Chapter 24 Slide 1
CHAPTER 24
Wills, Estates,
and Trusts
Lessons
24-1 Legal Consequences of Death
24-2 Trusts
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Chapter 24 Slide 2
LESSON 24-1
Legal Consequences
of Death
GOALS
 Explain why an orderly distribution of a
decedent’s estate is necessary
 Discuss the benefits of making a will
 Describe how a valid will is made
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Chapter 24 Slide 3
DEATH AND THE LAW
Death without a will
Death with a will
Creation and execution of a valid will
Amendment of a valid will
Special types of wills
Revocation of a will
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Chapter 24 Slide 4
Someone dies -- ?
 Decedent – person who is deceased
 What does the law do?
 Looks for instructions
 How are debts to be paid?
 Remaining property?
 Will – written document which state wishes of
the deceased (how property is to be divided)
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Chapter 24 Slide 5
No Will
Intestate – dying without a will
Probate Court – settles the affairs
 appoints a personal representative
ADMINISTRATOR (male)
ADMINISTRATIX (female)
Estate – property of the deceased
No Will = large administrative expenses
and large estate taxes
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Chapter 24 Slide 6
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Chapter 24 Slide 7
No Will
Intestacy Statutes – dictates how property
will be dispersed
1/3 or ½ to spouse
remainder among children
No surviving children/grandchildren –
decedent’s parents
Parents deceased – decedent’s sisters &
brothers and their children
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Chapter 24 Slide 8
With a Will
Testate – dying with a valid Will
Testator – maker of the Will (male)
Testatrix – maker of the Will (female)
Allows the deceased to decide how
property will be divided instead of
intestacy statutes.
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Chapter 24 Slide 9
With a Will
Executor (male)
Executrix (female)
personal representative of deceased
Can be exempt from posting bond (paying the court $ to
ensure the duties are properly performed)
Appoint guardian for minor children
guardian can also be exempt from posting bond
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Chapter 24 Slide 10
Living Wills
Directions to physicians on choices
regarding life-support treatment for
 terminally ill
 vegetative state
Durable Power of Attorney – confers the
power to an individual to make health
care decisions on your behalf
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Chapter 24 Slide 11
Rules on creation and
execution of a valid Will
 There are strict state laws that govern:


how wills are created
how wills are executed
1) Testatrix/Testator must have
Testamentary Intent (clear intention to
create a will)
 no deception present
2) Testamentary Capacity – understand
clearly what you are giving and to whom
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3) Writing –
signature witnessed by 2-3 adults
witnesses not in will
witnesses aware the document is a
will
Must be at least 18 years of age.
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Chapter 24 Slide 13
Amendment
Wills become effective when the person
dies.
Can be changed at any time before the
person dies.
Codicil – formal, written, and witnessed
amendment.
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Chapter 24 Slide 14
Special Types of Wills
Holographic Will – written by
decedent’s own hand and signed
Nuncupative Will – oral will / during
maker’s last illness or by service
personnel on active duty.
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Chapter 24 Slide 15
 Lee was fatally injured in a car accident.
 As she was dying – she told 3 witnesses
she was making a will.
She wanted her paintings collection to go to
her good friend, Anne.
In a State that allows nuncupative wills, if
the witnesses’ testimonies were properly
and promptly reduced to writing, Lee’s
dying wish as to the disposition of her
property would be carried out.
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Chapter 24 Slide 16
Revocation of a Will
As long as the Testator/trix has
testamentary intent and capacity, the
will can be amended.
Revoke a Will –
 destroy / deface
 marriage / adoption (not divorce; but divorce
settlement can alter a will)
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Revocation of a Will
Written revocation – in new will, write:
“I hereby revoke all prior wills, . . .”
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Procedures for Estate
Resolution
After decedant dies –
-- Administrator must bring proof of death to
the appropriate court (probate/surrogate)
 death certificate
 official notice from armed services
 disaster recovery testimony
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Procedures for Estate
Resolution
If a person just vanished –
State can declare dead under “Enoch
Arden laws” (after 5 – 7 years)
-- Organizing all assets and debts
-- Give public notice of the estate and
necessity for filing claims against it
within the statutory period (six months)
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Procedures for Estate
Resolution
-- Paying valid claims against the estate
-- Distributing the remaining property
according to the will or statute
Administrator is personally liable for failure
to reasonably carry out the duties.
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Chapter 24 Slide 21
Distributions Without a Will
Hawaii as an example:
Person dies intestate (one or more
children, no spouse) – children inherit
equal shares
Person dies (spouse + children) –
spouse gets ½ and rest divided equally
among children
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Person dies (spouse, no children) –
spouse gets ½ and parents of the
deceased receive the remainder. If
parents are deceased  brothers and
sisters
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Chapter 24 Slide 23
Distributions with a Will
Terms of the Will are followed.
There may be statutory provisions
allowing certain relatives to override the
will’s terms and receive more of the
estate than the will provided.
i.e. some states – surviving spouse may
elect to receive ½-1/3 instead of the
will’s provision.
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Chapter 24 Slide 24
DIVISION OF $1,800,000
ESTATE
John’s Children
Robin
John
(testator—
deceased)
Marie (deceased)
Grandchildren
Harold
Great-Grandchildren
Maynard
Scott
Alicia (deceased)
Molly
Morris
Guy
Grant (deceased)
Damon
Oliva
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Alex
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Chapter 24 Slide 25
DIVISION OF $1,800,000
ESTATE PER STIRPES
John’s Children
Robin ($600,000)
John
(testator—
deceased)
Marie (deceased)
Grandchildren
Harold
($0)
Maynard
Scott
Grant (deceased)
($300,000)
Molly ($150,000)
Morris ($150,000)
($200,000)
Damon ($200,000)
Oliva
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($0)
Alicia (deceased)
Guy
Great-Grandchildren
($200,000)
Alex
($0)
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Chapter 24 Slide 26
DIVISION OF $1,800,000
ESTATE PER CAPITA
John’s Children
Robin ($180,000)
John
(testator—
deceased)
Marie (deceased)
Grandchildren
Harold ($180,000)
Maynard ($180,000)
Scott
Molly ($180,000)
Morris ($180,000)
($180,000)
Damon ($180,000)
Oliva
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($180,000)
Alicia (deceased)
Guy
Grant (deceased)
Great-Grandchildren
($180,000)
Alex ($180,000)
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Chapter 24 Slide 27
No Inheritors
 Property of the deceased “escheats” or
reverts to the state.
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LESSON 24-2
Chapter 24 Slide 28
Trusts
GOALS
 Explain the usefulness of trusts
 Name and describe the various types of trusts
 Distinguish between express and implied trusts
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Chapter 24 Slide 29
DISTRIBUTION OF A
DECEDENT’S ESTATE
Procedure for estate resolution
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Chapter 24 Slide 30
What’s your verdict
Pedro buys a vacation home as a way
to “keep the family together”.
Didn’t want the property to be split up
and sold when he dies.
Pedro wants the vacation home to
remain as a “family gathering place.”
What can he do?
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Chapter 24 Slide 31
CREATION OF TRUSTS
A trust is a legal device used to transfer
the immediate control of property to
another party.
A separate legal entity.
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Creation of Trusts
Trustee – legal entity that has title to
property.
Settlor – person who creates the trust
Beneficiary – person for whom the trust
has been set up
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Creation of Trusts
Trustees have the right to be paid for
managing the trust.
NJ – 5%-7%
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Chapter 24 Slide 34
TYPES OF TRUSTS
Express Trust
 Inter vivos trust
 Testamentary trust
 Charitable trust
 Private trust
Implied Trust
 Resulting trust
 Constructive trust
 Spendthrift trust
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Chapter 24 Slide 35
Inter vivos trust
A trust created during the lifetime of the
settlor.
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Testamentary trust
A trust created after the death of the
settlor in accordance with his/her
wishes.
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Charitable trust
A trust created for altruistic purposes.
Raise money to help build shelter for
homeless.
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Private trust
A trust created for a private purpose.
One type 
Spendthrift Trust protects the beneficiary’s interest in
the property from potential creditors.
Beneficiary cannot have any control
over the trust.
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Express Trusts
 Written or oral statements made by the
settlor where terms are explicitly stated
by the settlor.
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Implied Trusts
Resulting Trust
-- Entity intended to receive the benefit of
an express trust cannot do so.
Resulting Trust formed to hold the
property for its original owner.
What’s your verdict – Oliver formed charitable trust to install air
conditioning in local high school.
Transferred property to be sold for for the cause.
School building burned down.
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Chapter 24 Slide 41
Implied Trusts
Constructive Trust
-- Created to require a person holding
property to transfer it to another b/c
retention of the property would be a
wrongful and unjust enrichment of the
holder.
Property obtained via fraud, duress, etc.
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