A substantial majority of Americans die intestate, that is, without ever having made a will, and some of those who do make out wills are quite
5Addresses are as follows: American Bar Association, 750 North Lake Shore Drive, Chicago, IL 60611; National Academic of Elder Law Attorneys, Inc. and National Elder Law Foundation, 1604 North Country Club Road, Tucson, AZ 85716.
creative. They may write a will an the back of a grocery bag, in rhyme, in a humorous fashion, or even in code. They may draft it in their own handwriting and not bother to have it witnessed ( holographic will) or perhaps even tape-record it ( nuncupative will). There are also mutual wills containing reciprocal provisions, as when a married couple leaves everything to each other without restrictions, and conditional wills containing provisions that take effect only when specific conditions described in the will have been met or certain events have taken place.
Holographic, nuncupative, and other nonstandard wills are not valid in all states, and in most cases, it is better for all concerned if an attorney is consulted and legal procedures are followed. In general, a will is legally binding if the testator (the person making the bequest) is at least 18 years of age and of sound mind, if the will is signed in the presence of witnesses (usually two) and contains certain required information. This includes the testator's name, address, and age, followed by a statement of his or her capacity to make a will and that the act is voluntary. Next is a list of the items in the estate and the names of the individuals to whom those items are being bequeathed. The name of the appointed executor of the will should also be provided, after which are the dated signature of the testator and the signatures and addresses of the witnesses. As long as the testator remains alive and in sound mind, he or she may alter or revoke the will.
Laws pertaining to inheritances and wills vary from state to state, but in most states, a will must be filed in a probate court or its nonexistence disclosed to the court within 10 days after the death. After the probate court has made a public announcement that the decedent's will is being probated, there is a specified time period during which claims against the estate must be settled and the property distributed by the executor according to the provisions in the will. In case of irregularities, such as no executor having been named or no will having been prepared by the decedent, the court appoints an administrator to handle the distribution of the decedent's property. If no legal heirs come forward, the estate becomes the property of the state.
Probate can be a lengthy and expensive process, involving a heavy tax burden on the estate. Estate taxes may be levied on the property left at death and must be paid from the estate before the remaining assets are distributed to the heirs. In addition, there may be inheritance taxes, which are levied on the heirs as a percentage of the value of the inherited property. Although some states have effectively abolished inheritance taxes, in most states estate and inheritance taxes range from 2% to 23% of the taxable property.
As a way of reducing the tax burden on his or her estate and heirs, one of the first things that a person with a sizable amount of property wants to know from an estates attorney is how to avoid probate. This may be done through annuitization (insurance, retirement plans, employee stock plans, annuities, etc.). which are exempt from probate. Furthermore, in many states, bank accounts that are held jointly may be treated like jointly held real estate and hence are not subject to probate. Another way to avoid probate is to transfer most of one's assets to other people while one is still alive or to transfer them in the form of co-ownership (joint tenancy). In addition, one can give $10,000
each to as many people as he or she wishes without the recipients having to pay taxes on the gifts. Stock can also be transferred to foundations or other charitable organizations with no tax liability.
Another popular way of avoiding probate is to set up a legal trust while the individual ( trustor ) is still alive. This method is commonly used by older adults who wish to continue providing support for their survivors after the trustor's own death. The trustor retains control of the property as long as he or she remains alive, but when the trustor dies, the property is distributed to his or her designated beneficiaries without being probated.
Because life insurance policies are also exempt from probate, many people use this method of making certain that their survivors are cared for. There are, however, many different kinds of life insurance, chief among which are term life insurance, universal life insurance, and variable life insurance, as well as group and individual life insurance policies. For this reason, and to make certain one is getting what he or she wants, it is important to study the terms and conditions of a life insurance policy before deciding to purchase it. Among the matters to be examined closely are the accidental death benefit, the double-indemnity clause, and provisions concerning payment in the case of homicide and suicide.
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