Will Substitutes and Living Wills/Durable Healthcare Powers

Although not the most essential topic to know within the subject of Wills, if you get an essay on Wills it helps to understand will substitutes, living wills, and durable healthcare powers to round out the subject.

Will substitutes may enable people to pass property upon death while avoiding taxes and other inconveniences associate with probate. Be sure to know the following:

Life Insurance: A widely used will substitute, this is a contract with the disposition governed by the terms of the contract.  Rather than leaving property in a will, the property will pass to the beneficiaries designated in the contract.

Totten Trusts. A Totten trust is a deposit of money in a bank account in trust for another person. Importantly, the depositor never loses the ability to revoke throughout the depositor's lifetime. The transfer is complete only upon the death of the depositor.

Joint Accounts with Rights of Survivorship: A joint account is an account in which funds are deposited in the name of two or more persons. A right of survivorship gives the survivors the absolute right to the funds when an account holder dies. For UBE purposes, creditors can reach the money in a joint account to the extent that the decedent deposited money in the account if the other estate assets are insufficient to satisfy valid claims of the creditors.

Deeds: A deed can be deposited in escrow with delivery conditioned upon the grantor's death. Less likely but worth keeping in mind is that a grantor can deliver a deed to a grantee during the grantor's lifetime and a court might construe that transfer as the delivery of a future interest to the grantee which will only become possessory upon the grantor's death (the grantor has therefore retained a life estate).

Living wills have popped up from time to time on the exam. A living will states an individual's desires regarding whether to administer, withhold, or withdraw life-sustaining procedures as well as whether to provide, withhold, or withdraw, artificial nutrition and hydration. A durable healthcare power, on the other hand, appoints an agent to make healthcare decisions on behalf of a principal and does not become effective until the principal becomes incapacitated. Both living wills and durable healthcare powers generally require a signed writing and most states require that the creation is witnessed. It might be noted that the Uniform Health Care Decisions Act does not require witnesses. Both living wills and durable healthcare powers can be revoked and the duty of an agent in a durable healthcare power is to always act in the principal's best interest. The agent is not subject to civil or criminal liability for deviations from reasonable care while acting as agent provided that the agent has acted in good faith.