Eight Things You Should Know About a Will

J. Michael Deege

1. What, precisely is a will? Who should have a will and why? What does it protect? Are there different types? What are the consequences of not having one? Other than assets, what can you protect with a will?

A will is a document leaving directions as to what you want done with your assets after death. Your will speaks for you after death.

Anyone who doesn't like the will the State writes for them should write their own. Anyone who is married, or who has children, or may have estate or inheritance tax problems because of the size of their estate or because of who their assets will pass to upon death. Therefore, a will protects spouse, children, and assets.

A will is a personal document setting forth details about who will receive your assets, when they will receive your assets, and how many assets they will receive. The type of will varies depending on various factors such as whether someone is married, whether they have children (or if only one of them has children), and the size and complexity of their estate assets.

If you don't write your own will, the State has written one for you. It is called the law of intestate succession. Most every State has a law on the books that sets forth the procedure to follow when someone dies without a will. Usually the surviving spouse (if any) will receive all or a portion of the estate and the remainder will pass to children (no matter what their current age).

Another important reason to have a will is that it lets you express your preference as to who would act as a Guardian / Conservator for any minor children you may have at the time of death. This can avoid fights by the relatives over who will care for your children.

Also, many states allow you to utilize "a list" which is referred to in the will to dispose of things like household goods and personal effects to certain designated individuals. These can be great tools because they can allow you to add items to the list or delete items from the list, all without having to go the expense of changing your will.

A very important estate planning concept to remember is that your will only controls assets that are titled in your own name alone or assets which are titled as tenants in common where you own an undivided interest. Assets that are titled in joint tenancy with right of survivorship automatically pass to the surviving joint tenant upon the death of either joint tenant, no matter what your will provides. Assets which have a POD or a TOD designation or a beneficiary designation, such as life insurance, annuities, and retirement plan assets, will pass to the named beneficiary upon death no matter what your will provides. And lastly, assets that are owned by a trust pass according to the terms of the trust no matter what your will provides.

2. Can you draw one up yourself? What makes it legal? Do you need a lawyer? How much might that cost?

In most states, you may draw up your own will without the necessity of hiring a lawyer. However, there are certain requirements that must be followed in order for the will to be valid. Many states require certain wording in what is called the "attestation clause" which sets forth who was present when the will was signed and who the witnesses are and if they are all present. Most states also require a certain number of witnesses to be present when the will is signed, as well as a notarization clause.

The costs for a will vary greatly based on the complexity of the document. The very simple basic will might cost in the $100-$200 range while a very complex will might run into the thousands. Costs may also vary depending on geographical location. Costs generally tend to be higher in the more densely populated areas of the country.

3. Are there any resources online that a person can use to draw up their own will? Any software? If so, what makes it legal? Having it notarized for example?

If one searches hard enough they can find almost anything on the Internet. However, you need to be aware and exercise some caution because many of the resources available to enable someone to write their own will, whether obtained from the Internet or from software, are often generic in nature and may not reflect all state specific requirements necessary to have a valid will in every state. Just because someone signs a document and has it notarized does not make it a valid will.

4. What if you've done extensive estate / financial planning? Do you still need a will? How do the two coincide? Is a high-net worth individual more in need of a will than someone who doesn't own a lot of assets?

Lets distinguish between "financial" and "estate" planning. Financial planning is the process of so arranging your finances while you are alive to accomplish certain lifetime financial goals such as college costs for children, the care of a relative, or retirement objectives. Estate planning, on the other hand, is determining who will receive your assets after your death and the manner and time when they will receive them. Steps can then be taken while one is alive toward implementing pieces of the plan (like gifting of assets or the setting up of trusts or making certain beneficiary designations, etc.) that will become effective upon death. Therefore, most lawyers leave financial planning to the financial planners and only get involved in estate planning.

Someone's net worth is not the sole determinant of whether they need a will, but as a general rule all high net-worth individuals do need wills because of the tax saving features of certain types of wills.

5. As we know, life changes. At what points should you update your will?

I generally recommend that someone review their will every 3 to 5 years, or sooner if their financial or family situation has changed. Please refer to my Frequently Asked Questions About Wills for a list of events that should trigger a review.

6. Can your will be contested? Under what circumstances?

Another important feature about a will is that in most states, once the probate of the will begins after death, there are certain statutes of limitations that begin running. One of those statutes establishes a window of time during which someone wishing to contest the will must bring the contest action or be forever barred from bringing the action. Also, there are often other statutes oflimitation which prescribe a similar window of time when any creditor of the deceased must file a claim or be forever barred from filing the claim.

7. What is the role of an executor? What type of person should you chose?

Probate is the process that occurs after death to cleanse the assets of the deceased from claims of any creditors, relatives, and the tax authorities before passing them on to the intended recipients. The person in charge of this process is called the executor. The executor is responsible for the gathering of the deceased's assets, the valuing of those assets, the payment of any claims (including taxes), and ultimately the distribution of those assets to the beneficiaries of the estate. Generally, the executor hires an attorney for the executor to assist in this entire process.

In deciding whom to name as your executor, many states have a requirement that at least one of the executors must be a resident of the state where the estate is being probated. The job does take time and a reasonable degree of intelligence to understand the complexities of taxation to be able to effectively perform the duties of the executor. Many people pick a bank trust department or an independent trust company to be named either as a sole executor or a co-executor because you are not naming a person, you are naming an institution which you hope has perpetual existence (although the name may change several times) and will always have trained personnel available to perform the duties of an executor when you need them. Often, another advantage to naming a corporate executor is that some states exempt a corporate executor from the requirement that they purchase a bond to insure the faithful performance of their duties that can be a cost saver for an estate. If you were to ask most individuals who have acted as an executor once if they would like to do it again, their answer is most often an emphatic, "No."

8. What are the most common mistakes that people make when drawing up wills that cause problems for their heirs?

One question I am frequently asked is whether a will drafted in one state is valid in another state if that person should move. Generally, most states follow the rule that if the instrument was valid where it was drafted they will also uphold the validity of the document even though it may not satisfy all of the legal requirements of the new state. However, it is always a good idea to have documents drafted in another state reviewed by an in-state lawyer to determine if they pose any problems or if there might be unique ways to do things in the new state that weren't available in the previous state.

The most difficult problem to deal with during the estate administration process, and the one that can literally destroy long-established family relationships, is the problem of disposing of the household goods and personal effects. There can be bitter arguments over things that have very little monetary value but are of great sentimental importance. It is highly advisable when having your will drafted to take some extra time to decide how this issue is to be handled and how the assets should be disposed of for the sake of family unity.

© J. Michael Deege 2003

Wilson, Deege, Dollar, Despotovich & Riemenschneider
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