Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Legal Terminology Fifth Edition by Gordon W. Brown PowerPoints prepared by Kimberly Lundy

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Chapter 27 Settling an Estate

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Petitioning the Court oPetition is filed by interested party for allowance of the will (if one exists) and appointment as personal representative. nIf decedent died testate – executor appointed in will files petition. nIf decedent died intestate – heir (person who inherits property from estate), next of kin, or creditor files petition.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Petitioning the Court oHearing is held to decide the petition. nNotice of hearing goes to heirs at law (people who would have inherited if decedent died intestate). nCourt issues decree (decision of a court of equity) or judgment (decision of a court of law).

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Fiduciary’s Bond oPersonal representative in fiduciary capacity (position of trust) must file bond (promise to pay if duties are not faithfully performed). nSureties – stand behind personal representative’s debt.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Letters oCertificate of appointment is issued by court once personal representative files bond with sureties. nCalled letters testamentary in a testate estate and letters of administration in an intestate estate.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Inventory oInventory – document listing the assets of the estate. nFiled with court by personal representative. nFollowed by waiting period during which creditors may file claims.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Federal Estate Taxes oFederal Estate Tax – imposed when gross estate of deceased exceeds exempt amount. nMust be filed within 9 months.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Federal Estate Tax – Gross Estate oGross estate of deceased includes: nIndividually and jointly owned real or personal property nLife insurance nInter vivos (between the living) trusts nGifts made in contemplation of death, or gifts causa mortis (made within 3 years of death).

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Federal Estate Tax - Deductions oDeductions from gross estate: nDebts of decedent, nFuneral expenses, nAdministration expenses, nAmounts willed to charity nAmounts inherited by a surviving spouse (the marital deduction).

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Federal Gift Tax oFederal gift tax – imposed on gifts totaling more than one million dollars made during one’s lifetime.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. State Death Taxes oState death taxes may be imposed on the estate or on heirs to estate. nEstate taxes – imposed on decedent’s estate. nInheritance taxes – imposed on a person who inherits from decedent’s estate.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Distribution and Accounting oDistribution – after taxes and debts are paid, assets are distributed according to will or intestate laws. oAccounting – first and final account is prepared, detailing amounts received and distributed by administrator.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Contesting a Will oWill may be contested on following grounds: nWill was improperly executed. nTestator was of unsound mind. nWill’s execution was obtained by fraud or undue influence.

Brown: Legal Terminology, 5 th ed. © 2008 Pearson Education, Upper Saddle River, NJ All Rights Reserved. Contesting a Will – Burden of Proof oIf grounds are for improper execution or unsound mind – proponent (one offering will for probate) has burden of proof. oIf grounds for contest are fraud or undue influence – person claiming fraud or undue influence has burden of proof.