A “Last Will and Testament” – aka “Will” – is a legal document that communicates your last wishes in regards to how you would like your possessions (assets, personal items, real estate) passed down to those persons/organizations you have chosen as your beneficiaries.
Wills offer many benefits and are an important part of any estate plan, regardless of how much your estate is worth. With so many estate planning software options available, many people question whether they really need to consult with an experienced estate planning attorney in order to draft a Will. Despite the simple definition above, there is much more to drafting a Will than meets the eye.
A Will is an affirming estate planning resource.
- It allows you to state your wishes as to who receives your property after your death.
- It gives you the ability to nominate those persons who you want to handle the distribution of your estate.
- In addition to dealing with your property, your Will gives you a place to voice who you would like to nominate as a guardian for minor children, or for your spouse if he or she is incapacitated at the time of your passing.
Without a Will, the courts and probate laws of your state will decide who inherits your property based on the laws of that state.
There are certain things a Will cannot accomplish. Depending on how your assets are owned while you are alive, your Will may have no effect on the distribution of those assets after your death:
- If you own property in joint tenancy with another co-owner, your share of that property automatically passes to the surviving joint tenant by operation of law regardless of what you say in your Will.
- If you have named a beneficiary of your life insurance policy – or your retirement accounts, including pension plans, individual retirement accounts (IRAs), 401(k) or 403(b) retirement plans – those proceeds aren’t subject to the terms of a Will and pass directly to your named beneficiary.
- Brokerage accounts, including stocks and bonds, in which you have named a transfer-on-death (TOD) beneficiary are transferred directly to the named beneficiary. Some states allow for vehicles and regular bank accounts to also have a TOD designation, thus meaning that any instructions in your Will would be ineffective for those assets too.
A Simple Will – sometimes called a Traditional Will – has limitations beyond matters of inheritance:
- Generally, Wills are not as well suited as trusts for putting conditions on a gift such as requiring someone to get married or divorced, or obtain a certain education level, as a prerequisite to inheriting a portion of your estate.
- A Traditional Will cannot reduce estate taxes the way that trusts, and other sophisticated planning methods, can.
- A trust, not a Traditional Will, is also necessary to arrange for care for a beneficiary who has special needs. A Traditional Will is not ideal for providing long-term care arrangements for a loved one.
Regardless of whether you have a Traditional Will or a Complex Will, no Will-based estate plan can help you avoid probate. In fact, a Will guarantees a court-supervised probate proceeding, which can take a minimum of a year, or longer, sometimes at significant expense to your estate. If it’s probate you want to avoid, then looking at more advanced estate planning strategies are options you should explore.
There are many complexities to drafting a Will, and customizing it to meet your needs is dependent on both your circumstances and the laws of your state. A generic software-developed Will may not accomplish your goals. Therefore sitting down with an experienced estate planning attorney to discuss your individual situation allows the attorney to suggest whether a Will-based plan or a Trust-based plan best fits your needs.