CHAPTER 31: WILLS AND TRUSTS 11
whole or in part.
determine their value. Both the rights of creditors and the rights of beneficiaries must be protected during the
estate administration proceedings. In addition, the personal representative is responsible for managing the
responsible for distributing the estate pursuant to the court order. Once the assets have been distributed, an
accounting is rendered to the court, the estate is closed, and the personal representative is relieved of any
other deductions available under federal law. An entire estate can pass free of estate tax if the estate is left to
bequest rather than on the estate. Some states also have a state estate tax similar to the federal estate tax. In
general, inheritance tax rates are graduated according to the type of relationship between the beneficiary and
whole or in part.
whole or in part.
16 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
2. Ask students to discuss why the requirements for executing valid wills are so strict in most states. Are
these standards prompted by fears of fraud? Should these standards be relaxed so that those who
fail, for one reason or another, to comply with a particular statutory requirement, will not have their
wills invalidated?
3. Ask students to discuss the various techniques for estate planning—which are most advantageous in
what types of situations—and to put together estate plans of their own. This could help underscore that estate
plans must be continually reviewed and revised to be sure they meet the needs of those for whom they are
designed. What circumstances, other than divorce, could affect who takes what under a will, or by
some other estate planning technique? Are taxes the only consideration?
4. Bring to class various will forms, trust forms, and forms for the documents discussed in the elder law
section, and discuss their provisions and effects, particularly in your jurisdiction.
Cyberlaw Link
What effect might the Web have on the uniformity of wills and other estate planning documents
discussed in this chapter? How might the existence of the Internet affect the management of a trust?
2. How does a specific devise or bequest differ from a general devise or bequest? A specific devise de–
scribes particular property—such as a gold watch or a diamond ring—that can be distinguished from all the rest of the
testator’s property. If the particular item is not in the testator’s estate at the time of his or her death, the devise will be
extinguished or canceled. A general devise, by contrast, does not single out any particular item of property to be
court to determine the intentions of the testator, the residue will pass according to state laws of intestacy.
4. What are the three requirements that must be satisfied in order for a testator to demonstrate his or
her testamentary capacity? The testator must (1) comprehend and remember the “natural objects of his or her
bounty” (usually family members and persons for whom the testator has affection); (2) comprehend the kind and
whole or in part.
beneficiary; (2) a designated trustee; (3) a fund sufficiently identified to enable title to pass to the trustee; and (4)
actual delivery of the property to the trustee with the intention of passing title.
8. How does a living trust differ from a testamentary trust? A living trust is a trust executed by a grantor
during his or her lifetime. The grantor executes a “trust deed,” and legal title to the trust property passes to the named
9. What is a constructive trust? A constructive trust arises by operation of law as an equitable remedy that
enables plaintiffs to recover property (and sometimes damages) from defendants who would otherwise be unjustly
enriched. The legal owner of the property is declared to be a trustee for the parties who, in equity, are actually entitled
to the beneficial enjoyment that flows from the trust.
2. Ask students to draft their own durable powers of attorney, health-care powers of attorney, or living wills.
What terms would they want to include? You might pass out standard versions of these forms and ask students
what they would change.
REVIEWING—
WILLS AND TRUSTS
In June 2013, Bernard Ramish set up a $48,000 trust fund through West Plains Credit Union to provide
tuition for his nephew, Nathan Covacek, to attend Tri-State Polytechnic Institute. The trust was established
under Ramish’s control and went into effect that August. In December, Ramish suffered a brain aneurysm that
caused frequent, severe headaches but no other symptoms. In August 2015, Ramish developed heat stroke
and collapsed on the golf course at La Prima Country Club.
After recuperating at the clubhouse, Ramish quickly wrote his will on the back of a wine list. It stated, “My
last will and testament: Upon my death, I give all of my personal property to my friend Steve Eshom and my
home to Lizzie Johansen.” He signed the will at the bottom in the presence of five men in the La Prima
CHAPTER 31: WILLS AND TRUSTS 19
EXAMPREP—
ISSUE SPOTTERS
1. Sheila makes out a will, leaving her property in equal thirds to Toby and Umeko, her children, and
Velda, her niece. Two years later, Sheila is adjudged mentally in competent, and that same year, she
dies. Can Toby and Umeko have Sheila’s will revoked on the ground that she did not have the
capacity to make a will? Why or why not? . No. To have testamentary capacity, a testator must be of legal
age and sound mind at the time the will is made. Generally, the testator must (1) know the nature of the act,
(2) comprehend and remember the “natural objects of his or her bounty,” (3) know the nature and extent of
her or his property, and (4) understand the distribution of assets called for by the will. In this situation, Sheila
had testamentary capacity at the time she made the will. The fact that she was ruled mentally incompetent
two years after making the will does not provide sufficient grounds to revoke it.
2. Ralph dies without having made a will. He is survived by many relatives—a spouse, children,
adopted children, sisters, brothers, uncles, aunts, cousins, nephews, and nieces. What determines
who gets what? The estate will pass according to the state’s intestacy laws. Intestacy laws set out how
property is distributed when a person dies without a will. Their purpose is to carry out the likely intent of the
decedent. The laws determine which of the deceased’s natural heirs (including, in this order, the surviving
spouse, second lineal descendants, third parents, and finally collateral heirs) inherit his or her property.
whole or in part.
whole or in part.
16 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
2. Ask students to discuss why the requirements for executing valid wills are so strict in most states. Are
these standards prompted by fears of fraud? Should these standards be relaxed so that those who
fail, for one reason or another, to comply with a particular statutory requirement, will not have their
wills invalidated?
3. Ask students to discuss the various techniques for estate planning—which are most advantageous in
what types of situations—and to put together estate plans of their own. This could help underscore that estate
plans must be continually reviewed and revised to be sure they meet the needs of those for whom they are
designed. What circumstances, other than divorce, could affect who takes what under a will, or by
some other estate planning technique? Are taxes the only consideration?
4. Bring to class various will forms, trust forms, and forms for the documents discussed in the elder law
section, and discuss their provisions and effects, particularly in your jurisdiction.
Cyberlaw Link
What effect might the Web have on the uniformity of wills and other estate planning documents
discussed in this chapter? How might the existence of the Internet affect the management of a trust?
2. How does a specific devise or bequest differ from a general devise or bequest? A specific devise de–
scribes particular property—such as a gold watch or a diamond ring—that can be distinguished from all the rest of the
testator’s property. If the particular item is not in the testator’s estate at the time of his or her death, the devise will be
extinguished or canceled. A general devise, by contrast, does not single out any particular item of property to be
court to determine the intentions of the testator, the residue will pass according to state laws of intestacy.
4. What are the three requirements that must be satisfied in order for a testator to demonstrate his or
her testamentary capacity? The testator must (1) comprehend and remember the “natural objects of his or her
bounty” (usually family members and persons for whom the testator has affection); (2) comprehend the kind and
whole or in part.
beneficiary; (2) a designated trustee; (3) a fund sufficiently identified to enable title to pass to the trustee; and (4)
actual delivery of the property to the trustee with the intention of passing title.
8. How does a living trust differ from a testamentary trust? A living trust is a trust executed by a grantor
during his or her lifetime. The grantor executes a “trust deed,” and legal title to the trust property passes to the named
9. What is a constructive trust? A constructive trust arises by operation of law as an equitable remedy that
enables plaintiffs to recover property (and sometimes damages) from defendants who would otherwise be unjustly
enriched. The legal owner of the property is declared to be a trustee for the parties who, in equity, are actually entitled
to the beneficial enjoyment that flows from the trust.
2. Ask students to draft their own durable powers of attorney, health-care powers of attorney, or living wills.
What terms would they want to include? You might pass out standard versions of these forms and ask students
what they would change.
REVIEWING—
WILLS AND TRUSTS
In June 2013, Bernard Ramish set up a $48,000 trust fund through West Plains Credit Union to provide
tuition for his nephew, Nathan Covacek, to attend Tri-State Polytechnic Institute. The trust was established
under Ramish’s control and went into effect that August. In December, Ramish suffered a brain aneurysm that
caused frequent, severe headaches but no other symptoms. In August 2015, Ramish developed heat stroke
and collapsed on the golf course at La Prima Country Club.
After recuperating at the clubhouse, Ramish quickly wrote his will on the back of a wine list. It stated, “My
last will and testament: Upon my death, I give all of my personal property to my friend Steve Eshom and my
home to Lizzie Johansen.” He signed the will at the bottom in the presence of five men in the La Prima
CHAPTER 31: WILLS AND TRUSTS 19
EXAMPREP—
ISSUE SPOTTERS
1. Sheila makes out a will, leaving her property in equal thirds to Toby and Umeko, her children, and
Velda, her niece. Two years later, Sheila is adjudged mentally in competent, and that same year, she
dies. Can Toby and Umeko have Sheila’s will revoked on the ground that she did not have the
capacity to make a will? Why or why not? . No. To have testamentary capacity, a testator must be of legal
age and sound mind at the time the will is made. Generally, the testator must (1) know the nature of the act,
(2) comprehend and remember the “natural objects of his or her bounty,” (3) know the nature and extent of
her or his property, and (4) understand the distribution of assets called for by the will. In this situation, Sheila
had testamentary capacity at the time she made the will. The fact that she was ruled mentally incompetent
two years after making the will does not provide sufficient grounds to revoke it.
2. Ralph dies without having made a will. He is survived by many relatives—a spouse, children,
adopted children, sisters, brothers, uncles, aunts, cousins, nephews, and nieces. What determines
who gets what? The estate will pass according to the state’s intestacy laws. Intestacy laws set out how
property is distributed when a person dies without a will. Their purpose is to carry out the likely intent of the
decedent. The laws determine which of the deceased’s natural heirs (including, in this order, the surviving
spouse, second lineal descendants, third parents, and finally collateral heirs) inherit his or her property.