Form 1041. Stephen Brooks
Warren's will provides that his estate will be divided into equal shares and distributed to his four children. Under the will, Mr. Warren's son, James is appointed executor of the estate. His probate estate will consist of all his assets except the life insurance and the IRA — these two assets will be distributed according to their designations of beneficiary and not under the terms of Mr. Warren's will. As the executor of Mr. Warren's estate, James will have the responsibility to take control of the probate assets, and make sure they are maintained during the period the estate is being administered. He will also have to pay from the probate assets any debts which Mr. Warren owed at the time of his death, and any costs of administering the estate out of the probate assets. He must also collect any income earned on those assets during the period of administration of the estate. This income offset by allowable deductions is the income reportable on the estate income tax return during the period of administration of the estate. At the end of the period of administration of the estate, the executor will distribute the remaining probate assets to Mr. Warren's four children in equal shares as provided in the will, and the estate will be closed.
Definitions
Testator — A person who has made a will; esp., a person who dies leaving a will.60
Devise — To give (property) by will.61
Bequest — (1) The act of giving property (usually personal property) by will; (2) Property (usually personal property other than money) disposed of in a will.62
Executor (or Executrix) — (1) One who performs or carries out some act; (2) A person named by a testator to carry out the provisions in the testator's will.63
Intestacy — The state or condition of a person having died without a valid will.64
Personal effects — Items of a personal character, especially personal property owned by a decedent at the time of death.65
Administrator — A person appointed by the court to manage the assets and liabilities of an intestate decedent.66
Residue — The part of a decedent's estate remaining after payment of all debts, expenses, statutory claims, taxes, and testamentary gifts (special, general, and demonstrative) have been made.67
Specific gift — A bequest of a specific or unique item of property, such as any real estate or a particular piece of furniture.68
General gift — (1) A bequest of a general benefit, rather than a particular asset, such as a gift of money or a gift of all the testator's stocks; (2) A bequest payable out of the general assets of the estate.69
Probate assets — A decedent's asset that by law is subject to the claims of creditors or legacies.70
Nonprobate assets — Property that passes to a named beneficiary upon the owner's death according to the terms of some contract or arrangement other than a will. Such an asset is not a part of the probate estate and is not ordinarily subject to the probate court's jurisdiction (and fees), although it is part of the taxable estate. Examples include life-insurance contracts, joint property arrangements with right of survivorship, pay-on-death bank accounts, and inter vivos trusts.71
Knowledge check
1 Which of the following is not required to form a trust?The settlor must have the requisite capacity.An indication by the settlor of an intention to create a trust.A charitable purpose.A definite beneficiary.
Notes
1 Jesse Dukeminier, Stanley M. Johanson, James Lindgren & Robert H. Sitkoff, Wills, Trusts, and Estates 485 (7th ed., 2005).
2 Restatement (Third) of Trusts Section 4.
3 Uniform Trust Code (UTC) Section 401.
4 Restatement (Third) of Trusts Section 13, comment b.
5 Restatement (Third) of Trusts Section 2.
6 Restatement (Third) of Trusts Section 6.
7 Restatement (Third) of Trusts Section 17.
8 UTC Section 403, comment.
9 Restatement (Third) of Trusts Section 17, Comment. Generally, under the Statute of Frauds, a signed writing is required for contracts involving the transfer of land. The Statute applies not only to a contract to sell land but also to any other contract in which land or an interest in it is disposed, such as the grant of a mortgage, an easement, or a trust.
10 UTC Section 404.
11 Restatement (Third) of Trusts Section 27.
12 UTC Section 405.
13 Restatement (Third) of Trusts Section 29, Comment g. The rule against perpetuities regulates remoteness of vesting. It applies to the equitable interests of trust beneficiaries. Under the rule, no trust interest is valid unless, by the terms and time of its creation, it is certain to vest or fail no later than 21 years after some life in being at the creation of the interest. As a result, a private trust, for example, will fail unless the trust has one or more definite beneficiaries or provides for one or more beneficiaries to be ascertained within the requirements of the applicable rule against perpetuities.
14 Restatement (Third) of Trusts Section 29.
15 Restatement (Third) of Trusts Section 29, Comment e.
16 Dukeminier, at 490.
17 Restatement (Second) of Trusts Section 174.
18 Restatement (Second) of Trusts Section