WHAT IS A WILL?
A Will is one of, if not the most, fundamental documents in an individual’s estate plan. A Will is a document that specifies how one’s assets should be administered, to whom, and under what circumstances. It also contains guardianship provisions that outline the care of an individual’s minor children or dependents upon their passing or incapacity. Additionally, a Will nominates a personal representative, formerly known as the executor or administrator, for the estate of the deceased individual. All in all, a Will is a powerful tool that encapsulates and legalizes an individual’s estate planning preferences.
Disposition of Assets
The main goal of a Will is to establish which people or organizations receive the assets from an individual’s estate after they have passed away. Using a Will, an individual can direct their probate property, meaning any assets that are not owned as a joint tenant or any assets with named beneficiaries, to any recipient of their choosing and in any amount of their choosing. Recipients could include children, grandchildren, other family members, friends, or charitable organizations. Wills can also be structured to direct an individual’s probate assets into a trust to be held for the benefit of their selected beneficiaries.
However, without a Will documenting these transfers, it is not certain that an individual’s probate assets will be directed to their specified heirs according to their wishes. This is because if an individual passes away without a Will, it means they died ‘intestate’. Dying intestate means that since the individual did not indicate their heirs, the individual’s estate is then distributed to the decedent’s heirs as predetermined by the state in which the individual lived. Because state statute determines the outcome of a person’s estate, there’s no guarantee that the state’s distribution will reflect that individual’s personal wishes. Therefore, having an estate plan ensures assets are distributed to the people or organizations as one intended.
On top of that, passing away without an estate plan can make the administration of an estate more complicated, expensive, and time consuming for loved ones. The intestate probate process, mentioned above, is fairly slow and can be costly. Not only that, but typically, while the probate process is ongoing, the assets are ‘frozen’, meaning the state’s predetermined heirs cannot access them until the process is complete, unless it’s reasonable to make an early distribution. This can cause stress and uncertainty for those individuals. To avoid dying intestate, and the time and costs that come with it, having a proper Will is crucial.
Guardianship Nominations
Another important aspect of a Will that is commonly overlooked is that it provides an outline for the care of a one’s minor child or dependent in the event that individual passes away. This is accomplished by designating a guardian, which is an individual or individuals that assumes the responsibility to care for the child or dependent. Guardianship nominations are necessary to protect children who are under the age of majority or dependents who are impaired.
If a guardian is not named for a minor or dependent, the court then steps in to determine who will take care of the individual. The court’s determination may be contrary to one’s wishes, which is why it’s crucial to execute a Will and ensure one’s preferences regarding the care of their children or dependents are met, all while avoiding potential family disputes.
Additionally, if a someone passes away and directs their assets to pass to a minor or dependent, their Will can be structured to create a trust that will hold the children’s inheritance for them and can designate terms for when they are to receive any partial distributions, or withhold the entirety of their inheritance until they reach a designated age. Furthermore, an individual can be named to manage the trust on behalf of the minor or dependent. Formatting the Will to include this potential trust avoids the need for a conservatorship, which requires annual court reports, hearings, and more, which adds costs that reduce the beneficiary’s inheritance. It provides that the inherited assets are held until the children reach an age where they are financially responsible, instead of passing the assets to them outright.
Personal Representative Nominations
Wills are also used to nominate a personal representative for the individual’s estate. A personal representative is the executor or administer of the deceased’s estate. Their duties include carrying out the individual’s wishes per their Will, distributing the individual’s assets to their specified beneficiaries, paying final bills and expenses, and determining any estate and inheritance taxes due. Personal representatives are crucial for the smooth execution of an individual’s estate. If no one is nominated, the court will designate an individual to carry out these duties, which may not be in accordance with the deceased individual’s wishes, and could create an unnecessary burden on the person selected by the court.
To summarize, a Will is one of the most important documents in an individual’s estate plan, and having one helps ensure that one’s wishes regarding assets, care of minor children and dependents, and nominations for personal representatives are memorialized and followed.
This post was drafted by Faith Kowalski, a law clerk at Baylor Evnen Wolfe & Tannehill. For more information about estate planning, please call Barry Hemmerling, Gabriella Miller, or Jennifer Heiser Pilka at 402-475-1075.