Last Will and Testament - Ins and Outs

Traditionally, the Last Will and Testament is the centerpiece of the estate plan. Although the living trust, in some instances, has replaced the Will as a means of transferring assets at death, every good estate plan includes a Will.

It is important to understand what a Will does.  A Will addresses three primary concerns after your death:

1. Who gets your ”estate” (beneficiaries);

2. Who administers your estate (executor); and

3. Who cares for your minor children (guardian).

Your Will controls only assets titled in your sole name or in tenancy in common (your “estate”).  Assets held in a trust, in joint tenancy (usually) and assets subject to a valid beneficiary designation (e.g. life insurance, retirement benefits) do not pass under your Will. 

Unlike living trusts, which can be used to manage your assets during your lifetime, a Will has no legal effect during your lifetime.  Additionally, unlike living trusts, Wills generally require a court procedure after your death, called probate, in order to carry out its terms.

There are three basic types of Wills that may be created:

1. Outright Will.  This type of Will is used when neither a living trust nor a testamentary trust is desired. It is “outright” because the Will provides for gifts to be made outright to the beneficiaries at death, rather than held and disposed of within a trust.

2. Will with Testamentary Trust.  This type of Will may be used when one wants to leave gifts in trust, but does not desire to set up a revocable living trust. We rarely advise that clients use this type of trust because it is nearly as complex and costly to draft as a living trust, without the benefit of avoiding probate, both during incapacity and at death.

3. Pour-Over Will.  This type of a Will is used in conjunction with a  revocable living trust. It serves as a “safety net” for any assets not titled in your trust after your death and pours them into the trust to be disposed of within the trust.  However, pour-over wills, like all other wills, do not avoid probate if the aggregate value of assets passing by Will exceeds $100,000.

Anyone with a minor or adult dependent child should have a Will to declare your wishes for who will become guardian of your children.  Without a Will, your family will be left not knowing your desires and all too often fighting over them in court. Not only can you designate who you want to serve, you may also wish to emphasize who you don’t want to serve or place conditions on the appointment of a guardian or co-guardian.

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