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Flashcards in Estate Planning Documents Deck (16)
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1
Q

Types of Fiduciaries

A
  • an executor or personal representative of an estate has a duty to act in the best interests of the beneficiaries of the estate.
  • A trustee must act in the best interests of the trust beneficiaries
  • Guardians are appointed to act in the best interests of the person who is their ward
  • an agent under a power of attorney document is a fiduciary who must act in the best interests of the principal.
2
Q

Fiduciary Duties

A
  • To act for the benefit of beneficiaries in regard to matters within the scope of the fiduciary relationship
  • To refrain from delegating acts that can be performed by the fiduciary
  • To make full disclosure of all facts in any transaction with the beneficiary; any transaction must be fair to the beneficiary; or it cant be set aside
  • To refrain from any self-dealing at the expense of the beneficiaries and to remain loyal to beneficiaries
  • To preserve property and make it productive
  • to invest property prudently according to state laws that may consist of prudent-person rule; legal-list statute, or Uniform Prudent Act
  • To be impartial towards beneficiaries so as not to favor income beneficiaries over remainder beneficiaries
3
Q

Power of Attorney (POA)

A
  • a legal document allowing the principal (person creating the POA) to name an agent to handle their financial affairs
  • under certain circumstances it is limited
  • broad powers that are granted is known as a general POA
  • A durable power of attorney (one that survives the incapacity of the principal) is commonly used in planning for incapacity
4
Q

Execution of a Will

A
  • distributing property to charities or to persons other than heirs
  • establishing a trust at death (testamentary)
  • allocating particular estate assets to pay debts and estate administration expenses
  • apportioning death taxes among the heirs receiving bequests
  • naming guardians and custodians for minor children and assets passing to minors
  • providing for presumption of survival in cases of simultaneous death of spouses
  • coordinating the use of the unified tax credit and marital and charitable deductions to reduce estate taxes
5
Q

A will cannot do the following

A
  • disinherit a spouse
  • making excessive charitable bequests
  • creating illegal conditions for inheritances
  • transferring property that passes by operation of law or trying to change an irrevocable trust
6
Q

Holographic Will

A
  • handwritten will that must be written by the testator in their own handwriting and signed and dated.
  • not valid in all states
7
Q

Nuncupative Wills

A
  • an oral will spoken by the testator in the presence of the required number of witnesses and latter reduced to writing.
  • not valid in all states
8
Q

Per Stripes

A
  • means by root or stock
  • distribution under a will or trust means that property passes to the issue as though their immediate ancestor had divided the property equally among them.
  • also called right of representation
9
Q

Modifying or Revoking a will

A
  • a will can be modified by executing a codicil
  • a will can be revoked by destroying it or by defacing it with the intent to revoke.
  • a will can be revoked by executing a new one
10
Q

Living Wills

A
  • mainly medical life-support directives and do not dispose of the owner’s property
  • an individual can declare his or her wishes for medical treatment and procedures in the event he or she becomes unconscious or incompetent
11
Q

Trusts are used to achieve the following

A
  • to provide professional management (by trustees) of assets for beneficiaries
  • to reduce income and estate taxes
  • to avoid creditors and prevent the waste of assets
  • to arrange for income to be paid to one person and the remaining assets to another
  • to provide assets or income to charities
  • to avoid probate
12
Q

Powers of Guardians

A

-a guardian or conservator generally has all the powers over the ward’s estate that the ward would exercise, except the power to make a will.
-there is potential for abuse
-

13
Q

General Nondurable Power

A
  • the agent is given restricted rights, and the power ends when the principal becomes incompetent.
  • since it ends at incapacity, it does not do much to help plan for this
14
Q

Durable Power of Attorney

A
  • continues indefinitely, even after the principal become incompetent or incapacitated
  • with a broadly drafted power of attorney, the attorney-in-fact can act to the same extent as the principal could act, including the power to make gifts, create trusts, to buy and sell property, and to elect gift splitting
  • avoids the expense of guardians and the legal fees of court supervision over the principal’s estate
15
Q

Springing Power

A

-a durable power that is activated only when a person becomes incapacitated or incompetent

16
Q

Medicaid Trust

A
  • an irrevocable trust that pays income only to the grantor and may also provide for additional invasion of the principal for special needs.
  • the purpose is to remove assets from the control of the grantor so that they will be eligible for medicaid assistance without expending their assets to the poverty level.

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