Wills & Trusts
Wills and trusts are testamentary tools in the larger process called estate planning. Most people think estate-planning focuses almost entirely on tax issues upon ones death. This would be a very limited and superficial understanding of the many issues involving the final disposition of a person’s estate. Preparing your will requires that you carefully consider your future and that of your family as it relates to your death and your final property distribution. Here are some points to consider before you make your will and before you speak with a wills and trusts expert.
When preparing your will and estate instructions it is a good idea to make an itemized statement of your assets and begin to consider your property item by item. Remember, you can change it at any time you wish, as your assets, beneficiaries or desires change. Your will is not filed or recorded before death and the existence of the will does not affect your ability to sell or give away the property during your lifetime. You may continue as though you had not written the document. Start by making a list of everything you own and all you owe -- a statement that will show exactly where you stand financially. Decide to whom you will lave your real and personal property. It is best to do it systematically. You will be asked specifically to state your last wishes and making a list of the persons involved, their relationship to you, your objectives, when their bequest is to be given, and whether it is to be provided by a trust fund, life insurance or other accepted financial vehicle. Take this list to the lawyer who is counseling with you.
You will also need to select an executor, executrix or personal representative to administer your will. This may be the beneficiary who will inherit some or all of your estate, a member of the family, your legal or financial advisor, or trusted friend. If your short on trusted friends and family, a bank can act as executor, personal representative, and/or trustee. Most banks are experienced with estate and probate accounting and management details. In selecting your executor or personal representative and trustee, the choice should be made with great care. The decision should be businesslike, not sentimental. While sentiment and friendship cause some people to name members of the family or close friends, remember that your executor or personal representative has the important responsibility of settling your estate and seeing that the wishes expressed are faithfully carried out.
The executor, also known as the personal representative, must qualify as an executor and obtain a certificate of authority to so act, and if necessary, execute a bond. The executor must also carefully locate and take possession of your property, discover and assert all rights and line up claims owed by the estate. Finally, the executor must prepare and file an inventory of all property and interest of any kind belonging to the estate along with its estimated and/or appraised value and accounting of the same, review all assets and collect all monies that is due and finally distribute the property.
If you die intestate (without a will), your state's laws of descent and distribution will determine who receives your property by default. These laws vary from state to state, but typically the distribution would be to your spouse and children, or if none, to other family members. A state's plan often reflects the legislature's guess as to how most people would dispose of their estates and builds in protections for certain beneficiaries, particularly minor children. That plan may or may not reflect your actual wishes, and some of the built-in protections may not be necessary in a harmonious family setting. A will allows you to alter the state's default plan to suit your personal preferences.
If you own property with another person as joint tenants with right of survivorship, that is, not as tenants in common, the property will pass directly to the remaining joint tenant upon your death and will not be a part of your probate estate. (It will, however, be a part of your taxable estate.) Frequently, people (particularly in old age) will cause bank accounts or securities to be placed in the name of the owner with one or more children or trusted friends as joint tenants with right of survivorship. This is sometimes done as a matter of convenience to give the joint tenant continuing access to accounts to pay bills. It is important to realize that the ownership of property in this fashion often leads to unexpected or unwanted results. Disputes, including litigation, are common between the estate of the original owner and the surviving joint tenant as to whether the survivor's name was added as a matter of convenience and/or management or whether a gift was intended. The planning built into a well-drawn will may be partially or completely thwarted by an inadvertently created joint tenancy that passes property to a beneficiary by operation of law, rather than under the terms of the will.
Insurance plays an important role in estate planning and should be coordinated with all other aspects of your estate plan. The laws pertaining to the taxability of insurance proceeds are complex, however, so it is important that all matters pertaining to life insurance be carefully reviewed with your attorney and insurance advisor. If you own life insurance on your own life, you may either designate one or more beneficiaries to receive the insurance proceeds upon your death, or make the proceeds payable to your probate estate or to a trust created by you during your lifetime or by your will.
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You will also need to select an executor, executrix or personal representative to administer your will. This may be the beneficiary who will inherit some or all of your estate, a member of the family, your legal or financial advisor, or trusted friend. If your short on trusted friends and family, a bank can act as executor, personal representative, and/or trustee. Most banks are experienced with estate and probate accounting and management details. In selecting your executor or personal representative and trustee, the choice should be made with great care. The decision should be businesslike, not sentimental. While sentiment and friendship cause some people to name members of the family or close friends, remember that your executor or personal representative has the important responsibility of settling your estate and seeing that the wishes expressed are faithfully carried out.
The executor, also known as the personal representative, must qualify as an executor and obtain a certificate of authority to so act, and if necessary, execute a bond. The executor must also carefully locate and take possession of your property, discover and assert all rights and line up claims owed by the estate. Finally, the executor must prepare and file an inventory of all property and interest of any kind belonging to the estate along with its estimated and/or appraised value and accounting of the same, review all assets and collect all monies that is due and finally distribute the property.
If you die intestate (without a will), your state's laws of descent and distribution will determine who receives your property by default. These laws vary from state to state, but typically the distribution would be to your spouse and children, or if none, to other family members. A state's plan often reflects the legislature's guess as to how most people would dispose of their estates and builds in protections for certain beneficiaries, particularly minor children. That plan may or may not reflect your actual wishes, and some of the built-in protections may not be necessary in a harmonious family setting. A will allows you to alter the state's default plan to suit your personal preferences.
If you own property with another person as joint tenants with right of survivorship, that is, not as tenants in common, the property will pass directly to the remaining joint tenant upon your death and will not be a part of your probate estate. (It will, however, be a part of your taxable estate.) Frequently, people (particularly in old age) will cause bank accounts or securities to be placed in the name of the owner with one or more children or trusted friends as joint tenants with right of survivorship. This is sometimes done as a matter of convenience to give the joint tenant continuing access to accounts to pay bills. It is important to realize that the ownership of property in this fashion often leads to unexpected or unwanted results. Disputes, including litigation, are common between the estate of the original owner and the surviving joint tenant as to whether the survivor's name was added as a matter of convenience and/or management or whether a gift was intended. The planning built into a well-drawn will may be partially or completely thwarted by an inadvertently created joint tenancy that passes property to a beneficiary by operation of law, rather than under the terms of the will.
Insurance plays an important role in estate planning and should be coordinated with all other aspects of your estate plan. The laws pertaining to the taxability of insurance proceeds are complex, however, so it is important that all matters pertaining to life insurance be carefully reviewed with your attorney and insurance advisor. If you own life insurance on your own life, you may either designate one or more beneficiaries to receive the insurance proceeds upon your death, or make the proceeds payable to your probate estate or to a trust created by you during your lifetime or by your will.
Got more questions? Get more answers on Probate, Wills and Trusts.
Learn and Grow With Our Community
Join the discussion and get new insights and tips on solving life’s troubles with our community. Make a difference; share what you know and join today.