The best-known estate planning document is a last will and testament, often referred to as simply a “will,” However, it’s also one of the most misunderstood, says an article titled “Most people don’t fully understand how wills work” from The News-Enterprise.
Don’t confuse a will with a Living Will. The Living Will concerns your wishes for end-of-life decision-making, like whether you want to be kept alive by artificial means. A will is your declaration of how you want your property to be distributed after death.
Generally speaking, there are five main parts to a will. The first is a statement of your marital status and family relationships. It recognizes your natural heirs and states the relationship, even if they are not named later on as beneficiaries.
The second part of the will discuss how property is to be divided and distributed. This part may include a list of beneficiaries and the percentage of the estate they will receive. It may consist of instructions for distributions over a period of time, although a trust is usually used to control distribution. Personal items, including those of value, like jewelry, and those of sentimental value, like Mom’s favorite serving platter, can be listed in this section.
The third part names the people you have chosen to fulfill specific roles. That includes the executor, who is responsible for carrying out the instructions in the will. Always name a successor executor (also known as a Personal Representative) if the primary executor predeceases you or chooses not to serve. Some people are comfortable naming a tertiary executor, just in case.
The will includes information on the rights and duties of the executor, authorizing the executor to pay bills from the estate owed to creditors, final illness expenses, and funeral expenses. Depending on your situation, it can also include whether the executor may acquire assets, sell real estate and personal property, and make charitable gifts. Most executors file the decedent’s last and final federal and state tax returns.
If there are minor or disabled children, the will is used to name a guardian. If this detail is neglected, the court will appoint a guardian for minor or disabled children. It may not be the person you would have chosen. Over time, as your children grow, significantly if their relationships with family members change, you should update the will. The same doting aunt who adored your three-year-old may not have the same relationship with the teenager she has now become.
Having a will means that property passes through probate, a court proceeding to make sure the will is valid and conforms to the state’s laws. It goes through probate unless the property has passed through a trust or a payable on death account. The will is filed with the court, and it becomes part of the public record and may be read by anyone who wants to see its contents.
A will does not protect from creditors. The will only becomes effective after death, so it only applies to whatever property is available after the person has died. By law, debts must be paid before beneficiaries receive property.
Reference: The News-Enterprise (Nov. 9, 2021) “Most people don’t fully understand how wills work.”