Every estate plan needs a will. Even when most of an estate is owned by an irrevocable living trust, a will is essential.
Yet, most estate owners do not know enough about what wills are, especially their powers and limits.
Knowing more about wills can make it easier to work with an estate planner, reduce the cost of the plan and deliver better results.
A few basics. The traditional name, “last will and testament,” is obsolete. In old common law, a testament contained a person’s instructions about how personal property was to be disbursed, while directions about real estate were contained in a will. Today, a will controls both types of property plus other issues.
To be valid, a will generally must be written and have the testator’s signature witnessed by two or more disinterested people. State law dictates the minimum number of witnesses.
In about 20 states oral wills can be valid, but only under limited circumstances. A few states recognize handwritten wills without witnesses, also known as holographic wills, in more limited circumstances.
The maker of the will and owner of the estate is the testator.
A disposition of property in a will is known as a bequest, and the person receiving property is a beneficiary.
After the testator’s death, the estate is administered, according to the terms of both the will and state law, by a person known as the executor, administrator, or personal representative, depending on the state. More than one person can serve in that capacity.
Every will is subject to probate, a process in which a state court supervises the executor and the administration of the estate.
Some states have separate probate courts. In other states, a family court or the regular district or circuit court handles probate.
Dying without a will is called dying intestate. When someone dies intestate, the estate still goes through probate. State law determines how the estate is distributed, and the court appoints the executor.
Does not cover everything. Many types of property are not controlled by a will and are exempt from probate.
The major assets that are inherited outside the will and probate include assets held in a trust, employer retirement plans, most jointly-owned property, life insurance, and annuities. These assets pass to the next owner according to the terms of contracts or laws.
Every time a will or estate plan is reviewed, assets exempt from the will and probate also should be reviewed.
The original copy can be important. States are moving toward recognizing digital and other nontraditional wills.
But for now, most states still require the original physical copy of the will to be filed for probate. That means the document must have an original, or “wet,” signature of the testator. The testator can sign several copies so that there is more than one original.
A photocopy is accepted only after proof that an exhaustive search was unable to locate an original. A copy is not as binding on a court as the original, and it is easier for a copy to be challenged.
Keeping the document in a safe deposit box at a bank or similar storage option might not be the best decision. Often, the testator is the only one legally authorized to access the box, making it difficult for the executor to obtain the will, depending on bank policies and state law. Sometimes a court order is needed.
Consider keeping an original will at the estate planner’s office or in a waterproof and fireproof container in your home or other accessible location.
Wherever you keep an original will, be sure the executor and key family members know where it is and can access it.
More than property. While the main purpose of a will is for the testator to record how he or she wants property distributed, it can address other important issues.
The testator can appoint or nominate the executor(s), subject to the probate court’s approval.
The testator also can designate a guardian or guardians for minor children or dependents. Failure to do that means courts make the decision.
The will also may state the testator’s wishes about the funeral, memorial service, whether there is a burial or cremation, and other issues. In some states, these directions are binding, but in others they are nonbinding suggestions and preferences.
Disinheritances. The testator can use the will to disinherit anyone who might be considered a natural object of his or her affection or who would inherit if there were no will.
In all states, however, the surviving spouse cannot be fully disinherited. Spouses generally inherit a minimum portion of the estate (usually one-third or two-thirds), though the right can be waived in a valid premarital or post marital agreement. The spouse’s forced share usually includes assets exempt from probate.
There are different reasons to disinherit someone.
A child who has done well financially and doesn’t need additional wealth might receive a small or no bequest, especially when other children or charities could use the support.
Or an inheritance might be provided outside the will, such as through a trust, life insurance or jointly owned property.
Of course, someone might be disinherited because he or she is estranged from the testator, has been irresponsible with money or has substance abuse or gambling problems.
To most effectively disinherit someone, the person be named in the will and there should be a statement that the testator is knowingly and intentionally leaving them nothing. Reason do not have to be given but can be provided.
Trying to disinherit someone simply by omitting them from the will could backfire. Courts generally assume omission of a family member was accidental, unless there is proof to the contrary.
An alternative is to leave the person a modest bequest and have an anti-challenge clause in the will, as explained below.
Will challenges. The terms of a will can be challenged by anyone who claims to have a legal interest in the estate. Challenges generally are made by a relative or someone claiming rights under state law, a promise or a contract.
Will challenges often allege that someone exerted undue influence over the testator or that the testator had diminished mental capacity. Sometimes a challenge alleges there’s a technical defect in the will, such as that it wasn’t properly witnessed.
Challengers argue that a prior will, an alternative document or state law should determine who inherits.
A defensive measure is to add an anti-challenge, or in terrorem, clause stating that anyone who challenges the will and loses will receive nothing from the estate. Most states allow such clauses.
The clause can be effective when a potential challenger is left a bequest that is less than he or she was expecting but still might not want to risk losing.
The testator also can take pre-emptive steps to establish his or her mental competence, such as making a video version of the will or undergoing a doctor’s exam near the time the will is executed.
Trusts and wills can work together. There are several ways to integrate a will with one or more trusts.
A trust can be created in the will. Suppose you want to leave wealth to your children, but they are minors or financially unsophisticated. Your will can state that the property will be transferred to a trust for the children’s benefit. The trust agreement can be attached to or be a section of the will.
An alternative is to create a revocable living trust during your lifetime that holds and manages most of your property. After you die, the trust automatically converts to an irrevocable trust. Your will can state that property covered by the will is transferred to the trust.
Or you can create a trust during your lifetime but transfer few or no assets to it. Your will directs the executor to transfer assets to the trust.
These last two arrangements often are known as pour-over trusts, and the will might be referred to as a pour-over will.
Strings and conditions. You can put any condition on a gift or bequest that isn’t against public policy. Courts generally have allowed any restriction that isn’t race-based and doesn’t violate or encourage the violation of a law.
Some conditions allowed by courts made bequests contingent on a beneficiary’s being married, staying married, or being employed.
There might not be anyone to enforce compliance with a condition that is continuous, such as staying employed, but such provisions usually are valid.
