Tag: executor

The Last Will and Testament, more commonly known as just “The Will,” is at the heart of the Estate Planning process (see prior segment of this series “The Basics of Estate Planning: Part I, Everyone Needs It”). The Will is the first document people think of, and typically the first document they complete as part of the larger task of Estate Planning.

But first, my disclaimer: I am NOT an attorney, but I have been exposed to all of the different pieces of the Estate Planning Process through my career as a Banker, and so I have a good understanding of the purpose of each, and have also seen where some pitfalls can occur. In addition, through my research, and the completion of my own Personal Estate Planning documents, I have learned a lot about the importance and significance of each, and am able to offer explanations and recommendations for anyone who would like to tackle this necessary task on their own.

Your Will is a document that will direct how your property and assets will be distributed upon your death. If you have minor children, your Will can also dictate your desire for guardianship of their care, and their finances. Experts say as young as age 18 is the time to start thinking about preparing a Will, especially if you own significant assets or have children. A Will can easily be completed without requiring an attorney, but more complicated situations will require legal advice. Keep in mind that an attorney will not–and should not–tell you what to do. You tell them what you want to accomplish and they will help you prepare the paperwork to make sure that happens. Some of the situations in which you should consider professional legal help include:

• You fear a lawsuit, or think your wishes might be contested
• You own multiple properties or multiple businesses, especially with complicated ownership
• You have a lot of assets, or high dollar assets (over 1 million)
• You have out-of-state, or international assets
• You want to protect your assets from estate taxes, creditors, or potential medical expenses
• You have complicated child care concerns
• You live in a Common Law State and are unsure how these laws apply to you

Each state has different requirements in terms of what will be considered a legal Will and also may handle situations differently regarding after-death processes. Do your research for state-specific requirements and always consult a state-sponsored website for your particular state. To find these, go to http://www.findlaw.com, click “state laws,” choose your state, and click “Estate Planning Laws.” Your state’s site may even have some sample documents available for you to review.

In most cases, the legal requirements for a Will are very basic.

• It should be typed
• You must be at least 18 years old and of sound mind
• You must name an Executor, and at least one beneficiary
• The document must state that it’s your Will
• You must sign and date your will and have at least two individuals sign as witnesses

Most states do not require that your Will be notarized, but as always, check your particular state for legal requirements. Having your signature notarized is usually a good idea, even if it’s not required. Your bank will likely have a notary available for you.

A Will can be very basic, or very complicated, but all cover the same components. Here are the basic sections of the Will and what each element consists of:

• Personal information/sound mind/replaces prior wills-Includes your legal name, address, marital status, and listing of children, or grandchildren; a statement that you are of sound mind, and that the current document replaces any prior versions of a Will. Example: I, John Smith, of 100 Springs Lane, Anytown, Sonoma County, CA do declare this to be my Last Will and Testament and replaces any prior versions. I am of sound mind, and I am married to Joanne Smith, and have one child, Joseph Smith, both of whom reside with me.
• Naming of Executor; In most cases, an executor will be named. This is sometimes referred to as an Administrator, or a Personal Representative. Naming an executor may not be required in your state, but it is always a good idea. This is the person who will carry out your wishes, and manage the disbursement of your assets upon your death. Naming an executor will make the probate process easier, and even if your Will does not need to be probated (because you have taken other steps to ensure your property passes to someone else upon your death), a Court appointment as Executor will come in handy for those trying to manage your affairs. Something as simple as a cable bill that is in your name alone will become a nightmare when your family members attempt to obtain information, or even close the account, following your death, if they do not have an official court document. See Future Installments of this Estate Planning series: Avoiding Probate and Guidelines for Your Executor. Example: I name Susan Smith, of 123 Vineyard Lane, Anytown, CA, as my Executor.
• Distribution of Assets/Residuary clause-This is a listing of your assets, and your beneficiaries; when determining amounts for assets that are to be split among different beneficiaries, use percentages instead of dollars; List beneficiaries, and alternates, and a residuary clause that includes the person or persons who will receive anything that is not specifically listed in the Will. In the case of numerous assets, a “Property List,” might be helpful; Example: I leave all of my assets including my home at 100 Springs Lane, my bank accounts, and my personal possessions, to my wife, Joanne Smith (40%), and my son, Joseph Smith (60%). If either of them predeceases me, the other shall inherit all assets. My residuary beneficiary will be Joanne Smith.
• Handling of children, if applicable; Example: Upon my death, and in the event Joseph is a minor, I direct that his personal and financial care, shall be in the hands of his mother, Joanne Smith.
• Survivorship clause: to ensure your Will determines who inherits your assets, and not the beneficiary’s will; in other words, if one of your beneficiaries dies immediately after receiving proceeds from your Will, those assets would then transfer to that individual’s beneficaries, as opposed to another of your beneficiaries; typically this waiting period is 5 to 60 days. Example: Beneficiaries must survive me by 30 days in order to inherit.
• Signatures/Witnesses/Notary; You will sign and date, have 2 witnesses sign and date, and have all signatures notarized.

The example phrases in the above, could be put together in a single document to complete a very basic Will. Most Wills are a little more lengthy, as they may involve multiple assets and beneficiaries, but in some instances could be as simple as one page. In addition to the basic components, your Will may also express your wishes for Funeral Arrangements and Memorial Services. This kind of information is also sometimes outlined in a separate document (For example “Final Arrangements”).

Most times, upon your death, your Will will need to be probated. This is a legal process where the Personal Representative is officially appointed by a local court, as the representative of your estate. This is important because most places, like banks, will not recognize the Will as a legal document to grant the PR the authority to manage the deceased’s finances. The person named as executor in the Will would complete an application (generally referred to as a “Petition for Probate”) and will provide the application along with an original copy of the Will and the death certificate to the Probate Court in their state. The court will “prove” the Will–verify it’s a legal Will– and then will appoint the Personal Representative. The Court will also appoint guardianship if there are minor children. The PR will receive a legal document that gives them the ability to act on your behalf for any property that has not otherwise been designated (for example with a Trust or joint ownership). The court appointment document is also important for managing any affairs that don’t involve assets, like accounts for cell phones, or utilities. The PR appointment does not grant anyone legal ownership but gives the appointee the ability to act on behalf of your Estate. 

In the absence of a Will (Known as dying “intestate,”), the Court will likely attempt to appoint the nearest living relative as PR, a spouse being the first option. The court won’t go looking for individuals, however, so in the absence of other applicants, the court will likely appoint any applicant with a close relationship to the deceased. As this may not have been the person you would have chosen, it’s best to make this clear by completing your Will as soon as possible. In the absence of a Will, the court will also determine how your assets are distributed, using a predetermined hierarchy.

You may have heard references to a Will being contested. This is a rare occurrence but could happen if the legal requirements of preparing a Will are not met. Other reasons a Will is vulnerable to being contested include the author being pressured to put certain things into their Will, lacking a sound mind, or possibly something fraudulent, for example a forged signature. Proof would need to be provided to substantiate any of these claims.

As with all of your Estate Planning documents, the Will should be reviewed regularly, and updates made as your situation changes. Every couple of years is probably sufficient unless you have a major life change like marriage, divorce, or new children. In addition, it’s a good idea to let someone know where your Will is located, or even to provide a copy to anyone you think should have it, in particular, your Executor.

Your Will is a very important piece of your Estate Planning Process, and you are never too young to start working on this document. While it’s not always a pleasant topic to tackle, having your instructions and wishes written in a formal, legal document, will make things much easier on the loved ones that you leave behind.