A common belief is that everyone needs a last will and testament. While a will is an effective and often used in estate planning, it may not be suitable or necessary in every situation. Below, our friends at Hartley Law Office review the general purpose and basic components of a will and discuss the various situations where a will is appropriate and where a will may not be necessary.
To begin, a will is a legal document that directs the administration of a person’s probate estate upon death. The person making a will is referred to as the testator. The requirements for a valid will vary by state, but in most instances, a will must be a document signed by a mentally competent testator and witnessed by at least two individuals who are at least eighteen years old. Most states require disinterested witnesses, meaning they do not stand to inherit under the will. A handwritten will signed by the testator without witnesses or notarization is called a holographic will. Holographic wills are invalid but may be enforceable in some states under specific conditions.
A estate planning lawyer will tell you that a will nominates a personal representative or executor to administer the probate estate which is comprised of probate assets. A probate asset is an asset titled solely in the testator’s name and requires assistance from a probate court to transfer. A common probate asset is real estate such as a home that is titled solely in the testator’s name. To sell or otherwise transfer the home upon the testator’s death, the will must be filed with a probate court, where absent objection from interested persons, the nominated personal representative is appointed by the court. One appointed, the personal representative has the authority to take control of the probate assets and administer the probate estate pursuant to the will and state-specific probate laws.
A will does not control the distribution of non-probate assets such as jointly owned real estate or financial accounts and life insurance policies with named beneficiaries. Non-probate assets do not require a probate court to facilitate transfer of the asset. Instead, beneficiary request forms or real property transfer documents are submitted or filed with the financial institution or county recorder’s office by the beneficiary or joint owner.
Importantly, beneficiary designations and joint owners take precedence over the distribution provisions in a will. Careful attention must be paid to ensure the testator’s intentions expressed in a will do not conflict with prior or subsequent beneficiary designations. Similarly, creating joint ownership for convenience purposes may have unexpected consequences. For instance, a parent naming a child joint account owner of a bank account to assist in paying bills. The intent expressed in a will may be to distribute the remaining funds in the account equally between surviving children while state law passes the funds to the surviving joint account owner.
Will provisions typically include estate administration guidance and distribution procedures for specific gifts, personal effects, and the residue of the probate estate. Specific gifts are often stated in the body of the will or can be listed in a separate signed document as allowed by state law. Specific gifts should be sufficiently described to avoid problems during distribution.
Personal effects are all those assets that were not specifically gifted. The provisions distributing personal effects can be the most critical part of a will. Typical distribution language simply divides the personal effects equally between the beneficiaries as they may agree. If there is disagreement, the personal representative is often directed to resolve such disputes by specific method such as drawing numbers from a hat or simply as the personal representative deems equitable. A testator’s honest assessment of the family dynamic will enable the will to be a means to resolve anticipated disputes rather than a source of perpetual family discord.
A will also directs distribution of the residue of the probate estate which is comprised of the surplus remaining after settling debts and paying expenses of administration. The residue is often distributed equally or by percentage between named beneficiaries. Where a beneficiary predeceases the testator, the will can direct the share of the predeceased beneficiary to the surviving beneficiaries or to the predeceased beneficiary’s descendants. A will can also direct that a beneficiaries’ share be placed in a testamentary trust. A testamentary trust provides distribution provisions and are often used where a beneficiary is a minor or fiscally irresponsible.
A will can contain provisions that discourage contests to the will’s validity. Common challenges focus on the testator’s competency or the effect of undue influence in the drafting and execution of the will. A “no contest” clause can disincentivize challenges, but enforceability may vary by state. In some jurisdictions, such clauses may be deemed unenforceable if probable cause exists for contesting the will. One strategy to discourage challenges is leaving something to the disinherited child while incorporating a no contest clause. If the family dynamic is toxic and challenges are likely, the testator is well-advised to take steps to mitigate future conflict. If competency is even remotely in question, the testator should see their doctor for a thorough competency assessment. Similarly, allegations of undue influence can be countered if the testator meets with an attorney alone rather than including a third person who may also be an intended beneficiary.
Circling back to the initial question posed in this blog post, the answer, like many answers to legal questions is “it depends”. Based upon the information presented, a person with probate assets should have a will. Having an effectively drafted will ensures the testator’s intent regarding all aspects of estate administration are clearly expressed and most importantly, properly interpreted. On the other hand, a person with no probate assets would not necessarily need a will. As an example, an elderly parent living alone in an apartment with children that are named beneficiaries on financial accounts may not need a will. Ultimately, the proper decision regarding a will should not be based upon a common belief but rather upon having a basic understanding of a will and receipt of thoughtful legal counsel.