7, 2016, the testator declares this as his last will
and testament and signed in our joint presence and by us in his
presence.”

Definition of Will and Essential Parts
o Self Proving Clause
• If notarized, the statement of the notary
• Example
“In witness whereof, I have hereto subscribed my name and affixed my
seal on this 7th day of January 2016 in the presence of the subscribing
witnesses.”
o Other Clauses
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Simultaneous Death Clause
Survivorship Clause
Disclaimer Clause
Contingent Legatee Clause
No Contest Clause

The Contingent Legatee Clause
o When a non blood line recipient of the will precedes the testator in
death and the will has not been revised this clause provides a
process for the disposal of the property originally assigned to the
legatee
o Typically the clause lets the heirs of the legatee receive the assets
• By per capita means all receive an equal amount and impacts the
amount to a surviving legatee
• By per stirpes means the asset is divided by the original legatee(s) and
heirs of the non surviving legatee get only that portion originally to that
legatee
• SEE FIGURES ON PAGES 34 and 35
o May stipulate living heirs of legatee or other distribution when
legatee precedes testator in death

Legal Capacity to Execute a Will
o Age Requirement: Testator has reached age of majority in domiciled state or is
an emancipated minor
o Mental Capacity: Has understanding concerning
• The consequences of the Will
• The nature and extent of the property being disposed of in the Will
• The natural objections of individuals that would seem to have a claim to the property
of the testator

Sound Mind Test
o Standard that the testator meets the above mental capacity requirement
o Not as strict as contract requirements

Recipients of Property fall into three classes
o Heir (blood line) – Relative that receives property under a will
o Legatee – One who receives property under a will
o Devisee – One who receives real property under a will

Types of Wills
o Statutory
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Drafted by an attorney
Complies with the statutory laws of the state of domicile
Generally must be witnessed
Filed as a public document with the county clerk
o Holographic Wills
• Handwritten by testator (or agent of testator)
• Must be signed by testator but not always required to be witnessed
o Noncupative
• Verbal Will – Oral dying declaration
• Must be made in front of witnesses that must sign affidavits
• Usually limited in types of property and not always valid in all states
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Revoking or Changing Will
o To Revoke a Will the testator can
• Destroy the Will (difficult if filed with county clerk)
• Create a new Will with a clause revoking all previous wills
o Changing Will – Events after initial draft of Will may change the
desires of the testator
• Life events – Births, Death, Marriages, Divorce
• Material change in Assets and Property – acquire or dispose of assets
o Codicil – Legal Document that changes provisions of a Will
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Amendment or Supplement to the Will
Must meet standards for creating a will (statutory or holographic)
Is attached to the Will and becomes part of the Will
Can add, delete, or alter the heirs, legatees or devisees of the will

Side Instruction Letter(s) of a Will
o Provides additional information or instructions of the deceased for
• Burial Rights and Funeral – Burial must be completed before probate so
this provides instructions outside the Will so burial can take place prior
to probate and the authentication of the Will
• Decease’s wishes on distribution of specific household goods –
generally avoids cluttering of the will and is instructions to executor for
completing the distribution of household goods
• Can provide information to the executor – information on safe deposit
boxes, location of other important papers or assets, account numbers
for assets, outstanding debt contracts, insurance contracts, or other
items that will help executor complete the probate process
o The letter has no legal standing – but is an aide to executor

Statues Affecting Wills
o Forced Heirship – States can mandate that children are entitled to a
minimum of assets for their
• Well Being
• Health and Safety
• Avoids children becoming wards of the state when the testator has
sufficient assets to care for children
o Marital Share – Like forced heirship for spouse
o Felonious Homicide Statues
• Heirs, legatees, or devisees that have been convicted of killing the
deceased cannot inherit through the will of the deceased
o Divorcee Statues – removed from will unless specifically named
o Anti-Lapse Statues – Children of deceased heir receive assets

Avoiding Will Contests
o Even though a Will meets all the requirements to be a Valid Will
individuals may contest the will
• Heirs that are not named in Will can make claims against the estate
• Substantial fortunes left to nontraditional individuals or groups
• Caregivers – Undue Influence on the testator in state of weakness
• Churches – Undue influence on the testator in state of weakness
• Pets – Unreasonable amounts for surviving pets
o Court must “entertain” what appears to be legitimate claims
o Testator can name potential heirs in will and
• Provide a specific amount if and only if they do not contest will
• Provide specific disclaimer of an heir
• Pre-validate will prior to death

So, What are the benefits and limitations of a Will
o BENEFITS
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Wishes of Deceased can be carried out
Can appoint desired Executor
Can designate choice for Guardianship of minor children
Can disinherit specific heirs
Can provide provisions that minimize estate and gift taxes
Can designate specific charities and assets (to minimize taxes)
Other issues of importance can be annotated
o LIMITS
• Assets that pass outside of probate cannot be changed (insurance,
retirement accounts, etc.)
• Could cause delay in probate if poorly written, contested, etc.

Learning Objectives of Powers of Attorney and Powers of
Appointment
o Distinguish the difference between a Power of Attorney and Power of
Appointment
o Describe the basic intent of a Power of Attorney
o Describe the basic intent of a Power of Appointment
o Distinguish between durable powers and springing powers

Power of Attorney
o The ability of an individual to select an agent to act in the interest of
the principal
• Typically a trusted individual is granted the power to make decisions
that the principal would chose to make on his own
• Power ends at the death of the principal

What Does the Agent in a Power of Attorney Do?
o In general it allows the agent to maintain the estate of the principal
• Pay bills of the principal
• Maintain property of the principal
o A General Power of Attorney gives wide discretion over all decisions
that the principal would normally make for himself or herself
o Some states limit the Power of Attorney such that the Agent
• Cannot make gifts for the principal
• Cannot self-deal, that is use the assets of the principal for his or her
personal gain
• Pay agent’s debts
• Transfer assets to agent’s estate
• Transfer assets to agent’s creditors
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What Does an Agent in a Power of Appointment Do?
o In general the agent has the power to direct assets of the principal
• Transfer assets to self
• Transfer assets to others
• May extend past death of principal
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General versus Limited
o Both Power of Attorney and Power of Appointment may be general or limited
o Limited means that the scope of decision making or time frame may be
specifically stated and the power expires outside of the time frame
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Durable versus Springing
o Durable Powers of Attorney stay in effect even if principal becomes
incapacitated
o Springing only begins once a specific named event happens

Advantages and Disadvantages of a Power of Attorney
o Advantages
• Enables trusted individual to maintain the estate of a principal in
absence
• Enables trusted individual to maintain the estate of a principal who has
become incapacitated
o Disadvantages
• If agent acts in own self interest the estate of the principal may be
diminished
• If agent is also holding a Power of Appointment over the assets of the
principal and the agent precedes the principal in death
• The assets of the principal are included in the estate of the agent
• This may cause gifting issues and taxes

Health Care Directives
o Three basic types of Health Care Directives
• Durable Power of Attorney for Health Care
• Living Wills and Advanced Medical Directives
• Do Not Resuscitate Orders
o Durable Power of Attorney for Health Care
• Typically a Springing Power of Attorney – Event is incapacitation of
principal
• Allows third party to make decisions on health care for principal
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Disclosure of medical records
Blood transfusions
Resuscitation (Cardiac)
Organ transplants
But not generally to removing life sustaining support - separate
o Living Wills and Advanced Medical Directives
• Advanced directive on life-sustaining measures allowed by principal
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Resuscitation of heart
Assisted breathing (ventilation via mechanical means)
Feeding tubes
Kidney Dialysis
• Can specify circumstances when these wishes are applied
• Can specify individual to make these decisions when principal is
incapacitated
• States suspend these directives if principal is pregnant
• Avoids court appointments or lawsuits (Terry Shiavo Case – 2005)
o Do Not Resuscitate Orders
• Typically prepared when an individual is near death
• Only apply to CPR and not other medical issues

Other Estate Documents
o Documents for owned businesses
• LLC – Limited Liability Corporations and the passing of ownership
• Proprietorships – passing of ownership
o Documents for Insurance
• Property Insurance contracts
• Life Insurance contracts
o Documents for Pensions
• Company pensions
• IRAs
• Etc.
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What are the implications for Financial Planning?
o Estate Planning is an essential part of the financial plan and poor
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estate documents can hurt clients
Clients need to have thorough evaluation of estate documents and
see that it matches their wishes
Legal documents provide insurance against decisions that are in
conflict with desires of client
Legal documents can prevent a extended probate process that
delays the distribution of assets to heirs
Legal documents can appoint the appropriate individuals to serve
as agents, executors, guardians, and health care directors
Other issues?