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Wills: The Cornerstone Of Your Estate Plan

Wills: The Cornerstone Of Your Estate Plan

March 05, 2024

If you care about what happens to your money, home, and other property after you die, you need to do some estate planning. There are many tools you can use to achieve your estate planning goals, but a will is probably the most vital. Even if you’re young or your estate is modest, you should always have a legally valid and up-to-date will. This is especially important if you have minor children because, in many states, your will is the only legal way you can name a guardian for them. A qualified attorney can help ensure that your will accomplishes what you intend.

Wills Avoid Intestacy

Probably the greatest advantage of a will is that it allows you to avoid intestacy. That is, with a will you get to choose who will get your property, rather than leave it up to state law. State intestate succession laws, in effect, provide a will for you if you die without one. This “intestate’s will” distributes your property, in general terms, to your surviving spouse, if any, and your closest relatives in proportions dictated by law. However, the state’s distribution may not be what you would have wanted.

Wills Distribute Property According to Your Wishes

Wills allow you to leave bequests (gifts) to anyone you want. You can leave your property to a surviving spouse, a child, other relatives, friends, a trust, a charity, or anyone you choose. There are some limits, however, on how you can distribute property using a will. For instance, your spouse may have certain rights with respect to your property, regardless of the provisions of your will.

Gifts through your will take the form of specific bequests (e.g., an heirloom, jewelry, furniture, or cash), general bequests (e.g., a percentage of your property), or a residuary bequest of what’s left after your other gifts.

Wills Allow You to Nominate a Guardian for Your Minor Children

In many states, a will is your only means of stating who you want to act as legal guardian for your minor children if you die. You can name a personal guardian, who takes personal custody of the children, and a property guardian, who manages the children’s assets. This can be the same person or different people. The probate court has final approval, but courts will usually approve your choice of guardian unless there are compelling reasons not to.

Wills Allow You to Nominate an Executor

A will allows you to designate a person as your executor to act as your legal representative after your death. An executor carries out many estate settlement tasks, including locating your will, collecting your assets, paying legitimate creditor claims, paying any taxes owed by your estate, and distributing any remaining assets to your beneficiaries. Like naming a guardian, the probate court has final approval but will usually approve whomever you nominate.

Wills Specify How to Pay Estate Taxes and Other Expenses

The way in which estate taxes and other expenses are divided among your heirs is generally determined by state law unless you direct otherwise in your will. To ensure that the specific bequests you make to your beneficiaries are not reduced by taxes and other expenses, you can provide in your will that these costs be paid from your residuary estate. You could also specify which assets should be used or sold to pay these costs.

Wills Can Create a Testamentary Trust

You can create a trust in your will, known as a testamentary trust, that comes into being when your will is probated. Your will sets out the terms of the trust, such as who the trustee is, who the beneficiaries are, how the trust is funded, how the distributions should be made, and when the trust terminates. This can be especially important if you have a spouse or minor children who are unable to manage assets or property themselves.

Wills Can Fund a Living Trust

Many people decide to establish a Revocable Living Trust during life. This type of trust is flexible and accessible; if you put assets into it while you’re alive, you can still use them, and you can amend or revoke the trust at any time. One of the main benefits is that assets in the trust pass to your beneficiaries outside of the probate process, which can make things simpler and quicker. If you have a Revocable Living Trust, a simple “pour over will” will can make sure any remaining assets will be transferred to the trust after your life. The will names the Living Trust as the beneficiary, so your estate “pours” into the trust.

Wills Can Help Minimize Taxes

Your will gives you the chance to minimize taxes and other costs. For instance, if you draft a will that leaves your entire estate to your U.S. citizen spouse, none of your property will be taxable when you die (if your spouse survives you) because it’s fully deductible under the unlimited marital deduction. However, if your estate is distributed according to intestacy rules, a portion of the property may be subject to estate taxes if it’s distributed to heirs other than your U.S. citizen spouse.

Assets Disposed of Through a Will Are Subject to Probate

Probate is the court-supervised process of administering and proving a will. Probate can be expensive and time consuming, and probate records are available to the public. Several factors can affect the length of probate, including the size and complexity of the estate, challenges to the will or its provisions, creditor claims against the estate, state probate laws, the state court system, and tax issues. Owning property in more than one state can result in multiple probate proceedings. This is known as ancillary probate. Generally, real estate is probated in the state in which it’s located, and personal property is probated in the state in which you are domiciled (i.e., reside) at the time of your death.

Establishing a Revocable Living Trust, discussed above, can help to streamline the probate process. So can making sure you have valid beneficiary or transfer-on-death designations on accounts and insurance policies. But it’s still important to have a will to make sure that all your assets end up in the right place.

Will Provisions Can Be Challenged in Court

Although it doesn’t happen often, the validity of your will can be challenged, usually by an unhappy beneficiary or a disinherited heir. Some common claims include:

  • You lacked testamentary capacity when you signed the will
  • You were unduly influenced by another individual when you drew up the will
  • The will was forged or was otherwise improperly executed
  • The will was revoked

The most reliable way to reduce the risk of court challenges is to have your documents drafted by a qualified attorney, who will also make sure that they are executed properly.

CRN202702-6021965