One large piece of the estate planning puzzle is Wills. A Will contains instructions to a Judge about how you would like your estate distributed when you die. An “estate” is property you own such as your home, and other assets, like cars, bank accounts, retirement accounts, investments, businesses, family heirlooms or personal keepsakes, jewelry, and even collections (i.e., coins or books). A Will can also include instructions about your final disposition (burial, cremation, eaten by vultures on a mountaintop), guardianship nominations for minor children, and even ask the court to create a Trust after you die, known as a Testamentary Trust, if that would be helpful (i.e. Special Needs Trust). Starting the process of creating your Will, may seem overwhelming, but an experienced estate planning attorney can help you get clarity about your specific goals and create an estate plan to protect what is important to you in your life and for your legacy.
What is a Will and Do I Need One?
A Will is a legal document signed by a person, known as the testator, that directs what should be done with property after a person’s death. In other words, a Will is a legal tool that allows you to control what happens to your estate — not the courts.
Everyone should have a Will so that their property is disposed of according to their wishes. Life can be hectic and there’s usually a lot going on, so creating a Will often gets pushed to the bottom of the to-do list. However, a Will is incredibility important because, in addition to directing where assets should go, a Will can nominate a guardian for minor children, or create a Trust that provides for the support and education for loved ones without needing additional court proceedings. Additionally, a Will can name the person you want to handle your estate, avoiding family conflicts such as siblings who may not agree, adult children living in different states, or divorced parents who won’t cooperate.
If you die without a Will, the government decides how your property is passed according to state law — regardless of your wishes. This process is called dying “intestate.” Typically, when a married person dies with a spouse still living, the estate usually passes entirely to the surviving spouse. There are usually exceptions if a person dies with a spouse and with children from a prior relationship. In these circumstances, without a Will, two-thirds of the estate typically pass to these children and the remaining one-third passes to the surviving spouse. An important note, however, unlike a Trust, when using a Will as the main estate planning tool (or if you pass without a Will) there is the potential that your surviving spouse could remarry and use your assets used to support your spouse’s new family without proper estate planning carving out an inheritance for your loved ones. Ultimately, the exact way an estate will be divided depends on state law and varies from state to state. The main take away is that if a person wants their assets to be disposed of differently than is set by statute -- a Will is required.
Overall, dying without a Will can cause huge problems for your loved ones by adding unnecessary stress and expenses to an already emotional and difficult situation. Here’s good news: creating a Will does not have to be complicated.
An alternative to a Will in an estate plan is a Trust, which shares similarities with a Will, but also allows for additional planning options. You can read more about Trusts here. Additionally, a pour-over Will is somewhat of a Will/Trust hybrid approach. A pour-over Will is a Will used in conjunction with a Living Trust, that essentially states that any assets of the deceased that weren’t already transferred to a Living Trust should flow into the Trust upon death. The deceased’s estate will then be distributed to beneficiaries according to directions outlined in the Trust rather than the Will. Even if a person plans to transfer all of their assets to a Trust before they pass. Estate planning best practices includes having a pour-over Will as a safeguard against forgotten or unexpected assets not placed into a Trust.
What is Probate?
Probate is the legal process where a court supervises the administration of an estate, which usually includes recognizing the Will of the deceased, and ultimately distributing the estate to the intended beneficiaries. During probate, most assets are frozen during the court probate process (which can last months and even years) before they can be fully distributed to any beneficiaries.
The probate process typically starts with appointing the Executor/Executrix or Personal Representative, which is the individual selected (usually by the Testator in the Will) to administer the estate. An Executor is tasked with major responsibilities during the probate process and can face liability for mismanagement of estate assets, so the individual selected has the option to refuse the position. Basically, being a personal representative for someone’s Will can evolve into a part-time job. The Executor can decline to serve in the position, then the Executor is chosen by an alternate named in the Will, or by a Judge. The Executor’s responsibilities include reading estate documents; notifying banks, credit card companies, and other relevant agencies of the death; paying estate taxes and negotiating and/or paying debts; identifying and maintaining estate assets (i.e. property, house, condo, running a business) until they can be distributed or sold; and complete all gifts to named beneficiaries.
One of the biggest benefits of proper estate planning is avoiding probate after an individual passes. Since the probate process is court supervised, the process can be drawn out and beneficiaries typically don’t receive distributions (or full distributions), until the probate process is complete. For complex estates or estates with other holdups, this can drag on for years, and the beneficiaries of the estate are left to wait for the process to be completed. Additionally, the probate process typically adds expenses to an estate, since there are court costs, attorneys’ fees, and even appraisal fees associated with probating a Will. The longer the probate process takes, the greater the expenses will be, which means less funds left over to be distributed to beneficiaries.
Not all assets go through the Court probate process required when someone dies without a Will or with a Will-based estate plan. Jointly owned assets, such as a property owned by two people, will pass to the survivor upon one individual’s passing. Additionally, some assets, such as life insurance and retirement accounts, allow you to designate a beneficiary and pass outside of probate. If a beneficiary designation is made on these assets, then they are not controlled by a Will, and instead pass to the beneficiary outside of probate. However, if a minor child is named as a beneficiary, probate is still likely to be required to name a guardianship for the asset, until the child reaches the legal age of majority. Also, probate is required if the beneficiaries you named have died or cannot accept the gift for another reason.
Do I Need a Lawyer to Write a Will?
When creating an estate plan, even the so called “simple Will,” it’s important to seek counsel from someone familiar with the laws to avoid potential pitfalls and comply with all necessary formalities to ensure the document is legally valid. Any money saved during the planning stage to execute a simple Will could end up costing your estate and beneficiaries money later on if there is an issue with the Will failing to comply with the current law, and even if the Will does not contain any customized provisions that can serve to discourage conflict and contests of a Will. An estate planning attorney can help you avoid complications, confusions, or even court challenges that could waste your estate money in unnecessary court battles, hearings, and the time of your friends and family, sorting out details that are unclear, spending hours on hold on the phone, or even waiting for information in the mail. Additionally, an experienced attorney can offer advice or guidance about things you are not familiar with that you wouldn’t have thought to include, like a battle plan to address contingencies, or an ingredient to add to a recipe that just makes it so much better.
An experienced estate planning attorney can help you prepare and guide you through the process of protecting your wealth and possessions and also provide strategies to leverage your legacy. Estate planning attorneys at General Counsel, P.C. can guarantee that you’ll feel more confident about your future after you’ve made your estate plan or update your existing plan. We would welcome the opportunity to help you navigate the estate planning process. Contact us today at 703-991-7973, or schedule an appointment, and see how we can help you protect yourself and your loved ones!
