Introduction
It may be a morbid process, but writing a will is always a wise decision. It provides your family and friends with your final wishes regarding your property and assets, and it provides the probate court with irrefutable evidence to carry out those wishes. Even for small estates with minimal assets, or for situations where family discord is unlikely, a will plays an essential role in giving you a voice beyond the grave. Without one, your estate will be subject to the state’s intestate succession laws, leaving you with no say over a life’s worth of possessions.
While the length and detail of a will hinges largely on the size and complexity of your estate, there are five essential elements that all wills should include.
Basic Identifying Information and Proper Signatures
For the will to be valid, the document must clearly state your name, address, the date, and a line indicating that this is your last will and testament (“last” in that it replaces any previous wills which you’ve written). The will should also be typed, not handwritten, and conclude with your signature next to the date of signing. This may seem obvious, but it’s nonetheless essential. Failure to include these elements could result in the probate court throwing out your will on a technicality.
You’ll also need to sign your will in the presence of at least two witnesses, and possibly a notary public depending on which state you live in. The witnesses should be “disinterested,” meaning they are not beneficiaries in your will. Your attorney should not serve as one of the witnesses, either. Using disinterested witnesses ensures that there are no conflicts of interest that would jeopardize the authenticity of your will. Additionally, you can choose to have your witnesses sign a self-proving affidavit in front of a notary public; this can speed up probate by not requiring the witnesses to appear before probate court to authenticate the will.
Nominating an Executor
The executor is the individual who will serve as your estate’s personal representative after your death. This person will be responsible for gathering your assets, settling liabilities, transferring property, and distributing the remaining assets to your beneficiaries. Most people nominate a family member to fulfill this role, but you are free to name whomever you see fit. It’s polite to check with this person before you formally nominate them, as they have the right to decline the nomination if they aren’t up for the task—an action that would leave your estate to be handled by a court-appointed administrator. You can name co-executors if you feel the burden necessitates multiple people, and you can indicate a backup executor in case the primary executor passes away.
Identifying the Beneficiaries
Clearly indicate who is to receive your assets. This includes individuals, charities, trusts, businesses, etc. When referring to others in the course of the will, include identifying information such as their address and date of birth. This isn’t always necessary, but it helps the court clearly distinguish who you are referring to, and it makes the probate process much easier. In addition to naming primary beneficiaries, you can also name contingent beneficiaries in case any primary beneficiaries pass away before the will is probated.
Instructions for the Executor
Instruct the executor to pay your outstanding debts and bills; if necessary, indicate which accounts should be used to settle your liabilities (e.g. first use the checking account, then the savings account, then use proceeds from the brokerage account as needed). Include any special instructions, such as an order to cancel any debts owed to you by family or friends.
Instructions for Distributing Assets and Property
Start by listing which beneficiaries are to receive specific property and assets, and be as detailed as possible. For example, Roger Wilson is to receive the 1966 Ford Mustang, Stacy Smith is to receive the 2017 Mercedes CLA250, and Linda Smith is to receive the house at 123 W. Main St. in Gilbert, Arizona. In addition to distributing property, belongings, and collectibles, you can also direct financial accounts (excluding non-probate assets) to beneficiaries.
Finally, you’ll need to provide instructions for any assets remaining after your liabilities are settled and real property is gifted. This is known as your residuary estate, and is often comprised of liquid assets such as bank and brokerage accounts.
In addition to these five essential elements, there are two topics that are commonly applicable and merit consideration.
Establish Guardianship
If you have any minor children, your will should recommend who will serve as their guardian. Without establishing guardianship, the court will place minor children with next-of-kin. If you want your children to be cared for by someone beyond next-of-kin, make your preference known in your will. Also, if any of your assets are to be used for your children’s benefit, it’s wise to consult an attorney about establishing a trust to provide for the children.
Establish Trusts
A trust is a fiduciary agreement where a third party (known as the trustee) can hold, manage, and distribute your assets on behalf of your beneficiaries. The trustee has a fiduciary responsibility to prudently manage the assets held in trust, typically by investing the assets in suitable securities to produce acceptable investment returns and income.
The trust can be revocable, meaning you have the right to modify or dissolve the trust during your lifetime, or it can be irrevocable, meaning the terms of the trust cannot be modified. Transferring assets to an irrevocable trust means you permanently lose control of the assets, but in return it allows you to shelter those assets from any applicable estate taxes (providing this is done before you die). Assets transferred to a revocable trust can be retaken if you choose to dissolve the trust during your lifetime, and the terms of the trust can change, allowing you to add or remove beneficiaries, or to change the intended use and distribution of the assets. Since most Americans don’t qualify for estate taxes, revocable trusts are much more common. They are incredibly useful for financially providing for loved ones such as a spouse, children, or even pets, while keeping control of the assets under the watchful eye of the trustee.
What Assets Should Not be Included in a Will?
Certain types of property or assets are designed to bypass probate, and are therefore irrelevant if mentioned in a will. Even if your will include strict instructions for these, the beneficiaries listed on the account or property will trump the guidance in your will. Also referred to as non-probate assets, these include:
- Property held in joint tenancy
- Assets within a living trust
- Life insurance death benefits (where the deceased is not the beneficiary)
- Retirement plans (401k, IRA, etc.)
- Bank or brokerage accounts with transfer-on-death (TOD) or payable-on-death (POD) beneficiaries
Call our Estate team at (480)467-4325 to discuss your case today.