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Wills, Trusts, Estates


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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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Copyright © 2001, 2004 Jo Alison Taylor

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