(a) It is established that the will has not been revoked; and

(b) Execution of the will is proved in the manner required for the probate of an existing will; and

(c) All of the provisions of the will are proved by at least two credible witnesses or by a copy or draft of the will proved to be true and complete.

In the normal probate of an original will, where the will itself is produced, the will itself is sufficient. However, in a lost will proceeding, this essential element is missing. Thus, the Court will look to a substantial equivalent in the statements of the petition and evidene presented to the Court of that which would have been apparent to the Court had the original will been available to the Court in the first instance.

Original wills should be kept in a secure, fireproof location and your nominated executor should be informed of the documents’ whereabouts. If key people cannot locate your will, they will not be able to assist you in the manner you wish. See: The Safekeeping of Wills in New York State.

Types of Trusts: Revocable Trusts

A revocable living trust should be considered in the following situations:

• You have assets in more than one state;
• You wish to avoid the cost and time delays associated with probate;
• You are concerned about privacy (a will becomes a public document; and/or
• You wish to ensure ease of administering your assets if you become incapacitated.

A revocable living trust does NOT offer any asset protection with respect to the assets transferred to the trust and it does NOT reduce your estate taxes in any way that cannot be accomplished through a will.

When a revocable living trust is part of an estate plan, the dispositive provisions (i.e., the blueprint of the estate plan… the who gets what, when details) will appear in the trust agreement and not the will. However, you will still need a will to handle any assets that were not transferred to the revocable trust during your lifetime. Plus, if you have minor children, the will is needed to nominate guardians for those minor children. The will operates to pour over any assets that are outside the trust into the trust at the time of your death. Thus a will of this sort is typically called a “pour over will.”

Types of Trusts: Irrevocable Trusts

With an irrevocable trust the grantor completely relinquishes title to the property and does not retain a right to alter, amend or revoke the trust. Since the grantor gives up all control and dominion over the transferred property, the assets of an irrevocable trust are not includible in the grantor’s gross estate for federal estate tax purposes. Irrevocable Trusts are also used to shield certain assets from potential future creditors by removing them to a trust

over which neither the grantor nor the beneficiary has discretionary control.

Need Help Creating or Updating Your Estate Plan? Contact Our Firm Today.

At Adler & Adler, we are dedicated to helping our clients protect their assets and families and ensure that your wishes are heard and honored. Once you retain our services, we can advise you on all aspects of your estate planning. Contact us today: 212-843-4059 or 646-946-8327.

2 – Clayton QTIP Plan With Trusts for Descendants

3 – Two Share Plan With Trusts for Descendants

4 – Three Share Plan (Federal Bypass Trust (Family Trust); GST Exempt Reverse QTIP Marital Trust; Marital Trust)

5. Three Share Plan (Federal/State Bypass Trust (Family Trust); State Only QTIP Marital Trust; Marital Trust)

6 – Four Share Plan (Federal/State Bypass Trust (Family Trust); State Only QTIP Marital Trust; Reverse QTIP Marital Trust, Marital Trust)

Clarity begins with a conversation. Call: 212-843-4059 or 646-946-8327.

Wills and Trusts, Estate Planning: Steps, Costs and Our Process

The last deceased spouse is the most recently deceased person who was married to the surviving spouse at the time of that person’s death. The identity of the last deceased spouse is determined as of the day a taxable gift is made and is not impacted by whether the decedent’s estate elected portability or whether the last deceased spouse had any DSUE amount available. Remarriage also does not affect the designation of the last deceased spouse and does not prevent the surviving spouse from applying the DSUE amount to taxable transfers.

When a taxable gift is made, the DSUE amount received from the last deceased spouse is applied before the surviving spouse’s basic exclusion amount. A surviving spouse who has more than one predeceased spouse is not precluded from using the DSUE amount of each spouse in succession. A surviving spouse may not use the sum of DSUE amounts from multiple predeceased spouses at one time nor may the DSUE amount of a predeceased spouse be applied after the death of a subsequent spouse.

A nonresident surviving spouse who is not a citizen of the United States may not take into account the DSUE amount of a deceased spouse unless allowed by treaty.

If the person died in New York City you can order a certified copy of the death certificate online or by mail from the Office of Vital Records.

f the person died outside of New York City but in New York State, you can order a certified copy of the death certificate online or by mail from the New York State Department of Health.

Key concepts to understand about income tax “Basis”:

1- What is Cost Basis?

2 – How is Cost Basis Determined?

3 – What is Carryover Basis?

4 – Basis of Property Acquired In A Tax-Free Exchange

5 – Basis Adjustments When Taxable “Boot” Received

6 – Basis of Property Transferred In Trust

7 – Stepped-Up Basis; Property Transferred Upon Death

8 – Cost Basis Consideration In Planning Family Gifts

All answered here: What is Basis?

In New York State, the County Surrogate’s Court has a vault where Wills can be stored for safekeeping until the person dies.

New York Consolidated Laws, Surrogate’s Court Procedure Act – SCP § 2507. Reception of wills for safekeeping

1. The court of any county upon being paid the fees allowed therefor by law shall receive and deposit in the court any will of a domiciliary of the county which any person shall deliver to it for that purpose and shall give a written receipt therefor to the person depositing it.  An attesting witness to any will may make and sign an affidavit before any officer authorized to administer oaths setting forth such facts as he would be required to testify to in order to prove the will.  The affidavit may be written upon the will or on some paper securely attached thereto and may be filed for safekeeping with the will to which it relates.  There may also be filed with the will affidavits of certified medical examiners, under the provisions of the mental hygiene law, certifying that the maker of the will was of sound mind at the time of its execution, together with any facts supporting such opinion.

2. The will shall be enclosed in a sealed wrapper so that the contents thereof cannot be read and shall have endorsed thereon the name of the testator, his domicile, and the day, month and year when delivered and shall not on any pretext whatever be opened, read or examined until delivered to a person entitled to it as hereinafter directed.

3. The will shall be delivered only

(a) to the testator in person or

(b) upon his written order duly proved by the oath of the testator which shall be duly acknowledged or

(c) after his death to the persons named in the endorsement on the wrapper of the will, if such endorsement be made thereon or

(d) if there be no such endorsement or if it has been deposited with any other officer than a surrogate, then to the surrogate’s court of the county.

4. If the will shall have been deposited with a surrogate’s court or shall have been delivered to it as above prescribed the court after the death of the testator shall publicly open and examine the will and make known the contents thereof and shall file it in the court, there to remain until it shall have been duly proved, if capable of proof, and then to be delivered to the person entitled to the custody thereof or until required by the authority of some competent court to produce the same in such court.

Non-probate assets are not affected by intestate succession laws. Non-probate assets will pass to the surviving joint tenant (in the case of joint tenancy with right of survivorship) or to the beneficiary you designate (in the case of the first 5 bulleted items below), whether you have a will or you do not have a will. Examples of non-probate property include:

• Property you’ve transferred to a revocable trust;
• Life insurance proceeds (unless your estate is the designated beneficiary);
• IRA, 401(k), or retirement plans (unless your estate is the designated beneficiary);
• Securities held in a transfer-on-death bank account (TOD account);
• Payable-on-death bank accounts (POD accounts); or
• Property you own with another person in joint tenancy with right of survivorship.

The Spouse’s Share in New York

In New York, if you are married and you die without a will, what your spouse gets depends on whether or not you have living descendants (children, grandchildren, or great grandchildren).

• If you die without a will in New York, and have no living descendants your spouse inherits everything.
• If you have living descendants, then your spouse inherits the first $50,000 of your intestate property, plus 1/2 of the balance

Children’s Shares in New York

If you die without a will in New York, your children will receive an “intestate share” of your property. The size of each child’s share depends on how many children you have and whether or not you are married.

If you die with children but no spouse your children inherit everything.

For children to inherit from you under the laws of intestacy, the state of New York must consider them your children, legally. Here are some things to keep in mind.

• Children you legally adopted will receive an intestate share, just as your biological children do
• Foster children and stepchildren. Foster children and stepchildren you never legally adopted will not automatically receive a share.
• Children you placed for adoption and who were legally adopted by another family will not receive a share. However, if your biological children were adopted by your spouse, that won’t affect their intestate inheritance.
• Children born outside of marriage. If you were not married to your children’s mother when she gave birth to them, they will receive a share of your estate if (1) you and the child’s mother signed an acknowledgment of paternity and filed it where your child’s birth certificate is registered, (2) you signed a document acknowledging paternity; you openly acknowledged the child as your own; (4) or a court has determined your paternity.
• Children born through artificial insemination. Your child born through artificial insemination will receive a share of your estate if you consented to the use of your genetic material to be used after your death and this consent was made within seven years of your death.
• A grandchild will receive a share only if that grandchild’s parent (your son or daughter) is not alive to receive his or her share.
• “Half” relatives inherit as if they were “whole.” That is, your sister with whom you share a father, but not a mother, has the same right to your property as she would if you had both parents in common.
• Posthumous relatives (relatives conceived before — but born after — you die) inherit as if they had been born while you were alive.

What is Escheat?

If you die without a will and don’t have any family, your property will “escheat” into the state’s coffers. However, this very rarely happens because the laws are designed to get your property to anyone who was even remotely related to you. For example, your property won’t go to the state if you leave a spouse, children, grandchildren, great grandchildren, parents, grandparents, siblings, nieces, nephews, great nieces or nephews, aunts, uncles, or cousins.

Best to have a Will

If you die without a will, state law will determine the distribution of your estate. As explained above this is known as the law of intestate succession. Through these laws, each state, in effect, draws your will for you – determines “who gets what” – according to what seems most equitable for the greatest number of its citizens. The problem with these laws is they are designed for general application and rarely suit individual circumstances. Preparing your own will assures that your property will go to the people you choose.

The executor named in the decedent’s Will must offer the Will for probate in the Surrogate’s Court in the county in which the Decedent was domiciled at the time of his death. All of the decedent’s distributees (in effect their “next of kin”), irrespective of whether or not they are named in the Will as beneficiaries of the decedent’s estate, are entitled to notice that the decedent’s Will is being offered for probate. After jurisdiction has been obtained over all of the interested parties and the executor nominated in the Will has been granted Letters Testamentary, the executor is charged with collecting and marshalling the decedent’s estate in accordance with the terms of the Decedent’s Will.

If a decedent died without leaving a valid Will, the decedent is said to have died intestate, and the decedent’s estate passes through intestacy to the decedent’s distributees.

The distributees of a decedent’s estate are set by statute. See: EPTL § 4-1.1. Eligibility to serve as the administrator of a decedent’s intestate estate is set by SCPA § § 1001-1002.

Important Terms

Intestate: When a person dies without a will.

Testate: When a person dies with a will.

Administration Proceeding: A proceeding to appoint a legal representative, known as an

administrator, to administer the estate of a person who dies without a Will.

Probate Proceeding: A surrogate court proceeding to administer the property of a person who dies with a will. The legal representative of the estate here is called the Executor. See also: How is a Will Probated?

Probate Assets: Assets held in the decedent’s name alone that do not pass by operation of law and that which the Executor administers in accordance with the decedent’s Will. See also: The Probate Estate.

Operation of Law: Property that passes automatically because of the way title is held in the

property and is not affected by intestacy rules or by a Will. See also: How Property is Transferred at Death.

See also: Die without a will in New York? What happens?

For income tax purposes, non-grantor trusts are classified as either simple trusts or complex trusts. A simple trust is one that mandates that all income earned during the taxable year must be distributed to the trust beneficiary. A complex trust is sometimes referred to as an accumulation trust or a discretionary trust. The trustee of a complex trust has discretion over distributions as described in the trust document. If a trust mandates distributions of income and the trustee also makes a discretionary distribution of principal, the trust is considered a complex trust.

Understanding the income tax treatment of taxable trusts is important because trusts have highly compressed tax brackets. As of 2021, the top tax rate of 37% on ordinary income begins at the very low threshold of $13,051 for trusts. By comparison an individual single taxpayer only reaches the 37% marginal tax rate after reaching $523,601 of ordinary income. Married individuals filing jointly reach the the top marginal rate after reaching $628,301 of ordinary income. The top tax rate of long-term capital gains begins at a threshold of $13,250 for trusts, whereas the threshold for individual single filers is $445,850 and for married persons filing jointly $501,600 of income.

Like individuals, trusts are also be subject to an additional tax for any undistributed investment income, known as “net investment income tax.”

If a trust’s beneficiary is in a lower tax bracket than the trust and the trust’s beneficiary receives distributions from the trust, such distributions could result in a lower overall tax if the beneficiary is in a lower tax bracket.

For tax purposes, we must look at so-called trust accounting income (“TAI”). TAI is calculated in conformity with the terms of the trust agreement and state law. In simple terms, TAI includes all forms of income, except long term capital gains. But note that the trust document can redefine trust accounting income to include capital gains.

The taxable income of a trust is generally calculated the same as the taxable income of an individual, but the tax may be owed by the trust or by a combination of the trust and its beneficiaries. This is true because trusts are entitled to a deduction known as the Income Distribution Deduction, which is generally defined as the lesser of Distributable Net Income (“DNI”) or the total distributions. DNI is the construct used to allocate income between a non-grantor trust and its beneficiaries and assure that there is no double taxation.

DNI is the amount of income that will be taxed to the beneficiary. Distributions in excess of DNI are treated as tax-exempt income or as principal and are not taxable to the beneficiary. A complex trust does not have to distribute all of its income or make principal distributions. Regardless of how much is distributed, the distribution deduction is limited to DNI. The amount that is treated as DNI is taxed on the beneficiary’s income tax return since it is income earned by the trust or estate which then received an offsetting deduction on the fiduciary income tax return (Form 1041).

The gift tax applies to a transfer by gift regardless of whether: (1) the transfer is made outright or in trust; (2) the gift is direct or indirect; or (3) the property is real or personal, tangible or intangible.

The federal gift tax assumes that all transfers of property by gift are taxable, but there are exceptions. Nontaxable transfers that need not be reported on Form 709 (the United States Gift (and Generation-Skipping Transfer) Tax Return) include:

– Gifts of present interests (see below) within the gift tax annual exclusion amount (currently, $15,000 per donee),

– Direct payments of qualifying medical or educational expenses on behalf of an individual,

– Deductible charitable gifts,

– Gifts to one’s U.S. citizen spouse, either outright or to a trust that meets certain requirements, and

– Gifts to one’s non-citizen spouse within a special annual exclusion amount ($159,000, as indexed for inflation in 2021).

If all your gifts for the year fall into these categories, no gift tax return is required. But gifts that don’t meet these requirements are generally considered taxable and thus must be reported on Form 709 — even if they’re shielded from tax by the lifetime exemption ($11,700,000 in 2021).

Beware of common errors:

– Future interests. The $15,000 annual exclusion applies only to present interests, such as outright gifts. Gifts of future interests, such as transfers to a trust for a beneficiaries benefit, aren’t covered, so you’re required to report them on Form 709 even if they’re less than $15,000. Be aware, however, that it’s possible for gifts in trust to meet the present interest requirement by giving beneficiaries so-called Crummey withdrawal powers (the right to withdraw a contribution for a limited time after it’s made).

– Spousal gifts. As previously noted, gifts to a U.S. citizen spouse are not reported on Form 709. However, if you make a gift to a trust for your spouse’s benefit, the trust must 1) provide that your spouse is entitled to all the trust’s income for life, payable at least annually, 2) give your spouse a general power of appointment over its assets and 3) not be subject to any other person’s power of appointment. Otherwise, the gift must be reported. And, gifts to a non-citizen spouse: If they exceed the $159,000 annual exclusion, they must be reported whether they’re outright gifts or gifts in trust.

– Gift splitting. Spouses may elect to split a gift to a child or other donee, so that each spouse is deemed to have made one-half of the gift, even if one spouse wrote the check. This allows married couples to combine their annual exclusions and give up to $30,000 to each donee. To make the election, the donor spouse must file Form 709, and the other spouse must sign a consent or, in some cases, file a separate gift tax return. Keep in mind that, once you make this election, you and your spouse must split all gifts to third parties during that tax year.

– 529 plans. You can contribute up to five times the annual gift allowance of $15,000, per beneficiary in a single year without gift tax as long as no additional gifts are made to the same beneficiary during the next four years. This means that you can contribute up to $75,000 ($150,000 for married couples) for your beneficiary today and elect to treat your contribution as made over a five calendar-year period for gift tax purposes. To take advantage of this benefit, you must file an election on Form 709.

Sometimes it may be useful to file a gift tax return, even if one is not required. For example, if you make annual exclusion gifts of hard to value assets, such as interests in a closely held business, a gift tax return that meets “adequate disclosure” requirements will trigger the three-year statute of limitations period for audits. If you don’t file a gift tax return, the IRS has unlimited time to challenge the value of your gifts.

See also: Wealth Transfer Taxes (in 6 minutes)

A trust exists when one person (the trustee) holds title to property for the benefit of another person (the beneficiary).

A person called the grantor (also known as the settlor or trustor) creates the trust and transfers property in the trust. The grantor, trustee, and beneficiary can be different people. It is also possible that one single person could be the grantor, trustee and beneficiary.

What is a trustee?

The trustee is the person or entity (such as a bank or trust company) that holds legal title to the property in the trust. The trustee’s job is to manage the property in the trust for the benefit of the beneficiaries pursuant to the terms of the trust.

A trustee has all the powers set forth in the trust document (unless they conflict with New York law or unless a court order says otherwise). The trustee has a duty to collect, preserve and protect the trust assets.

Generally speaking the trustee must:

– Follow what the trust document says (as long as it is legal);

– Do only things that benefit the beneficiaries;

– Not favor one beneficiary over another (unless the trust document says otherwise);

– Avoid conflicts of interest with the beneficiaries

– Never use trust property for personal benefit (unless the trustee is also a beneficiary);

– Keep trust property separate from property owned by anyone else;

– Administer and invest the assets of the trust with reasonable care and skill, protect the trust and accomplish the purposes of the trust as set forth in the trust document;

– Keep detailed records and provide the beneficiaries with periodic reports and accountings as required by New York law.

– Make proper determinations of what is income versus principal when the trust directs that they be distributed differently.

What is a trust “beneficiary”?

A beneficiary of a trust is a person who by the terms of the trust has the current or future right to have the trustee pay out cash or other trust property to him or her. Unless the trust is revocable by someone else the beneficiary generally has the following rights, in addition to any other rights listed in the trust:

– The right to receive notice of the existence of the trust.

– The right to receive a copy of the trust.

– The right to receive trust information about the beneficiary’s interests in the trust.

– The right to enforce the terms of the trust and to hold the trustee accountable for any wrongful acts or omissions that affect that beneficiary’s interests.

See also:

What is a Trust?

Revocable Trusts

All property that is included in the gross estate and passes to a surviving spouse is eligible for the marital deduction. The property must pass “outright.” In some cases, certain life estates and certain marital trusts (for example, a so-called QTIP trust) also qualify for the marital deduction.

Once you have accounted for the Gross Estate, certain deductions (and in certain circumstances, reductions to value) are allowed in arriving at your “Taxable Estate.” These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify.

After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit.

Most estates do not need to file an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $11,180,000 in 2018, $11,400,000 in 2019, $11,580,000 in 2020, and $11,700,000 in 2021. In 2026, the exemption amount is scheduled to revert to its pre-2018 level of $5 million, as adjusted for inflation.

Treasury regulations state that taxpayers taking advantage of the increased exemption amounts by making gifts during the period 2018 to 2025 will not be adversely effected after 2025 when this amount reverts to its pre-2018 level of $5 million. Thus, taxpayers planning to make large gifts between 2018 and 2025 can do so without being concerned that they will lose the tax benefit of the higher exemption level once it decreases.

Since January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent’s unused exemption to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse and is known as the portability election.

See: Wealth Transfer Taxes (in 6 minutes)

Estates

When a will makes a bequest to charity, the estate must register with the Attorney General.

Are any charitable estates exempt from registration?

Registration is not required if all bequests to charity are specific dollar amounts left to named charities. However, if the bequests cannot be paid in full for any reason (for example, the estate has insufficient assets, a named charity no longer exists, etc.), then the estate must register as soon as possible but no later than six months after these facts become known.

How does an estate register?

A registration file is opened automatically, and a registration number is assigned, when the Attorney General’s office receives a copy of the Notice of Probate, a court document that is prepared by the executor or the estate’s attorney. The executor or attorney will receive a letter from the Attorney General’s office confirming that the estate is registered, and requesting a copy of the will if has not already been provided.

Must a charitable estate file financial reports with the Attorney General?

The only required financial report is the executor’s final accounting, which is filed when the estate is ready to be closed. The accounting may be formal (filed in court) or informal.

The applicable fee is payable at the time of the final accounting. The fee amount is based on the amount that is paid to charity.

Trusts

Which trusts must register?

Any trust that has a current charitable interest must register with the Attorney General. This includes charitable lead trusts, charitable remainder trusts (when the charitable remainder interest becomes current), and trusts with wholly charitable purposes, including private foundations and public charities organized in trust form.

In general, a trust is required to register no later than six months after the charitable interest becomes current.

There are three different kinds of estate proceedings in Surrogate’s Court.

Small Estate: This is also called a voluntary administration. If a person died with less than $50,000 worth of personal property, then a small estate can be filed. It doesn’t matter if there was a Will or not.

Probate: If a person dies with a Will, then the kind of proceeding filed is called probate and the property is divided according to the Will.

Administration: If a person dies without a Will, then the proceeding filed is called administration and the property is divided according to New York State law.

If you’ve recently lost a loved one, or are helping someone who has, we know this is a challenging time. We are here to help you with estate administration, New York probate and the inheritance process: Probate and Estate Administration

New York Estates Powers and Trust Law (EPTL) Section 5-1.1-A provides a right of election for the surviving spouse to take a share of his or her spouse’s estate, no matter what the will provides. The right of election provides that the elective share of the surviving spouse is the greater of one-third of the net estate, as augmented by so called “testamentary substitutes,” or Fifty Thousand Dollars ($50,000).

Testamentary substitutes include gifts causa mortis, gifts made in the year prior to the decedent’s death, Totten trust accounts, joint bank accounts, property held jointly or payable to another upon death, assets transferred by the decedent in which she retained the right to income for life, retirement accounts, assets in which the decedent held a general power of appointment and transfer-on-death (TOD) or payable-on-death (POD) accounts or securities. These testamentary substitutes are added back into the net estate for purposes of calculating right of election of the surviving spouse.

When divorce occurs, there are important tax law and estate planning issues that need to be addressed. — especially by high net worth families. Unfortunately, these issues are often ignored or misunderstood. Divorcing spouses often wrongly assume that their divorce attorney understands the gift tax, estate tax and generation skipping transfer tax implications of the divorce settlement (some do.. many don’t). The best practice is to have a competent tax and estate planning lawyer involved in the divorce settlement negotiations… this is especially necessary where the divorce attorney’s engagement agreement specifically disclaims responsibility for any tax or estate planning issues.

Also, all existing estate planning documents (including beneficiary designations) should be reviewed and redrafted by an estate planning attorney.

See: Planning for Divorce from the Perspective of a Tax and Estate Planner by Attorney John J. Scroggin, AEP, J.D., LL.M.

Cutting back certain gifts under a will when it’s necessary to meet expenses, pay taxes, satisfy debts or take care of other bequests that are given priority under law or under the will.

ADEMPTION

The failure of a testamentary gift of real or personal property due to the absence of the item given in the testator’s estate at the time of death.

ADMINISTRATOR — EXECUTOR

An administrator is a person appointed by the court to settle an estate.

An executor is a person named by the estate owner in his or her will to settle the estate.

An administrator may be appointed (1) when the deceased left no will, (2) where the deceased left a will but failed to name an executor, (3) where the executor in the will failed to qualify or refused to serve, and (4) where the executor in the will, after having qualified, fails to settle the estate.

ADVANCEMENT

Money or property given by a parent to his child, other descendant, or heir (depending upon the statute’s wording), or expended by the former for the latter’s benefit, by way of anticipation of the share which the child, for example, will inherit in the parent’s estate and intended to be deducted therefrom.

AFTER-BORN CHILD

A child born after the execution of a parent’s will.

ATTESTATION

The attestation clause is the paragraph appended to the will indicating that certain persons by their signatures thereto have heard the testator declare the instrument to be his will and have witnessed his signing of the will.

AUGMENTED ESTATE

A method used in a number of states following the common law ownership of property system to measure a person’s estate for the purpose of determining whether a surviving spouse has been adequately provided for. Generally, the augmented estate consists of property left by the will plus certain property transferred outside of the will by such devices as gifts, joint tenancies and living trusts. In the states using this concept, a surviving spouse is generally considered to be adequately provided for if he or she receives at least one-third of the augmented estate.

BENEFICIARY

A person or organization who’s legally entitled to receive benefits under a legal document such as a will or trust. Except when very small estate are involved, beneficiaries of wills receive their property only after the will is examined and approved by the probate court. Beneficiaries of trusts receive their property as provided in the trust instrument.

BEQUEST

Bequests are classified, generally speaking, as specific or general. A specific bequest is a gift of a particular specified class or kind of property as, for example, a gift of the testator’s diamond ring to a named individual or a gift of designated stock in a corporation. A general bequest is one which may be satisfied from the general assets of the estate as, for example, a bequest of a sum of money without reference to any particular fund from which it is to be paid. Since a specific bequest designates a particular item of the estate which is to be given, if that item is not in existence at the time of the testator’s death, the gift fails.

BOND

A document guaranteeing that a certain amount of money will be paid to people who lose money because a person occupying a position of trust doesn’t carry out his or her legal and ethical responsibilities. For example, if an executor, trustee or guardian who’s bonded (covered by a bond) wrongfully deprives a beneficiary of his or her property (say by blowing it during a trip in Vas Vegas), the bonding company will replace it, up to the limits of the bond. Bonding companies are normally divisions of insurance companies.

CODICIL

A supplement or addition to an existing will, to effect some revision, change, or modification of that will. A codicil must meet the same requirements regarding execution and validity as a will.

COLLATERAL RELATIONS

A phrase used primarily in the law of intestacy to designate uncles and aunts, cousins, etc., those relatives not in a direct ascending or descending line, like grandparents or grandchildren, the latter which are designated as lineal relations.

CUSTODIAN

A general term to describe a personal or financial institution that has charge or custody of property, securities, papers, assets, etc. Also, a person named to care for property left to a minor under the Uniform Transfers to Minors Act.

DECEDENT

A deceased person, especially one who has died recently.

DOMICILE

A person’s legal home. That place where an individual has his true, fixed, and permanent home and principal establishment, and to which whenever he is absent he has the intention of returning.

DONEE

The recipient of a gift. In the law of wills, the term is used to refer to the recipient of a power of appointment.

DONOR

A person who makes a gift. In the law of wills, the term refers to the person who grants a power of appointment to another.

ENCUMBRANCES

Debts (such as taxes, mechanics’ liens, judgment liens) and loans (such as mortgages, deeds of trust, and security interests) which use property as collateral for payment of the debt or loan. They encumber the property because they must be paid off before title to the property can pass from one owner to the next. Generally, the value of a person’s ownership in such property (called the “equity”) is measured by the market value of the property less the sum of all encumbrances.

GUARDIAN

A person named to represent the interests of minor children, whether named in a will or appointed by a court.

HEIR

Technically those persons designated by law to succeed to the estate of an intestate (also designated as next of kin).

HOLOGRAPHIC WILL

A will entirely in the handwriting of the testator. In many states, such a will is not recognized unless it is published, declared and witnessed as required by statute for other written wills.

INTESTACY STATUTES

Statutes designating the persons to whom an intestate’s property is to be distributed, and the share each is to take.

INTESTATE

Without a will. A person who leaves no will is an intestate. A person who dies without a will dies intestate.

JOINT TENANCY

Type of ownership of real or personal property by two or more persons in which each owns an undivided interest in the whole and attached to which is the right of survivorship. When two or more people own property as joint tenants, and one of the owners dies, the other owners automatically own the deceased owner’s share. For example, if a parent and child own a house as joint tenants, and the parent dies, the child automatically becomes the full owner. Because of this “right of survivorship,” a joint tenancy interest in property doesn’t go through probate. Instead, it goes directly to the surviving joint tenant(s). See also: How Property is Transferred at Death

LAPSE

The failure of a testamentary gift due to the death of the intended beneficiary during the life of the testator.

LAST WILL AND TESTAMENT

The usual term referring to a will. The phrase is an outgrowth of the old English law under which a “will” was a disposition of real estate and a “testament” was a disposition of personal property. The two terms originally meant different things. The difference is no longer recognized, however. Nothing is added by coupling “testament” with “will,” the latter being sufficiently inclusive.

LEGACY

A legacy is a gift of personal property by will. It would perhaps be proper to use the term “Bequest” to include any disposition by will, the term “devise” to cover gifts of real estate, and the term “legacy” to cover gifts of personal property. However, both at law and in common practice, the terms are not used with any great respect for this distinction and often appear more or less interchangeably.

LIVING TRUST

A trust set up while you are alive. See: What is a Trust?

NUNCUPATIVE WILL

An oral will, declared or dictated by the testator in his last sickness before a sufficient number of witnesses, and afterwards reduced to writing.

PAY ON DEATH (POD) BANK ACCOUNT

An account enabling you to name a beneficiary who will receive the funds in the account outside of probate after your death.

PERSONAL PROPERTY

Generally, all property other than real estate. Examples of personal property include cars, bank accounts, wages, securities, a small business, furniture, insurance policies, jewelry, pets, etc.

POWER OF APPOINTMENT

A power of appointment is essentially the right to designate who is to own certain specified property. See: What is a Power of Appointment?.

POWER OF ATTORNEY

An instrument in writing whereby one person, as principal, appoints another as his agent and confers authority to perform certain specified acts or kinds of acts on behalf of principal (i.e, you authorize someone to act for you). A durable power of attorney exists when a person executes a power of attorney which will remain effective in the event he or she should later become disabled. For instance, a durable power of attorney allows someone to act for you if you become disabled or incapacitated, to make financial decisions for you.

PROBATE

The process of proving the validity of the will in court and executing its provisions under the guidance of the court. When a person dies, his or her will must be filed before the proper officer of the proper court, giving this court jurisdiction in the matter of enforcing the document. This is called “filing the will for probate.” When the will has been filed, it is said to be “admitted to probate.” The process of “probating” the will involves recognition by the court of the executor named in the will (or appointment of an administrator if none has been named), the filing of the proper reports and papers as required by law, determination of validity of the will if contested, and distribution and final settlement of the estate under the supervision of the court.

RESIDUARY ESTATE

The remaining part of testator’s estate, after payment of debts and requests. Wills usually contain a clause disposing of the residue of the estate which the testator has not otherwise bequeathed or devised.

TAKING AGAINST THE WILL

The choice by a surviving spouse to claim a statutorily allotted share of the deceased spouse’s estate instead of the share specified in the deceased spouse’s will.

TENANCY IN COMMON

A form of ownership whereby each tenant (i.e., owner) holds an undivided interest in property. It is a way of sharing ownership of property where the shares need not be equal. Each owner’s share can be left to whomever he or she wants.

TESTAMENTARY TRUST

A trust of certain property passing under a will and created by the terms of the will.

TESTATOR — TESTATRIX

The person who makes a will. If a man, he is a testator. If a woman, she is a testatrix.

TRUST

A legal entity created by a grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument. The trustee (an individual or institution) holds a fiduciary responsibility to manage the trust’s assets and income for the economic benefit of all of the beneficiaries. See: What is a Trust?

UNIFORM TRANSFERS TO MINORS ACT

A series of statutes, adopted by most states, that provides a method for appointing an adult (called a custodian) to manage property left to a minor.

WILL

A document in which an individual makes a disposition of his real and personal property, to take effect after his death.