One of the most important documents in your estate plan is your Last Will and Testament, or more simply known as your Will. Your other documents, such as your Power of Attorney and Health Care Proxy, are supplementary to your Will and have more to do with your wishes during your life, while your Will dictates your wishes after you pass away.
While your Power of Attorney and Health Care Proxy are used to follow your wishes while you’re still alive, your Will designates what should happen in the event of your passing. This guide will cover all of the things you need to know about a Will and what to consider as you create and update your Will.
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Basic Questions About Wills
A Will designates the beneficiaries of your estate (your assets, property, and other belongings) and allows you to nominate a guardian for minor children and gift your pets, if you have them. It also allows you to name someone to uphold your wishes.
If you have assets - even if they are limited - you should have a Will to direct who should receive your funds, belongings, and even pets when you pass away. Without a Will, your state’s laws will determine who will receive your assets.
Your online Will protects your loved ones because you make the decisions about who receives your assets, including your beloved pets and who manages your estate. If you don’t have a Will, your family and especially your minor children (if you have them) are unprotected because the state courts will appoint guardians and the administrator of your estate, and distribute your assets according to state laws. You will not have a say in these important choices and decisions without a Will.
Defining the Elements of a Will
Assets
Your assets, or individual assets, are all of the items that you own personally without any co-owners. Property such as pets, jewelry, vehicles, boats, real estate, business interests, bank accounts, stocks, bonds, and investment accounts are all considered assets. For assets that you co-own (such as joint bank accounts or business interests), your Will can only control what happens to your ownership interest in the co-owned assets, depending upon how the item is jointly held. If the item is held jointly with right of survivorship, the item goes to the surviving joint owner. In the case of a joint bank account between spouses, the bank account remains under the control of the surviving spouse.
Beneficiary / Beneficiaries
A beneficiary of a Will is the individual(s) and or charity named as the inheritor of the deceased person’s property or money. There can be more than one beneficiary in your Will, and you can distribute your money or property equally or specifically to each beneficiary you include.
Class / Classes
In a Will, some people choose to refer to a group of relatives instead of listing each person by name. A class helps make this easier, since it’s a legal method of referring to a group when they are related to you in the same way, such as children, grandchildren, or siblings. Unless you want to exclude a specific individual within a class or you want different members of a class to benefit differently, it’s easier to name the class when distributing your assets in your Will.
Decedent
In the administration of a Last Will and Testament, the decedent is the deceased individual who owned the assets and issued the Will for the administration of their estate upon their death.
Digital Assets
In addition to your pets and monetary assets, you might have digital assets and other electronic records such as digital photos, social media accounts, and email accounts. You can pass all of your digital assets through your Will, however, there may be some types of digital assets that you would like to transfer in other ways.
Executor / Personal Representative
The person who, upon your death, inventories your assets and documents, values your estate, handles the administration of your estate, and distributes your remaining property and assets to your beneficiaries is known as the executor (referred to as your “personal representative” at Gentreo) of your estate. Your executor is obligated to fulfill your wishes as dictated in your Will.
Guardianship
If you have minor children, you will need to designate guardians for them in your Will. If you pass away before your children become of age, they will need a legal guardian to care for and supervise them. It’s important to include your wishes for the guardianship of your minor children in your Will to ensure their care and protection.
Health Care Proxy
A Health Care Proxy or Medical Power of Attorney is a separate document that is effective only when you are alive. It outlines your wishes for your medical care in the event that you become incapacitated or you cannot speak for yourself, such as if you were to have an accident and become comatose temporarily or long-term. A Health Care Proxy stipulates how you wish to be cared for, who will be responsible for making medical care decisions on your behalf. It may include, depending upon your choices, limits to your care and other orders such as Do Not Resuscitate.
Intestate
Dying without a Will is referred to as “intestate.” This means that, when someone doesn’t direct the distribution of their assets in a Will, the entire estate is then distributed pursuant to the intestacy laws of the state where that person resides. Those laws and the courts will determine which family members get that person’s estate. Intestacy laws cover everything from pets to bank accounts; real estate and other assets the decedent might own at the time of death.
Living Revocable Trust
A Living Revocable Trust is just like a Will in that it is a document that states how your assets should be handled after you pass away. The difference from a Will is that a Living Revocable Trust owns your assets and the Trustee manages the assets while you are alive. Most times, while you have capacity, you serve as Trustee.
Power of Attorney
There are two types of Powers of Attorney, one for health care and one for financial decisions. Often, the person you assign to be your Power of Attorney and Health Care Proxy might be the same individual, such as your oldest or most responsible adult child. Your financial Power of Attorney may be empowered to pay your bills, collect debts owed to you, file your taxes, and make other financial decisions on your behalf if you become incapacitated, depending upon the authority you chose to grant your agent.
Probate
Probate is the legal process which permits a personal representative, also known as an executor, to transfer and distribute assets as directed by a deceased person in their Last Will and Testament to the beneficiaries identified in the document.
Creating a Will is an important step in creating an estate plan that will protect your loved ones and your wishes.
Why Putting Off Creating Your Will Could Be Disastrous
Everyone needs a Will, even if you have limited assets. If you don’t have a Will, your state’s laws will determine what happens to your assets and who cares for your minor children and who gets your pets if you pass away unexpectedly.
The future, and life itself, is very unpredictable. It’s important to prioritize completing your Will so that you can ensure your loved ones are protected and clarify your wishes. If you procrastinate and something happens to you, the state steps in and your assets may be distributed to family members that you did not intend to benefit from your estate.
Your Will is not something to put off until a later date.
Read More: Putting Off Creating Your Will Could Be Disastrous
What Happens If I Die Without a Will?
If you pass away without a Will, it is called intestate and your state courts will decide how to distribute your estate pursuant to the intestacy laws of your state or the state in which your property is located (such as real estate that’s located in a state different from your state of residency). Losing you is devastating enough, but passing away without a Will can cause additional pain, hassle, and cost to your loved ones during a terrible time, including:
- Involving the court to seek approval to pay your bills or distribute your assets in a certain way;
- Confusion about how your assets should be portioned out;
- Animosity between family members who believe some individuals should receive more, less, or anything at all from your estate;
- And more.
When a person dies without having a Will, the laws of intestacy do not consider your final wishes. For example, if you have children from a previous marriage and you die without a Will, your current spouse may receive all of your assets, even if you wanted to bequeath assets to your children from the other marriage. This could result in animosity between your children and your spouse, lawsuits between family members, and other emotional, legal and financial pain.
Everyone should create a Will to protect their loved ones. Without one, the laws of your state determine who receives your assets, who cares for your minor children and pets, and how your estate is distributed.
Your Will Keeps You In Control
With a Will, you remain in control of your estate even after you pass away. Your Will lets you dictate who gets your estate, assets, and pets; who becomes the guardian for your children; and more. Your chosen personal representative is obligated to fulfill the wishes dictated in your Will.
In contrast, without a Will, intestacy laws give full control of your estate to your state of residency and the state where your property is located (when applicable for out-of-state property). Having the state administer your estate usually results in issues and costs for your heirs which could have been avoided if you had a Will. What’s more, your wishes might not be carried out with regard to the distribution of your estate.
It’s Never Too Early for a Will
We never know what life will bring us, and you’re never too young to plan your estate. Although it might be the farthest thing from your mind, you should be preparing even basic estate planning documents like a Will, Power of Attorney, and Healthcare Proxy, no matter your age or your level of wealth.
Remember, if you pass away without these documents (especially a Will), the state will not consider any of your wishes as far as who gets your property or belongings. Instead, the state distributes the assets per its schedule even if you would not have wanted a particular person to benefit from your death.
You never know what tomorrow will bring. Don’t run the risk of having your assets and belongings seized by the state or given to individuals whom you would not have chosen to receive them. Don’t put off creating a Will or an estate plan.
No matter what your age, it’s never too early to create a Will.
How Often Should I Update Estate Planning Documents Like My Will?
Many people make the mistake of writing a Will once and then putting it away without ever revisiting it. However, Wills and revocable Trusts are living documents, and laws and life changes happen, often making it necessary to update these documents throughout your life.
Gentreo recommends revisiting your estate planning documents like your Will at least once per year. We also suggest reviewing your Will when major changes happen in your life or estate laws change. For example, you should revisit your Will and estate planning documents if:
- Beneficiaries named in the Will pass away or new beneficiaries are born;
- Your relationships change (i.e. if you get married or divorced — if you get a divorce and your current partner is not your legal spouse, all of your assets could go to your children or other family members and not your partner);
- Personal representatives or persons named in Health Care Proxies or Powers of Attorney pass away or their life circumstances make them unable to perform their duties.
- Laws affecting estate taxes change;
- Specific properties are no longer part of your estate;
- You accumulate or dispose of substantial assets that change your Will;
- Bank information changes;
- Other issues or legislative changes occur.
Although it might be better to have an outdated Will instead of no Will at all, it is far more beneficial and useful to update your Will throughout your lifetime. It only takes a few minutes, and doing so once every year or so can save your personal representative and your beneficiaries lots of time, hassle, and legal fees.
Keep your Will updated throughout your lifetime as your circumstances and laws change.
What’s the Difference Between a Will-Based Estate Plan Over a Living Revocable Trust?
An estate plan based on a Will and a Living Revocable Trust have some things in common and some differences. Both types of estate plans should include a Power of Attorney and a Health Care Proxy with HIPPA authorization and Advance Directives about end of life planning (if that is your choice). Whether you choose a Living Revocable Trust or a Will, the document should be easily accessible if an emergency happens in order for it to be useful.
For most Americans, a Will-based estate plan is appropriate and sufficient. Some of the things you’ll want to consider are:
- Time and effort
- Financial costs
- Timing and stage of life
A Will-Based Estate Plan is More Efficient
With regard to your input of time and effort, a Will-based plan could be more efficient than a Revocable Living Trust. You need a specific type of Will, called a “Pour-over Will” as well as a Living Revocable Trust because the Will ‘pours’ any assets not in your Trust at the time of your death into your Trust once the Pour-over Will is probated. You need this Pour-over Will since people almost never fully fund their Living Trust during their lifetimes. However, you do not necessarily need a Living Revocable Trust if you have a Will.
A Living Revocable Trust May Cost More to Create Than a Will
There are similar costs involved with administering or managing a Will and Trust, but the timing if the expense is different. The administration and management costs are incurred after your death with a Will, but with a Living Revocable Trust, you will incur those costs during your lifetime. Additionally, you may incur extra costs for ongoing accounting fees and possible additional tax considerations with a Trust.
Timing May Determine Whether a Will or Trust is Better
Your choice between a Will- based Estate Plan and a Living Revocable Trust- based Estate Plan also depends on where you are in life. If you’re younger, you may be in the process of building your wealth and it wouldn’t be efficient to have your assets tied up in a Trust. However, if you’re older and have more assets that you don’t need immediate access to, it might be beneficial to use those assets to fund a Trust.
Read More: At What Point is My Estate Large Enough for a Trust?
Depending on your situation, it might be better to create a Living Revocable Trust in addition to a Will. However, a Will is enough for most Americans.
Does My Will Have to Be Probated?
Probate is a process that Wills must undergo, where the Executor (Personal Representative) of a Will must deliver the Will and a copy of the testator’s (the person who executed the Will) death certificate to the local court. Probating a Will is the legal process that allows a personal representative to distribute a deceased person’s assets as stipulated in the Will. The personal representative will also need to complete forms in order to effectively probate the Will.
Generally, when the court receives the probate documents, their first step is to determine the authenticity of the Will. They will look for self-proving language – if the Will doesn’t contain language to prove itself, additional proof or testimony may be necessary. Therefore, a self-proving Will makes the probate process quicker and easier.
Within a certain number of days of probate (depending on the state, but usually 60 days), the personal representative will need to notify (via certified mail or return receipt requested) all next of kin and beneficiaries of the testator’s Will with the following information:
- Whether the Will is being probated or is in process of probate
- The date and place of probate
- The personal representative’s name
- Provision of a copy of the Will upon request
The personal representative must save copies of each letter and the certified mail receipts proving that each next of kin or beneficiary received notice. Next, they must file a “Proof of mailing of the Notice of Probate of Will” and a filing fee with the court. Finally, the court will issue judgment for probate and issue the Letters Testamentary, and then the Last Will & Testament is deemed “probated.” Only after the Will is declared probated can the personal representative begin to distribute assets and wrap up the estate.
The size and circumstances of the estate often determine how complex the probate process will be, so it can be expensive and complicated, but it doesn’t have to be. Every Will needs to be probated, but the probate process can be straightforward, affordable, and completed without an attorney. However, the probate requirements differ from state to state, situation to situation and whether your documents are all in order.
Read More: Probate: What is it? Must All Wills Go Through Probate?
Your Will needs to be probated before your executor or personal representative can execute your estate on your behalf.
How to Choose an Executor or Personal Representative for Your Will
Since the executor of your estate will be responsible for adhering to court processes and the laws of your state as they distribute your assets, your choice of this personal representative is important.
Although you can choose whomever you wish for this role, it should be someone who is organized, responsible, and trustworthy. The person that you select should also be honest, dependable, and level-headed. Even with small estates, there are a number of deadlines and requirements that the executor or personal representative must meet. The person should also have the time and availability to take on this role, which means that your ideal choice for an executor or personal representative may change throughout your life.
Many people choose a family member to serve as their executor or personal representative, although sometimes, attorneys or third-parties are chosen. There are services and companies who can serve as your executor or personal representative, but it is generally a better idea to select someone you know and trust rather than a stranger. Generally speaking, family and friends will typically put much more love and effort into administering your estate than an outside company.
You should always inform the person that you have named as your executor or personal representative to avoid any surprises if you should pass away unexpectedly and be sure the person is prepared to take on the responsibilities of executing your wishes for your estate.
Read More: Choosing an Executor for My Will
What Does an Executor Do?
An executor (or personal representative) is responsible for administering the distribution of assets and payment of liabilities from the estate and fulfilling your last wishes. Their responsibilities include:
- Making an inventory of the estate
- Contacting creditors and beneficiaries
- Paying the estate’s bills
- Dispersing assets to the beneficiaries
- Filing the estate’s tax returns
- Selling property
- Collecting monies owed on notes, and more.
Even for basic estates, it could take the executor several months to complete the administration of the Will and close out the estate. Large or complex estates could take between six months and a few years to complete.
Who is Legally Allowed to Act as an Executor?
Your executor must usually be a person who is 18 years of age or older, and must accept the role. Additionally, they must be of sound mind, meaning that they are not judged incapacitated by a court. In some states, the court will not appoint someone as the executor or personal representative if they have ever been convicted of a felony or if you are divorced from the person.
It might be a good idea to select an alternate executor or personal representative in case your first choice is unable to carry out their duties. Administering a Will typically takes time, work and great attention to detail. You want a personal representative who will treat the handling of your estate as a significant responsibility and who will act accordingly.
Finally, your executor may be a beneficiary of the Will and still serve as the personal representative.
Will Your Executor Be Compensated?
Your executor or personal representative is entitled to be paid for their time and services, sometimes even if they are a beneficiary. However, this person may decide not to accept payment, such as in small family situations, where the spouse is the personal representative of the deceased’s estate and the Will bequeaths them the remaining assets. If the executor is also a beneficiary and will inherit most or all of the estate, they may want to waive the executor’s fee because this pay is taxable income, whereas inherited money is not taxable in many situations.
A personal representative’s compensation is based on your state’s rules and the Will. In most standard Wills, there is a provision for appointing your executor and listing a reasonable fee for their compensation. Some states have statutes that set a predetermined amount for an executor’s compensation. In states where there is no statutory payment structure, personal representatives often get paid by a percentage of the total estate or an hourly rate.
Even with simple estates, the personal representative has a fair amount of work to do to close out the estate and typically justifies a fee. To determine the executor’s compensation, you should always check your state’s regulations.
Read More: Does Your Executor Get Paid for Services? And If So, How Much?
Gentreo is not a law firm or a substitute for a law firm, or attorney, or an attorney’s advice or recommendations.
Don’t wait until it’s too late; start your estate planning journey with Gentreo today. By doing so, you’ll not only protect your loved ones but also gain the peace of mind that comes with knowing your legacy is secure. Click here to join now. https://www.gentreo.com/
This article is for informational purposes only and should not be considered legal advice. Consult with a qualified attorney or estate planning professional for personalized guidance.
