B. Definitions
1. Wills
Will: A document that outlines how a
person wants the things (s)he owns to be distributed after his/her
death, and who (s)he wants to be in charge of administering the
process. A will can be changed or revoked any time during the testator’s
life (as long as he is competent). Do not mark on an existing will,
as that may invalidate it. Sometimes it is possible to execute a
“codicil”, or addition to the will, instead of an entirely
new document. A codicil must be executed with the same formality
as a will. (If the will is a simple one it may be as easy to execute
a new will.)
Alabama law pertaining to wills is found
in the Probate Code starting at Alabama
Code, §43-8-130. Any person 18 or
over and of sound mind may make a will.
To be valid a will must be witnessed by
at least two people, each of whom either
sees the testator sign the will or sees
him/her attest to signing it.
The best practice is to have the will
“self-proved”, which requires
two witnesses and a notary public. This
eliminates the necessity for finding one
of the witnesses after the death of the
testator in order to have the will admitted
to probate. The process also offers some
assurance that matters were carefully
handled. The self-proving procedure is
outlined in Alabama Code, §43-8-132.
It is also good practice to have disinterested
witnesses if possible, but that is no
longer a legal requirement. (Alabama Code,
§ 43-8-135.)
Testator/testatrix:
A man executing a will is called a testator; a woman, may be called a testatrix, but may also be called a testator.
Executor/executrix/personal
representative: This is the person you appoint in your will
to see that your wishes are carried out after your death. A male and
female may be called an executor. Sometimes a female is called an executrix. A modern term
for either gender is “personal representative”.
Codicil: A written
addition to a will, usually short, altering a will provision. A
codicil must be signed, witnessed and notarized with the same degree
of formality as a will. If the will is a simple one, it may be about
as easy to have a new will drafted. If the will is complex, and
the codicil is designed to make a relatively minor change such as
naming a new executor when those named predeceased the testator,
a codicil can be useful and economical.
2. Estates
Your estate includes all your material possessions: real property
(land and any permanent structures on it) and personal property
(furniture, car, money, coin collection). Different parts of an
estate may be “held” or “owned” in different
ways. There can be a sole owner, or two or more joint owners. If
an individual owns property with someone else, (s)he has a property
interest. A contingent or future interest is one to which an individual
has no legal or enforceable right (the interest will not vest) until
and unless one or more specific events occur(s). Personal property
can be tangible (anything you can touch) or intangible (things that
have value but which you cannot hold in your hand).
3. Trusts
A trust is a device for transferring
property to another person (the trustee)
to be held in trust for the benefit of
one or more beneficiaries. A settlor or
trustor is a person who creates a trust
and transfers some of his/her property
into it. The trustee manages the trust.
In some living trusts the trustor/settlor
names him/herself as both trustee and
beneficiary, naming an alternate trustee
to take over management of the trust if
(s)he becomes incapacitated or dies; also
naming alternate beneficiaries to benefit
from anything left in the trust at the
settlor’s death.
A person executing a trust must be of
legal age to enter into a contract., which
at present in Alabama is 19, unless the
disability of non-age has been removed
by marriage or court order.
Revocable trust:
One that can be revoked during the trustor/settlor’s lifetime;
also called an inter vivos or living trust. (Living trusts become
irrevocable at the death of the original settlor.)
Irrevocable trust:
A trust that cannot be revoked or changed once it is set up and
executed.
Testamentary trust:
A trust that is set up in and by a Will.
4. Joint Accounts
Bank and brokerage accounts may have two or more owners
listed on them. Most states, including Alabama, have laws that determine
to whom ownership of a joint account will pass when one owner dies.
However, banks are not required to use the account designations
permitted by law. Further, employees opening accounts are not always
experienced enough to realize the importance of determining depositors'
needs.
If an account is a “joint account
with rights of survivorship”, each
joint owner has a right to all the proceeds
in the account, whether or not (s)he contributed
anything to it. It is also possible to
have joint accounts that are “convenience”
or “agency” accounts, which
allow another person access to the funds
but no ownership interest.
Assume that an account is a survivorship
account unless you examine the signature
card or agreement yourself, to be sure
that the account is a convenience account,
if that is what you want. Almost all joint
bank accounts are set up as survivorship
accounts, and when one owner dies, the
entire account will pass to the other
person whose name is on the account. A
will cannot change that.
Real property may also be owned by more
than one person; married couples usually
own their homes as joint tenants with
right of survivorship. That is generally
the most efficient and sensible way for
spouses, so that the home passes to the
survivor at the death of one spouse. Whether
it is the best type of ownership in other
relationships depends on the circumstances.
Older couples who have owned their properties
since the fifties may have deeds that
reflect joint ownership, but not with
survivorship. If that is the case it might
be wise to execute a new deed to add the
survivorship provision.
5. Capacity
“Capacity” refers to the ability
of a person to understand what (s)he is
doing and to appreciate the consequences
of his/her actions. Testamentary capacity
(the capacity to make a will) is not a
high standard. A person must be able to
know generally what property (s)he has,
what (s)he wants to do with it and to
generally comprehend the results of his/her
choices. To execute a trust requires a
higher level of capacity, as it takes
more steps and is more complicated in
theory and execution.
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