Wills & Your Estate Plan
Wills are commonplace enough that most people are familiar with the basic reason they’re used – in a nutshell, to determine who receives a deceased individual’s assets. Wills are capable of much more than just defining who inherits the family silver, however. The following are some of the useful things that can be done with a will:
List who gets what
As mentioned, when someone passes away, wills are typically used to determine to which person or persons the decedent’s property will be given.
Establish trusts at your death
There are often instances in which a person may not want a child or loved one to receive all of his or her inheritance at once. Or perhaps a person wishes that the beneficiary is able to use the property for a given amount of time or for a specific purpose, and then require that it be inherited by someone else. In situations like these, a trust can be useful, because a trust holds property on someone else’s behalf. When included in a will, trusts are frequently established for minor children with the purpose of appointing another person, a trustee, who can manage the children’s finances until they reach a given age or are mature enough to manage them on their own. Another common situation where a trust may be used is a second marriage – ultimately, a person may want his or her children to inherit the decedent’s property, but allow the surviving spouse to retain access to certain property in the meantime. Trusts can help achieve all of these goals.
Name guardians for your children
A will is also often used to designate who the decedent wants to raise his or her children if the surviving parent is unable to raise them. The will typically includes at least one alternate should the first choice not be able to serve.
Naming executors and trustees
Wills are also used to name other important individuals involved in carrying out a deceased individual’s affairs: executors and trustees. The executor of the estate carries out the wishes of the decedent listed in the will, and if any trusts are created, instructions for those trusts are seen to by the trustee.
As you can see, wills can be very useful estate planning tools, but they are only effective if they are drafted correctly to meet the specific needs of each individual. Reviewing all of your options with an estate planning attorney can help you establish a will that guarantees your wishes will be honored.
List your funeral wishes
Though this information is often included in other documents, a will may also declare what should be done with an individual’s remains: whether to be buried or cremated, and where to be buried or the ashes spread. More specific funeral instructions may also be listed, such as where and when the service should occur, what music should be played, and even which readings should be recited and by whom.
If you want to avoid estate or inheritance taxes, wills can be a useful tool. This approach to tax planning is sometimes achievable by including instructions to set up different types of trusts.
Do all my assets pass according to my Will?
Not all of your assets pass under the terms of your Will. You can and should designate some assets, such as life insurance, retirement accounts, assets in a trust, bank accounts, and other accounts, to pass to a specific designated beneficiary upon the occurrence of specific events, such as your death.
When should I update my Will?
If you already have a Will, you should review your Will periodically to make sure it your wishes have not changed. Some common situation that occur and lead to your desiring to change your Will are:
- If you marry or divorce;
- If you give birth to or adopt a child; when a family member or other beneficiary of your estate dies;
- When there are changes in the federal estate tax laws or state tax laws that might impact your estate;
- When someone you’ve named as an executor, trustee or guardian is no longer able to fulfill that role;
- When you decide to change an executor, trustee or guardian;
- When you want to change the way your property will be distributed;
- When you move to another state;
- When your net worth increases or decreases dramatically;
- When your children are no longer minors, or are old enough to handle financial matters on their own; or
- You wish to eliminate bequests to beneficiaries.
You should never try to change your will by marking on a previous will, i.e., writing notations in the margins, or crossing out words. This only risks the possibility of ambiguity and a potential will contest.