1. 5.02 Understand Wills & Estate Planning
Personal Law
5.02 Understand Wills & Estate Planning

2. Retirement Planning Private Pension Plans Government Pension Plans
Individual Pension Plans

3. Private Pension Plans
Pension Plans: Employer provided retirement funds or funding to employees
Examples: 401K, SEP, Profit Sharing
Typically offered as a benefit, not required by law
Employers may fully fund the plan or partially fund the plan whereby the employee also contributes to the plan
Vesting: act of giving a worker a guaranteed right to receive a future pension
Portability: ability to transfer pension benefits from one job to another

4. Government Pension Plans
Social Security
Employer and employee match contribution into social security fund.
Those eligible to receive social security may do so by the age of 62 at a reduced amount. Full benefits are offered at age 66.
A person can receive social security benefits from spouse if their spouse dies.
Disability is considered a social security benefit.
Medicare is also considered a social security benefit
Railroad pensions
Military pensions
Civil service pensions

5. Social Security Disability
Retirement, Survivors, Disability, and Health Insurance
The D in RSDHI of Social Security benefits
Replaces income when a severe long lasting disability prevents eligible person from doing “any substantial work”.
File claim through Social Security Administration
Six month required elimination (waiting) period
Only long term disability or terminal illness
Periodic review of status to continue benefits

6. Individual Pension Plans
Can be set up by self-employed individuals, or individuals who do not receive private pension plans from their employers
Individual Retirement Accounts (IRA’s): individual pension plans where a portion of their income is saved each year
Only a certain amount of income is allowed to be placed in an IRA ($5,500 or $6,500 if you’re age 50 or older for 2013/2014)
The interest on the IRA is not taxed until the money is withdrawn
Keogh Plans: set up by individuals who are sole-proprietors or in a partnership

7. Unemployment Insurance
Social Security Act provides for joint federal and state unemployment system
Federal Unemployment Tax Act (FUTA)
State Unemployment Tax Act (SUTA)
Both FUTA and SUTA taxes are paid completely by employer
Monies are paid into a special fund for workers who have been discharged without cause (lost their jobs through no fault of their own)

8. Unemployment Benefits
Employee files claim through NC Employment Security Commission
One or two week waiting period before benefits are paid
Benefits payable for limited number of weeks – 99 as of Nov. 6, 2009.
Percentage of lost wages paid

9. Filing Unemployment Claim
Employee Filing Requirements:
Must have been working at least 2 quarters(6-mos.)
File claim with NC Employment Security Commission
Collect money when “laid off” from job or otherwise “discharged without cause”
Must search for replacement job

10. Unemployment Insurance
Reasons workers are NOT covered:
Violating a contractual employment obligation or other discharges “for cause”
Striking employees
Quit voluntarily
Refuse to accept similar replacement work

11. Unemployment Insurance Costs
Business’ employment history is risk factor
How often employees are laid off from work
How many employees are laid off from work
How long employees are laid off from work

12. Worker’s Compensation
A government-regulated program that provides medical benefits and income to employees who are injured or who develop a disability or disease as a result of their job
Indemnifies (pays) employee for their loss
Job related illness or injury
Coverage is no fault
Insurance is paid for by employer

13. Worker’s Compensation
Worker’s compensation indemnifies (to guarantee against any loss which another might suffer) employee for:
Rehabilitation
Related medical expenses
Time lost from work
Permanent damage from injury or illness

14. Workers Compensation Costs Cost factors Paid completely by employer
Employer’s claim history
Risk rating of job

15. Retirement Review Name 3 examples of retirement plans.
What is portability?
What are 2 examples of Government Pension Plans?
What is the retirement plan called that an individual saves part of their income each year?
What is one thing an employee must do in order to file for unemployment?

16. Wills
Will - Document drawn up and signed by persons during their lifetime to provide for distribution of their property upon their death
Decedent - Deceased person
Heirs - Persons who inherit by right of relationship
Testator is a man who makes a will. A woman is called a testatrix
The testator/testatrix must have the capacity to create a will

17. Will Requirements Laws concerning wills vary from state-to-state
A will must be in writing, properly signed, and witnessed.
In some states a holographic will (written in the decedents own handwriting) is acceptable.
A nuncupative will is an oral will that some states will recognize.
To change a will, the testator/testatrix should write a new will or change it by a codicil (amendment to a will).

18. NC Will Requirements Minimum Age to Make a Will 18
Written Document Required Yes
Nuncupative Wills (Oral) Yes
Made orally by a person who is in his last sickness or in imminent peril of death and who does not survive such sickness or imminent peril, and
Declared to be his will before two competent witnesses simultaneously present at the making thereof and specially requested by him to bear witness thereto.
Holographic Wills (Hand-Written, Unwitnessed) Yes
Number of Witnesses Required 2
Self-Proving Affidavit Allowed
Sworn statement swearing to validity of will
Statutory Form for Self-Proving Affidavit Yes

19. Will Requirements (cont.)
A will states an executor/executrix
Executor: person named in the will to carry out the terms of the will
The executor or representative will: make sure the assets are assembled, preserved, inventoried, and appraised (court supervised procedure), publish notice to creditors, pay all receivables from debtors, pay all legitimate expenses of the decedent, distribute property according to will (must divide according to state law)
The will may state a guardian for children if spouse is not alive

20. Intestacy
A person who dies without making a will is said to have died intestate.
The estate is handled in the same way as if there was a will.
Instead of an executor/executrix, there is an administrator/administratrix to look after the estate

21. Intestacy (cont.)
Generally, the spouse is entitled to one-half or one-third of the estate
Children split the remaining equally
The administrator/administratrix must distribute the estate according to the laws of the state
The personal property of the decedent goes to the heirs according to state law
Children cannot be forgotten
If someone dies without a will and does not have a living relative, after the bills are paid, then the estate is escheated (held by state government)

22. Probate Probate and Estate Settlement
Probate Court-Is probate court a real court or more of a process
Executor and Executrix- What do these terms mean and who decides or appoints a person to these positions?

23. Power of Attorney/Living Will
Power of Attorney-Why is a power of attorney a good thing to have?
Special Power of Attorney- What is the difference between a special power of attorney and just a general power of attorney?
Medical Directives- as another form of a special power of attorney, what does a medical directive do?
Living Will-What is the importance of a living will?

24. Trusts
Trust: transfer of property from one party to another with instructions on how it is to be managed for the benefit of the transferor or a third party
Trusts may be created during the lifetime of the settlor (grantor or creator), known as inter vivos trust
Trusts may also be created after the death of the settlor in correspondence with his or her will, known as a testamentary trust
A charitable trust is created for the fulfillment of humane purposes
A private trust is created for a private purpose
Spendthrift trust protects the beneficiary from creditors

25. Trusts
Testamentary Trust- is a trust created by a will. It only comes into use when the person making the will dies
Spendthrift Trust-is a trust that protects the settler’s assets from being spent recklessly by the beneficiary and the beneficiaries creditors.

26. Trusts (cont.)
Express Trusts are created by a written or oral statement in which all terms are clearly expressed.
Implied Trusts
Resulting Trust: formed when the body intended to receive the benefit of an express trust cannot do so
Constructive Trust: created to require a person holding property to transfer it to another because retaining the property would be wrong and unjust

27. Will Requirements Review
What is an executor?
What is an administrator?
What is the term for when a person dies without a will?
What is a holographic will?
What is the transfer of property from one person to another called?
WORKSHEET:
True / False
WORKSHEET:
Multiple Choice
WORKSHEET:
Short Answer
WORKSHEET:
Critical Thinking
WORKSHEET:
Case Study