Instructor Manual Complete

Instructor’s Manual and Test Bank to Accompany

Wills, Trusts, and Estate Administration

Eighth Edition

Dennis R. Hower

Janis L. Walter, J.D.

Emma R. Wright, J.D.

iii

CONTENTS

Preface ………………………………………………………………………………………………………..………………… iv

Sample Syllabus ……………………………………………………………………………………………………………….v

CHAPTER 1. The Concept of Property Related to Wills, Trusts, and Estate Administration …….1

CHAPTER 2. The Estate Plan and the Purpose and Need for a Will ……………………………………..17

CHAPTER 3. The Law of Succession: Death Testate or Intestate ………………………………………..25

CHAPTER 4. Wills: Validity Requirements, Modification, Revocation, and Contests ……………42

CHAPTER 5. Preparation to Draft a Will: Checklists and the Conference with the Client ………54

CHAPTER 6. Final Draft and Execution of a Valid Will …………………………………………………….65

CHAPTER 7. The Participants and the Proper Court ………………………………………………………….80

CHAPTER 8. Personal Representatives: Types, Pre-Probate Duties, and Appointment ………….91

CHAPTER 9. Probate and Estate Administration …………………………………………………………….100

CHAPTER 10. Informal Probate Administration ………………………………………………………………126

CHAPTER 11. Tax Considerations in the Administration of Estates …………………………………..137

CHAPTER 12. Introduction to Trusts ……………………………………………………………………………..152

CHAPTER 13. Classification of Trusts, the Living Trust, and Other Special Trusts ……………..166

CHAPTER 14. Estate Planning ……………………………………………………………………………………..181

CHAPTER 15. Long-Term Care …………………………………………………………………………………….196

Test Bank …………………………………………………………………………………………………………………….200

Test Bank Answer Key ………………………………………………………………………………………………….246

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PREFACE

This instructor’s manual is designed to be used with Wills, Trusts, and Estate Administration, Eighth

Edition, by Dennis Hower, Janis Walter, and Emma Wright. The audience includes beginning and more

advanced paralegal students. The manual provides detailed lecture outlines for each text chapter. The

outline also includes teaching suggestions interspersed throughout the textual materials. Each chapter

includes review questions, practice problems, and practical assignments. Many of the questions point the

student to state-specific materials.

The test bank provides multiple-choice and essay questions for each chapter. You may want to

supplement the test bank questions with state-specific questions. The test bank is available in the

instructor’s manual and in an online system via Cognero on the Instructor Companion Site.

Remember to take advantage of local Internal Revenue Service offices and state revenue offices.

Additionally, many probate courts have their own websites. These provide a wealth of information

including forms and publications. They are also a source for guest speakers. Other guest speaker

resources may include an estate tax or elder law attorney, a paralegal from your own jurisdiction, a local

bank trust officer, or someone versed in life insurance.

Arranging for guest speakers requires time, but it is invariably worth the effort. Field trips also bring “the

law to life.” Guest speakers and information learned on field trips will emphasize and highlight facts you

have already taught, but with real-life applicability and verifiability.

Basic language review is important whether you have beginning or advanced students. The law of estates

is term specific and all persons need this review. Take the time to cover terminology in each chapter.

Encourage class discussion. Our students are paralegals of tomorrow. They will be hired (or at least

retained) because they can think independently and use independent judgment. Class debate encourages

this type of thinking and fosters legal maturity in our students.

Treat this course as an opportunity to learn as much as your student; and your zest for learning will be

contagious!

v

SAMPLE SYLLABUS

WILLS, TRUSTS, & ESTATE ADMINISTRATION

Course Number including Section Number

Semester Offered:

Number of Credits:

Prerequisite(s) for course:

INSTRUCTOR: [NAME}

____________________________________________________________________________

OFFICE: Building & Room No.

OFFICE HOURS:

OFFICE PHONE:

HOME PHONE: [optional]

E-MAIL ADDRESS:

INSTRUCTOR’S WEB PAGE: [If applicable]

COURSE PAGE: [If applicable]

CLASS HOURS:

____________________________________________________________________________

COURSE DESCRIPTION: An introduction to basic wills and trusts concepts and an examination of the

law and procedure of preparing wills, administration of estates, and general probate procedure. There will

be a discussion and practical exercises in the areas of wills, living trusts, testamentary trusts, and tax

planning topics involving the marital deduction and the annual exclusion. The drafting of wills and trusts,

preparation of probate documents, filing procedures, asset collection, estate management, and closing

procedures will be covered. In addition, the course will introduce the student to patients’ rights in health-

care decision making, entitlement programs, managed care and long-term care insurance, living facilities

for the elderly, financial planning, social security, and elder abuse.

COURSE OBJECTIVES:

Upon the successful completion of this course, students will demonstrate the following competencies:

• Discuss the basic concepts and purpose of estate planning.

• List the different estate planning tools available.

• Differentiate between probate property and nonprobate property.

• Identify and explain the state statute of descent and distribution, and the concept and consequences of

intestacy.

• Draft a simple will.

• Draft a revocable living trust agreement.

• Compare/Contrast the types of protections afforded family members.

• Discuss trust agreements and identify the parties needed to form a trust.

• Explain the jurisdiction of probate court.

• Choose proper forms used in estate administration.

• Describe tax implications associated with estate administration.

• Complete forms necessary to administer an estate in a probate court.

• Identify and explain various legal issues relating to the elderly.

• Describe the bounds of ethical behavior for a paralegal when dealing with estate and probate issues.

vi

TEXT AND REQUIRED SUPPLIES/COURSE MATERIALS

Wills, Trusts, and Estate Administration, Eighth Edition, by Hower/Walter/Wright, plus online materials

to be identified in class

ATTENDANCE POLICY: [Insert policy]

IMPORTANT DATES: For important dates for the academic year, students should consult the

institutional website: [insert website]. This includes all important dates for students regarding registering,

dropping of classes, refunds, holidays, etc. These deadlines will be followed strictly.

CLASS CANCELLATIONS: [The syllabus should specify the amount of time that you expect students

to wait for you past the scheduled meeting time in the case of your unscheduled absence due to illness or

emergency. It should also specify what students should do about assignments in such cases. Note:

Student complaints are received about faculty who regularly arrive late or fail to appear at all. Clearly,

such performance violates faculty members’ duties under their contracts.]

GRADING PLAN: [Identify your basis of grading. The syllabus should include explicit indications of

your grading system and the weight of each assignment in the final grade. Grievances sometimes claim

that an instructor’s grading was capricious, and without an explicit policy the student’s claim carries

greater credibility. Extra credit is the option of the instructor, but you must clearly identify such

opportunities and make them available to all students in the class.]

[If class participation is included as part of your grading plan, make sure you identify the quantity and

quality of participation.]

[In addition to the specific assignments and point value, you should include your grading scale.]

LATE ASSIGNMENTS: [Include your policy on whether you accept late assignments and under what

conditions. If there is a specific time period, i.e., up to one week after the due date, or consequences for

late assignments, i.e., deduct two points for every day late, make sure you are explicit in the syllabus. If

there are acceptable reasons for late assignments, identify those terms, verification required, and

consequences.]

ACADEMIC DISHONESTY: [Insert policy identified in Student Code of Conduct along with

consequences for such behavior.]

FINAL EXAM: [Identify the time and place of the final examination.]

CLASSROOM RULES OF CONDUCT: [Identify prohibited behavior and the consequences.]

DISABILITY POLICY: [For students who have learning, physical, or other disabilities, a statement of

accommodation will make them more comfortable approaching you and informing you of problems early

in the semester.]

TENTATIVE SCHEDULE AND READINGS

WEEK 1—The Concept of Property Related to Wills, Trusts, and Estate Administration

WEEK 2—The Estate Plan and Purpose of Wills

WEEK 3—The Law of Succession: Testate and Intestate

WEEK 4—Requirements for a Will, Modifications, Revocation, and Contests

WEEK 5—Preparation of a Will—Client Conferences and Checklists

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WEEK 6—Drafting and Executing of a Will

WEEK 7—The Participants and Proper Court

WEEK 8—Personal Representatives; Types, Pre-Probate Duties, and Appointment

WEEK 9—Probate and Estate Administration

WEEK 10—Informal Probate Administration

WEEK 11—Tax Considerations in the Administration of Estates

WEEK 12—Introduction to Trusts

WEEK 13—Classification of Trusts, Living Trusts, and Other Special Trusts

WEEK 14—Estate Planning

WEEK 15—Long-Term Care

SUGGESTED PRACTICAL ASSIGNMENTS: [See assignments in text but you should include the

following]

1) Draft Will

2) Draft Living Trust

3) Draft Advanced Directives

4) Draft Financial Power of Attorney

5) Draft Digital Estate Plan

6) Draft Living Will

7) Draft Court Documents (using software and applicable court website)

8) Prepare Tax Forms

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CHAPTER 1 THE CONCEPT OF PROPERTY RELATED TO WILLS,

TRUSTS, AND ESTATE ADMINISTRATION

LEARNING OBJECTIVES

Students should be able to do the following:

• Identify, explain, and classify the various kinds of property, such as real and personal property or

probate and nonprobate property.

• Recognize and understand the terminology associated with property law.

• Distinguish the various forms of ownership of real and personal property and explain the

requirements for their creation and function.

• Understand and explain why courts do not favor the creation of joint tenancies between parties other

than spouses.

• Identify the community property states and differentiate between community and separate property.

• Explain the kinds, methods of creation, and characteristics of estates in real property.

LECTURE OUTLINE

I. Scope of the Chapter

A. Property (real and personal) is the essential component that establishes the need for and

purpose of wills and trusts.

B. Everyone owns some type of property.

C. Property can be transferred by its owner during the life of the owner by gift, by sale, or by

creating a trust.

D. After the owner dies, property can be transferred in a will, by provisions of a testamentary

trust, or by intestate succession laws.

E. Understanding the law of property and its terminology is required before paralegals can draft

wills and trusts and assist clients with estate administration. Such understanding includes the

following:

1. Terminology of the law of property

2. The law of property’s association with wills, trusts, and estate administration

3. Related statutes and court decisions

4. Forms in which property can be owned

5. Estates in real property, including freeholds and leaseholds

II. Property: Terminology and Classification

A. Property is anything subject to ownership.

1. Property can be classified as real property.

2. Property can be classified as personal property.

B. Real property is immovable, fixed, or permanent.

1. Real property is also called realty or real estate.

2. Real property includes land; structures affixed to land such as houses, apartment buildings,

condominiums, and office buildings; objects attached to land and buildings called fixtures;

and things grown on land except those for the purpose of sale.

3. Real property owners also have rights to airspace above their land and to the earth below it,

including any minerals in the earth.

C. A fixture is real property that once may have been personal property but now is permanently

attached to land or buildings.

1. Examples of fixtures: a tree; carpeting nailed to a floor; a built-in dishwasher.

2. Not fixtures: crops that are annually cultivated such as corn, wheat, and vegetables.

2 Chapter 1: The Concept of Property Related to Wills, Trusts, and Estate Administration

3. State courts apply three tests—annexation, adaptation, and intention—to determine if

personal property has been converted into a fixture.

a. Annexation means that the personal property has been affixed or annexed to the real

property.

b. Adaptation means that the personal property has been adapted to the use or purpose of

the real estate.

(1) Is the property necessary to the function or enjoyment of the real estate?

(2) Is the property beneficial to the function or enjoyment of the real estate?

c. Intention refers to the intention of the person who annexed the personal property to the

real property. In most states, this has been the controlling test that determines the

existence of a fixture.

d. There is substantial variation among courts throughout the country on what constitutes

a fixture.

(1) Generally, examples of fixtures are doors, fences, windows, stoves, wall-to-wall

carpeting, refrigerators, and electric lights.

(2) Compare: Mortgage Bond Co. v. Stephens, 181 Okl. 419, 74 P.2d 361 (1937), in

which a refrigerator was a fixture, and Elliott v. Tallmadge, 207 Or. 428, 297 P.2d

310 (1956), in which a refrigerator was held to be personal property.

—TEACHING SUGGESTION: If students can perform legal research, ask them each to

locate one case in your state jurisdiction where the court either determined personal

property to be a fixture or determined it not to be a fixture. Ask the students to identify

which test applies in your jurisdiction and to explain the court’s reasoning and holding.

If students cannot perform legal research, provide copies of various cases from your

jurisdiction for this exercise.

As a classroom exercise, students can present their findings to expand their appreciation of

what is considered a fixture and why.

4. Tenants who install fixtures on property they rent may remove that property if it falls under

one of three exceptions known as tenant’s fixtures.

a. Trade fixtures are property placed on the land or in a building to help the tenant carry

on a trade or business.

b. Agricultural fixtures are property annexed by the tenant for farming purposes.

c. Domestic fixtures are property attached by the tenant to make an apartment more

comfortable or convenient.

D. When real property is transferred by gift or sale, the title or ownership is conveyed to the donee

or buyer by a formal written document called a deed.

1. Transfer is an act by which the title to property is conveyed from one party to another,

whether the party is a person, corporation, or the government.

2. Conveyance is any transfer by deed or will of legal or equitable title to real property from

one person to another.

3. Disposition is the parting with, transfer, or conveyance of property.

4. Grant is a transfer of title to real or personal property by deed or other instrument.

5. Grantor is the person who conveys or transfers real or personal property to another.

6. Grantee is the person to whom real or personal property is transferred or conveyed.

7. Deed is a written, signed, and delivered legal document that transfers title or ownership of

real property such as land or buildings.

8. Title is the right to and evidence of ownership of real or personal property.

9. Legal title is a title that is complete, perfect, and enforceable in a court of law, granting the

holder the right of ownership and possession of property.

10. Equitable title is title held by a party that gives the party the right to have the legal title

transferred to him/her. For example, a person who purchases a house through a mortgage

Chapter 1: The Concept of Property Related to Wills, Trusts, and Estate Administration 3

has equitable title and is in possession of the house while paying off the installments on the

mortgage to the bank that holds legal title until the mortgage is paid off and legal title is

transferred to the possessor by delivery of a deed.

11. Interest in property entitles a person to some right in the property, but that right may be less

than title or ownership. For example, a renter has an interest in the apartment that is leased but

does not have title, which is held by the owner of the property, who is usually the landlord.

12. To vest means to deliver possession of land.

a. At death, state law automatically vests title to a decedent’s real property in the

beneficiaries of the will or in heirs if a decedent dies without a will.

b. Title to the real property is vested “subject to” the right of the personal representative

to devest or divest or take away the property to pay claims of the decedent’s creditors.

13. To devest or divest means to withdraw or take away title from the possessor.

E. Personal property is movable property and encompasses everything subject to ownership that is

not real property. It is sometimes referred to as chattel.

1. Title to a decedent’s personal property passes to the personal representative (administrator or

executor) appointed by the probate court to administer the decedent’s estate. If creditors must

be paid, generally, the decedent’s personal property is used first to obtain the necessary funds.

2. There are two categories of personal property.

a. Tangible personal property has a physical existence; it can be touched and is movable.

b. Intangible personal property has no physical existence; it cannot be touched.

(1) It establishes and represents the right to receive something of value.

(2) Ownership is established by documents such as bank statements, stock or bond

certificates, and written contracts for life insurance and annuities.

(3) It includes a chose in action, a right to personal property that the owner does not

possess but does have a right of action for, e.g., a right to receive payment of a

debt or to sue for damages for another’s negligence.

—TEACHING SUGGESTION: Because students may not be familiar with various types

of financial or business documents and terminology, it is a good idea to review the

examples of intangible personal property items such as annuities, pension plans, profit-

sharing plans, stocks, bonds, and so forth.

3. Paralegals play a major role in helping the personal representative find, collect, preserve,

value, and liquidate or distribute the decedent’s personal assets.

a. Paralegals list and classify all the decedent’s assets as real property or personal

property, whether tangible or intangible.

b. Accurate classification is essential in administering an estate; therefore, the paralegal

must learn to distinguish the different types of property and verify the classifications

with the supervising attorney.

F. Probate property or a probate estate differs from the gross estate of a decedent.

1. An estate or gross estate is all the property, real and personal, owned by a living person or

all the assets owned by a decedent at the time of death.

2. The only type of property owned by a decedent that can be passed by will is probate

property, also called the probate assets, the probate estate, or the estate of the decedent.

3. Probate property is all real or personal property that the decedent owned either individually

as a single or sole owner, called ownership in severalty, or as a co-owner with another

person or persons in the form of ownership called tenancy in common.

4. Probate property is subject to estate administration by the personal representative

according to the terms of the will or, if the decedent died intestate, according to the

appropriate state intestate succession statute.

5. The following probate property is subject to creditors’ claims and federal and state death

taxes: real property owned in severalty or in a tenancy in common; personal property

owned in severalty or in a tenancy in common; life insurance proceeds payable to the estate

4 Chapter 1: The Concept of Property Related to Wills, Trusts, and Estate Administration

or a policy in which the decedent retained the incidents of ownership; debts owed the

decedent for mortgages, promissory notes, contracts for deed, loans, rents, interest, stock

dividends, income tax refunds, royalties, and copyrights; gain from the sale of a business;

Social Security, Railroad Retirement, and Veterans Administration benefits; civil lawsuits

for money damages; and testamentary trusts.

G. Nonprobate property is real or personal property that is not part of the decedent’s probate estate

except for figuring the decedent’s gross estate for federal and state death tax purposes.

1. Nonprobate property is not distributed according to the decedent’s will.

2. Nonprobate property is not distributed according to intestate succession statutes.

3. Nonprobate property is not subject to estate administration (probate) of the decedent’s estate.

4. Nonprobate property is not subject to a spouse’s claims.

5. Nonprobate property is not subject to the claims of the decedent’s creditors.

6. Nonprobate property includes property that has been converted into nonprobate assets such

as the following:

a. Real and personal property owned and held in joint tenancy or tenancy by the entirety,

both with the right of survivorship and real property subject to transfer under a transfer

on death deed or beneficiary deed

b. Real and personal property transferred to living (inter vivos) trusts prior to the settler’s

death

c. Money placed in a bank account as a Totten trust or pay-on-death (POD) account

d. Proceeds of a life insurance policy payable to a named beneficiary and not to the

decedent’s estate as long as the decedent relinquishes the incidents of ownership

e. Employment contract benefits, such as profit-sharing plans, pension plans, group life

insurance, 401(k) plans, employee stock ownership plans (ESOPs), and self-employment

plans, that name a specific beneficiary

f. Annuity contracts with a named beneficiary

g. Individual retirement accounts (IRAs) with a named beneficiary

h. U.S. savings bonds payable on death to a beneficiary other than the decedent’s estate

i. Tenancy in partnership property

7. Nonprobate property goes directly to the named beneficiary or the surviving joint tenant(s)

by operation of law.

8. Even though nonprobate property avoids the probate process, paralegals must identify and

keep accurate records of each item for the preparation of federal and state estate, death, or

inheritance tax returns.

III. Statutes That Govern the Passage of Property

A. Property law is mostly statutory law.

1. States have the power to enact statutes that govern the passage of property.

2. States derive the power to legislate in this area from the U.S. Constitution, which gives

states the right to levy and collect taxes, and from their duty to protect the citizenry.

a. Owners of property have the right to distribute their property as they wish, so long as it

does not conflict with the rights of others.

(1) Generally, a spouse cannot be disinherited.

(2) Generally, minor children are entitled to support.

(3) Creditors have the right to be compensated for their valid claims, and states

establish statutory procedures for creditors to make claims against estates.

B. All activity during the administration of a decedent’s estate must be carefully and accurately

recorded.

1. This accuracy is required so that the state can fairly and accurately calculate the amount of

tax that may be due from the estate of the decedent.

2. The state becomes a creditor of the estate.

Chapter 1: The Concept of Property Related to Wills, Trusts, and Estate Administration 5

C. The state protects the decedent’s rights by statute.

1. Statutes provide for the right to make a will.

2. Descent and distribution or intestate succession statutes provide that if someone dies

without a will, the property of the decedent will be distributed to those whom the decedent

would probably have chosen if the decedent had made a will.

—TEACHING SUGGESTION: To accompany Assignment 1.3, students should

research, locate, and read their state statute dealing with descent and distribution. Any

words or phrases that are different from those identified in the New York statute should be

identified and defined.

IV. Forms of Property Ownership

A. Tenancy in severalty means that one person is the sole owner of real property or personal

property.

1. The individual owner has absolute ownership with exclusive rights, privileges, and interests.

2. The owner may voluntarily dispose of the property while living, either by gift or sale, or

may voluntarily dispose of it at death through a will.

3. If the owner has not made a disposition of the property by the time of death by gift, sale, or

through a will, the property remains in the owner’s estate and passes to certain specified

takers under intestate succession statutes.

B. There are various forms of concurrent ownership, ownership shared by two or more persons, of

real or personal property.

1. Joint tenancy is the ownership of real or personal property by two or more persons, joint

tenants, who obtain an equal and individual interest in the property by gift, purchase, will,

or inheritance.

a. On the death of one joint tenant, the right of survivorship passes the decedent’s interest

in the property automatically to the surviving joint tenant(s) by operation of law

without the need for probate and with the last surviving joint tenant entitled to the

whole property in severalty.

b. To create a joint tenancy, common law requires “four unities”: unity of time, unity of

title, unity of interest, and unity of possession.

(1) Unity of time requires that joint tenants take their interests in the property at the

same time, meaning that they must receive their interest in the property together.

(2) Unity of title requires that the tenancy be created and the tenants receive their title

from a single source such as the same will or deed.

(3) Unity of interest requires that each tenant have an interest in the property that is

identical to that of the other tenants.

(a) The interest must be of the same quantity.

(b) The interest must be of the same duration.

(4) Unity of possession requires that each joint tenant own and hold the same

undivided possession of the whole property held in joint tenancy.

(a) Each joint tenant has an equal right to possess the entire property.

(b) Each joint tenant has an equal right to share in the profits derived from the property.

c. When a joint tenant dies, the surviving joint tenants receive the interest of the deceased

with nothing passing to the beneficiaries’ heirs or devisees of the decedent, under the

right of survivorship.

(1) Joint tenants cannot transfer joint property by will.

(2) If all joint tenants die except one, the joint tenancy is destroyed and the lone

survivor owns the property solely, in severalty.

d. Joint tenants are entitled to the equal use, enjoyment, control, and possession of the

property since they have an equal and undivided identical interest in the same property,

meaning that no joint tenant owns a specific or individual part of the property.

6 Chapter 1: The Concept of Property Related to Wills, Trusts, and Estate Administration

e. While alive, each joint tenant has the right of severance, the act of severing, separating,

or partitioning real property.

(1) A joint tenant can convey his/her equal interest in the property during his/her lifetime,

thereby destroying one of the four essential unities and terminating the joint tenancy.

(2) This inter vivos conveyance is the only way a joint tenancy can be severed.

(3) Severance of real property is accomplished by transferring a deed.

(4) When a joint tenancy is severed, the remaining joint tenants and the new tenant are

tenants in common, with the new tenant having no right of survivorship.

f. State statutes determine whether a joint tenancy is legally created.

(1) The required wording and the intent of the creator determine whether a binding

joint tenancy is established.

(2) States vary in the express language required to create a joint tenancy.

(3) States vary in their preference for certain forms of co-ownership of property.

(4) Generally, if the intent of the parties is not clear, tenancy in common is presumed

and preferred over joint tenancy since legislatures believe the decedent’s property

should pass to beneficiaries, heirs, or devisees and not to surviving joint tenants.

g. Advantages of a joint tenancy are the following:

• On the death of a joint tenant, title passes automatically to the survivor(s).

• No probate proceedings are necessary or required for the survivor(s) to acquire

title, thus avoiding expense and delay.

• Title passes to the surviving joint tenant(s) free of the claims of the decedent’s

creditors unless the joint tenancy was created to defraud creditors. The decedent’s

real estate is subject to certain unpaid debts such as mortgages, taxes, and liens.

• If the joint tenants are husband and wife, no federal gift tax is owed because of the