Wills and Codicils
If you die intestate (without a will), your state’s laws of distribution will determine who receives your property by default. A state’s plan often reflects the legislature’s guess as to how most people would dispose of their estates and builds in protections for certain beneficiaries, particularly minor children. That plan may or may not reflect your actual wishes, and some of the built-in protections may not be necessary in a harmonious family setting. A will allows you to alter the state’s default plan to suit your personal preferences. It also permits you to exercise control over personal decisions that broad and general state default provisions cannot address.
A will provides for the distribution of certain property owned by you at the time of your death. Your right to dispose of property as you choose, however, may be subject to laws that prevent you from disinheriting a spouse and , in some cases, children.
Your will does not govern the disposition of your property that is controlled by beneficiary designations or by titling and so passes outside your probate estate. Such assets include property titled in joint names with right of survivorship, payable on death accounts, life insurance, retirement plans and accounts, and employee death benefits. These assets pass automatically at death to another person, and your Will is not applicable to them unless they are payable to your estate by the terms of beneficiary designations for them. Your probate estate consists of only the assets subject to your will, or to a state’s intestacy laws if you have no will, and over which the probate court may have authority. This is why reviewing beneficiary designations, in addition to preparing a will, is a critical part of the estate planning process. It is important to note that whether property is part of your probate estate has nothing to do with whether property is part of your taxable estate for estate tax purposes.
Wills can be of various degrees of complexity and can be utilized to achieve a wide range of family and tax objectives. If a will provides for the outright distribution of assets, it is sometimes characterized as a simple will. If the will creates one or more trusts upon you death, the will is often call a testamentary trust will. Alternatively, the will may leave probate assets to a preexisting inter vivos trust (created during your lifetime), in which case the will is called a pour over will. Such preexisting inter vivos trusts are often referred to as revocable living trusts. The use of such trusts or those created by a will generally is to ensure continued property management, protection for surviving family members, protection of an heir from his or her own irresponsibility, provisions for charities, or minimization of taxes.
Aside from providing the intended disposition of your property upon your death, a number of other important objectives may be accomplished in your will.
- You may designate the guardian for your minor child or children if you are the surviving parent and thereby minimize court involvement in the care of your child. Also, by the judicious use of a trust and appointment of a trustee to manage property funding that trust for the support of your children, you may eliminate the needs for bonds (money posted to secure a trustee’s properly carrying out the trustee’s responsibilities) as well as avoid supervision by the court of the minor children’s inherited assets.
- You may designate an executor (personal representative) of your estate in your will, and eliminate their need for a bond. In some states, the designation of an independent executor, or the waiver of otherwise applicable state statutes, will eliminate the need for court supervision of the settlement of your estate.
- You may choose to provide for persons whom the state’s intestacy laws would not otherwise benefit, such as stepchildren, godchildren, friends or charities.