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G.56 Wills and Estate Documents

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1 A. Professional Conduct and Regulation

A.1 Code of Ethics and Standards of Conduct A.1.1 The Six Ethical Principles A.2 Procedural Rules and Discipline A.2.1 Fitness Standards for Candidates A.3 Financial Institutions Overview A.3.1 Broker-Dealers vs. RIAs A.4 SEC and Securities Regulation A.4.1 FINRA and Broker-Dealer Regulation A.4.2 State Securities Regulation A.5 Consumer Protection Laws A.5.1 Privacy and Confidentiality Requirements A.6 Fiduciary Duty and Application

2 B. General Principles of Financial Planning

B.7 The Financial Planning Process B.7.1 Establishing the Client Relationship B.7.2 Gathering Client Data and Goals B.8 Personal Financial Statements B.8.1 Key Financial Ratios B.9 Cash Flow Management B.9.1 Emergency Fund Planning B.10 Debt Management Strategies B.10.1 Mortgage and Home Financing B.11 Economic Concepts B.11.1 Planning for Inflation B.12 Time Value of Money Concepts B.12.1 TVM Calculations and Applications B.12.2 Loan Amortization B.13 Education Needs Analysis B.14 Education Savings Vehicles B.14.1 529 Plans In-Depth B.15 Education Funding Strategies B.16 Gift/Income Tax Strategies

3 C. Risk Management and Insurance Planning

C.17 Principles of Risk and Insurance C.17.1 Risk Management Process C.18 Analysis of Risk Exposures C.19 Health Insurance Fundamentals C.19.1 Types of Health Insurance Plans C.20 Disability Income Insurance C.20.1 Disability Policy Features C.21 Long-Term Care Insurance C.22 Annuities Overview C.22.1 Fixed vs. Variable Annuities C.23 Life Insurance Fundamentals C.23.1 Types of Life Insurance C.24 Business Owner Insurance Solutions C.25 Insurance Needs Analysis C.26 Insurance Policy and Company Selection

4 D. Investment Planning

D.27 Equity Securities D.27.1 Fixed Income Securities D.27.2 Mutual Funds and ETFs D.27.3 Taxation of Investment Vehicles D.28 Systematic Risk D.28.1 Unsystematic Risk D.29 Economic and Market Cycles D.30 Measures of Risk and Return D.30.1 Investment Performance Measures D.31 Asset Allocation Strategies D.31.1 Portfolio Diversification D.32 Bond and Stock Valuation D.32.1 Stock Valuation Models D.33 Investment Policy Statement D.33.1 Modern Portfolio Theory D.34 Active vs. Passive Investing D.34.1 Common Investment Strategies D.35 Alternative Investments D.35.1 Options and Derivatives

5 E. Tax Planning

E.36 Income Tax Fundamentals E.36.1 Filing Status and Tax Brackets E.37 Types of Income E.37.1 Deductions and Credits E.37.2 Capital Gains and Losses E.38 Business Entity Taxation E.38.1 Self-Employment Tax E.39 Taxation of Trusts and Estates E.40 Tax Reduction Strategies E.40.1 Retirement Account Tax Strategies E.41 Property Transactions E.41.1 Basis Rules for Acquired Property E.42 AMT and NIIT E.42.1 Special Tax Situations E.43 Charitable Giving Strategies

6 F. Retirement Savings and Income Planning

F.44 Retirement Needs Analysis F.44.1 Sources of Retirement Income F.45 Social Security Benefits F.45.1 Social Security Claiming Strategies F.45.2 Medicare Planning F.46 Eldercare and Special Needs Planning F.47 Qualified Plan Overview F.47.1 Defined Benefit Pension Plans F.47.2 Defined Contribution Plans F.48 Eligibility and Vesting F.48.1 Coverage and Discrimination Testing F.48.2 Contribution and Benefit Limits F.48.3 401(k) Plan Features F.49 Non-Qualified Deferred Compensation F.49.1 Executive Compensation Plans F.50 Retirement Plan Selection for Businesses F.50.1 Individual Retirement Accounts F.51 Distribution Rules F.51.1 Required Minimum Distributions F.52 Retirement Income Strategies F.52.1 Tax-Efficient Withdrawal Strategies F.53 Business Succession Planning

7 G. Estate Planning

G.54 Property Titling and Beneficiary Designations G.54.1 Beneficiary Designations G.55 Strategies to Transfer Property G.55.1 Lifetime Gifting Strategies G.56 Wills and Estate Documents G.56.1 Powers of Attorney G.56.2 Advance Directives and Healthcare Documents G.57 Federal Gift Tax G.57.1 Federal Estate Tax G.57.2 Generation-Skipping Transfer Tax G.58 Sources for Estate Liquidity G.58.1 Life Insurance for Estate Liquidity G.59 Trust Fundamentals G.59.1 Revocable Living Trusts G.59.2 Irrevocable Trusts G.59.3 Trust Income Taxation G.60 Marital Deduction Planning G.60.1 QTIP Trusts G.60.2 Portability of Estate Tax Exemption G.61 Intra-family and Business Transfer Techniques G.61.1 Family Limited Partnerships G.61.2 GRATs and IDGTs G.62 Postmortem Estate Planning Techniques G.62.1 Disclaimer Planning G.62.2 Estate Tax Elections G.63 Planning for Divorce and Unmarried Couples G.63.1 Estate Planning for Unmarried Couples G.63.2 Planning for Blended Families G.64 Planning for Special Needs and Circumstances G.64.1 Special Needs Trusts G.64.2 ABLE Accounts

8 H. Psychology of Financial Planning

H.65 Client and Planner Attitudes, Values, Biases H.65.1 Money Scripts and Money Attitudes H.65.2 Planner Self-Awareness H.66 Behavioral Finance H.66.1 Cognitive Biases H.66.2 Emotional Biases H.66.3 Heuristics and Mental Accounting H.67 Sources of Money Conflict H.67.1 Couples and Money Conflict H.67.2 Family and Intergenerational Money Conflict H.68 Principles of Counseling H.68.1 Therapeutic Techniques in Financial Planning H.68.2 Professional Boundaries and Referrals H.69 General Principles of Effective Communication H.69.1 Listening and Questioning Skills H.69.2 Managing Difficult Conversations H.69.3 Non-Verbal Communication H.70 Crisis Events with Severe Consequences H.70.1 Death and Divorce H.70.2 Job Loss and Health Crisis H.70.3 Sudden Wealth and Sudden Loss H.70.4 Natural Disasters and Traumatic Events

G.56 Wills and Estate Documents

Key Takeaways Explain This Topic AI

A will directs distribution of probate assets at death

Intestacy laws apply when there is no valid will

Pour-over wills work with revocable trusts

  • Will requirements vary by state (witnesses, notarization)
  • Last updated: January 2026

Wills and Estate Documents

A will is a legal document that directs the distribution of a person's probate assets at death. Understanding wills is fundamental to estate planning because they serve as the foundation for expressing a testator's wishes about asset distribution, guardian appointments, and estate administration.

Purpose of a Will

A will serves several critical functions in estate planning:

  • Directs probate asset distribution : Specifies who receives assets that pass through probate
  • Appoints an executor/personal representative : Names the person responsible for settling the estate
  • Names guardians for minor children : Designates who will care for children if both parents die
  • Creates testamentary trusts : Can establish trusts that come into existence at death
  • Specifies funeral and burial wishes : Documents final disposition preferences

Important : A will only controls probate assets . It does NOT control assets that pass by:

  • Beneficiary designation (life insurance, retirement accounts, POD/TOD accounts)
  • Joint ownership with right of survivorship
  • Trust arrangements
  • Requirements for a Valid Will

While requirements vary by state, most jurisdictions require the following elements for a valid will:

  • Requirement Description
  • Legal Age Testator must be at least 18 years old (or an emancipated minor in some states)

Sound Mind Testator must have testamentary capacity - understanding the nature of making a will, the extent of their property, and the natural objects of their bounty (family members)

  • Intent The document must clearly indicate the testator's intention to make a will
  • Writing Most states require the will to be in writing (exceptions for holographic and nuncupative wills)

Signature Must be signed by the testator at the end of the document (or by another person in the testator's presence and at their direction)

Witnesses Generally requires two disinterested witnesses who sign in the testator's presence and in each other's presence

Notarization : While not required for validity in most states, a self-proving affidavit (notarized) can simplify probate by eliminating the need to locate witnesses.

  • Types of Wills
  • Attested (Statutory/Formal) Will

The most common type of will, which meets all formal execution requirements:

  • Typed or printed document
  • Signed by the testator
  • Witnessed by two disinterested witnesses
  • May include a self-proving affidavit
  • Holographic Will

A handwritten will that may be valid without witnesses in approximately 25-30 states:

  • Must be entirely or substantially in the testator's handwriting
  • Must be signed by the testator
  • Must clearly express testamentary intent
  • Risks : May be challenged due to lack of witnesses; unclear provisions common
  • Nuncupative Will (Oral Will)

An oral will spoken aloud, valid only in very limited circumstances:

  • Generally limited to military personnel on active duty or sailors at sea
  • Some states allow for personal property only during "imminent peril of death"
  • Requires multiple witnesses who heard the declaration
  • Rarely valid in modern estate planning; most states do not recognize
  • Pour-Over Will

A will that directs probate assets to "pour over" into an existing revocable living trust:

  • Works in conjunction with a revocable trust
  • Ensures assets not transferred to the trust during lifetime still reach the trust
  • The trust document, not the will, controls ultimate distribution
  • Assets still go through probate but then transfer to the trust
  • Comparison of Will Types
  • Will Type Writing Required Witnesses Required When Used
  • Attested/Statutory Yes (typed/printed) Yes (typically 2) Standard estate planning
  • Holographic Yes (handwritten) No (in some states) Emergency situations; not recommended
  • Nuncupative No (oral) Yes (typically 2-3) Military/maritime only; very limited
  • Pour-Over Yes Yes Works with revocable trust
  • Intestacy Laws: When There Is No Valid Will

When a person dies intestate (without a valid will), state intestacy laws determine who inherits. These laws create a default distribution scheme based on family relationships:

Typical Intestate Distribution Priority:

  • Surviving Spouse : Usually receives a significant portion or all of the estate
  • Children/Descendants : Share with spouse or inherit everything if no spouse
  • Parents : Inherit if no spouse or descendants
  • Siblings : Inherit if no spouse, descendants, or parents
  • More Distant Relatives : Grandparents, aunts, uncles, cousins
  • Escheat to State : If no heirs can be located

Common Intestate Distribution Scenarios:

  • Survivors Typical Distribution
  • Spouse only Spouse receives entire estate
  • Spouse + children (all from marriage) Spouse receives all or significant portion

Spouse + children from another relationship Spouse receives reduced share (often 1/3 to 1/2); children share remainder

  • Children only (no spouse) Children share equally (per stirpes or per capita)
  • Parents only Parents share equally
  • Siblings only Siblings share equally

Key Intestacy Concerns :

  • Unmarried partners receive nothing under intestacy laws
  • Stepchildren typically receive nothing unless legally adopted
  • Favorite charities receive nothing
  • Distribution may not match decedent's wishes
  • Important Will Provisions
  • Survivorship Clause

Requires a beneficiary to survive the testator by a specified period (commonly 30-60 days) to inherit. This prevents:

  • Double probate of the same assets
  • Assets passing to the beneficiary's heirs rather than alternate beneficiaries

Example : "I leave my estate to my spouse, provided she survives me by at least 30 days; otherwise to my children in equal shares."

Disclaimer Clause

Allows beneficiaries to refuse an inheritance, with instructions for where disclaimed assets will go. This provides:

  • Post-mortem planning flexibility
  • Tax planning opportunities
  • Medicaid planning options
  • Residuary Clause

Disposes of all remaining assets not specifically bequeathed. This "catch-all" provision ensures:

  • No assets pass by intestacy
  • Newly acquired assets are covered
  • Specific bequests that lapse (beneficiary predeceases) have a destination
  • No-Contest (In Terrorem) Clause

Disinherits any beneficiary who challenges the will. Effectiveness varies by state.

Codicils and Will Amendments

A codicil is a formal amendment to an existing will that:

  • Must meet the same execution requirements as the original will
  • Can add, modify, or revoke specific provisions
  • Does not replace the entire will
  • Should reference the original will by date

Modern Practice : Due to word processing, most estate planners now recommend executing an entirely new will rather than using codicils, which can create confusion and are easier to misplace.

  • Key Exam Concepts
  • Wills only control probate assets - Beneficiary designations and joint ownership override will provisions
  • Testamentary capacity is presumed - Challengers must prove lack of capacity
  • Holographic wills are risky - Not recognized in all states; often challenged
  • Intestacy rarely matches wishes - Unmarried partners and stepchildren are excluded
  • Pour-over wills require a trust - They work in conjunction with revocable trusts
  • Survivorship clauses prevent double probate - Common in spousal bequests

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