Last Will and Testament
In the estate planning realm, we often use many different phrases and reference many different types of documents with clients, but do not spend time explaining what they are. For starters, the phrase “estate planning” often goes undefined in our discussions. For our purposes, estate planning generally refers to the process of planning for how your assets will pass to other people upon your death. In the implementation of a plan, a person utilizes a variety of documents to make clear what his or her intentions are as to the plan. This is the first of a series of articles that will give you some basic information about the most commonly-used documents and explain their use for planning someone’s estate.
In the first installment of this series, we will discuss the Last Will and Testament, also commonly known as a Will. A Will is generally the main component of a person’s estate plan. Through a Will, a person (called the Testator) makes his or her final wishes known by identifying the people or organizations whom they wish to inherit their property as well as nominating the persons or organizations (known as the Executor or Personal Representative) who the Court will appoint to carry out the Testator’s wishes.
Why wills matter
A well-written Will should be carefully crafted to add clarity and certainty for many situations. A Testator can make special arrangements for the ongoing care of someone after the Testator dies–usually through a Trust (to be discussed in a future article)—such as for an ailing parent, a special needs dependent, or a minor child. If a person’s estate is large enough that estate taxes are a concern, the Testator can include special provisions that reduce or maybe even eliminate these taxes. In a Will, a person may also appoint the guardian of any minors they may have under their care. Finally, a person can make charitable contributions, such as to their church, as a final indication of what the person valued during their lifetime.
While the language used in a Will is extremely important, it is also equally important that the Will is signed and witnessed properly. All states have very specific provisions on the procedure of how Wills are to be executed and witnessed. If a Will is not executed properly to the letter of the law, it will not be recognized by the Court. Thus, it is possible to have a perfectly-worded Will that is invalid if it has been improperly signed and executed.
To be valid, a Will must be recognized and approved by a court. The court process by which a Will is recognized and the person’s estate is administered is called the probate process. If a Will is never presented and recognized by the Court as the Last Will and Testament of the deceased person, then it never has any legal authority to pass assets along to anyone.
A Will only controls the property owned solely be the person who died. Joint accounts and accounts that have a beneficiary form are not controlled by the terms of a Will. Thus, it is always important that a person understand what it is that they own and how they own it (i.e. individually, joint, etc.) to make sure that all the necessary documentation is in place.
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Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.