University:
Indiana University Bloomington
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

387

Pages:

2
Author:

bratrochanter

Here’s a breakdown of each aspect of George’s situation regarding his estate and planning options: 1. What Happens if George Dies Without a Will? o If George passes away without a will, his estate will be distributed according to state intestacy laws. This typically means that only blood relatives inherit, so George’s estranged brother would likely be his sole heir. George’s stepdaughters, despite their close relationship, would not inherit unless specified in a will since they are not his biological or legally adopted children. 2. Requirements for a Valid Will o For a will to be valid, most states require:  It must be in writing and signed by the testator (George) or someone directed by him if he is unable.  It must be witnessed by two or three disinterested parties who will not inherit under the will.  The testator must have testamentary capacity, meaning George must understand the nature of his property and who would naturally inherit his estate.  The will must show testamentary intent, indicating George's intention to make this document his final wishes regarding his property. 3. Factors that Can Invalidate a Will o Several issues can invalidate a will:  Lack of Capacity: If George is not of sound mind at the time of signing, the will could be contested.  Undue Influence: If someone exerts excessive control or persuasion over George in making the will, it could be voided.  Failure to Meet Formal Requirements: Missing signatures, improper witness procedures, or ambiguity in the terms can lead to a will being declared invalid. 4. Probate Process for George’s Estate After His Death o The probate process includes:  Filing the Will: If George has a valid will, it must be filed with the probate court, where the court verifies its authenticity.  Appointing an Executor: Named in George’s will, this person manages the estate, pays debts, and distributes assets.  Inventory and Appraisal: All of George’s assets (home, cars, stocks, etc.) are identified and valued.  Payment of Debts and Taxes: George’s debts and any applicable taxes are paid from the estate.  Distribution of Assets: Remaining assets are distributed to beneficiaries according to George’s will. If he dies intestate, assets are distributed according to state law. 5. Creating a Trust for Stepdaughters o If George wants to create a trust for his stepdaughters, the requirements are:  Intent and Capacity: George must intend to create the trust and be legally capable.  Funding the Trust: George must transfer assets into the trust, which then legally owns the assets for the benefit of his stepdaughters.  Naming Beneficiaries and a Trustee: The stepdaughters would be the beneficiaries, and George would need to appoint a trustee to manage the trust.  Trustee’s Legal and Ethical Duties:  Legal: The trustee must manage the trust assets prudently and in the best interest of the beneficiaries. This includes adhering to fiduciary standards and protecting assets.  Ethical: The trustee must act loyally, avoid conflicts of interest, and transparently manage the trust, regularly updating beneficiaries and adhering to George’s intentions. By creating a will and possibly a trust, George can ensure that his stepdaughters, not his estranged brother, inherit his estate. Both a well-drafted will and/or trust could provide clear instructions to avoid probate delays and reduce potential disputes.