By Lisa Hughes
Attorney and Partner,
Yates Campbell & Hoeg LLP
When embarking on the estate planning adventure, many people want to focus on ways to protect and grow their investments or create a “golden” retirement for themselves.
But the best place to start is actually at the end. Start by answering this question—in writing: “What do I want to happen to my assets after I die?”
Your answer is your Will, (or Last Will and Testament), which delegates control over property once the person creating the Will (the “testator”) dies. Since Wills are the cornerstones of all estate planning, your Will should be the first document you prepare when doing your estate planning.
Consider these seven tips when creating your Will.
- In the Will, nominate a “personal representative” of your estate. This can be a person, a series of persons, or a financial institution to take over the administration of your estate after your death.
- Consider whether you want to specify in the Will how the personal representative should be compensated for the work associated with the administration of your estate. If your Will doesn’t indicate how the personal representative may be compensated, then the rules of the jurisdiction where the Will is probated will apply.
- List any “specific bequests” of treasured items (e.g., Grandmother’s brooch, the coin collection, or even the vacation home) to one or more named persons. You could also designate a specific percentage of the estate (10% to my favorite university) or specific dollar amounts ($20,000 to my grandson, Billy). In my experience, however, unlike in the movies and on TV, most Wills do not contain specific bequests.
- Most importantly, your Will should indicate to whom the remainder of your assets—known as the “residue” —will be distributed once all taxes, expenses, and debts are paid. In the event that those you’ve designated to receive the residue die before you do, be sure to include an alternate disposition of the residue in the document.
- Be sure to state how you would like certain expenses and debts to be paid within the parameters of applicable law. For example, in case there is a car loan or home mortgage outstanding at the time of your death, it is a good idea to address in the Will how that debt should be paid. The options are to bequeath the property subject to the debt—meaning that the loan follows the property out to the beneficiary—or that the loan will be paid off using other assets in the estate so that the beneficiary receiving the car or the real estate can receive the property free of the debt.
- Take the same approach in specifying how any taxes should be paid that might be generated as a result of certain property changing hands under the Will. Do you want those taxes paid from the residue? Or, should the beneficiary receiving the asset that generates the tax be responsible for that tax?
- Think about what’s fair in addressing how certain lifetime gifts should be treated. For example, if Mom has bailed out son number three from his many failed businesses and marriages, she may want those lifetime advances “brought back into the ‘hotchpot‘” for purposes of dividing her estate fairly among her three sons. Or, Mom might decide that those lifetime advances (or loans) shall not count toward that son’s share of her estate. This is an area where the term “fairness” has many definitions.
Protecting Young Children in the Will
People who have minor children are usually eager to prepare Wills in order to name the guardians who will raise their minor children in the event that both parents die or become incapacitated while one or more of the children is under age 18. Unlike the other provisions mentioned above, which could be included in a trust instead of a Will, nominating guardians of minor children can only be done in a Will.
Many times when I work with young couples, we discuss whether there should be some additional benefits included in the Will for the guardians or the children of the guardians. For example, some people choose to allow for some money to pass to the guardians in the event they need to increase the size of their residence to accommodate additional children.
Some parents like to include a provision in the Will specifying that if their children have sufficient funds to take dance or music lessons, it would be appropriate for the guardians’ children to be able to have distributions from the estate for similar activities. This helps ensure that all of the children now living under the same roof have the same standard of living.
How a Will Is Probated
It is critical to note that the Will does not become effective until:
- Its testator is actually deceased, and
- A death certificate is issued by the jurisdiction in which the testator died.
Before a Will can be probated, it has to be officially delivered to the proper court (the proper court is the court where the person normally resided even if it is not the jurisdiction in which the person actually died), and that court has to accept it.
“Probating a Will” describes the process by which a particular Will is proven to be the last, valid Will of a deceased person. Probating a Will varies significantly from state to state and sometimes even from locality to locality. In all cases, the original Will must be presented to the court (unless you can prove via a mini-trial that a copy of a lost Will is a substitute for the original Will), along with an original death certificate (which will have a raised seal) in order to get the process started.
Most courts have information on their websites and/or provide handouts to their patrons explaining the probate process, but none of them will provide patrons with legal advice as to how to administer the deceased person’s estate.
Ask Your Attorney About Your Options
I’ve described here just some of the things you should be prepared to discuss with your attorney when you plan to write a Will. There are countless options to consider even when you believe that you have the simplest plan in mind.
Like most other planning that we do, there may be small distinctions that end up making the greatest of differences.
About Lisa Hughes
Attorney Lisa M. Hughes is experienced at preparing Wills and trusts, powers of attorney, guardianships, and conservatorships; in administering estates of decedents and incapacitated individuals; and in the related tax and asset-protection planning. Her particular areas of focus include succession planning for closely held businesses, same-sex couples, and incapacitated beneficiaries, as well as certain elder-law challenges and trusts for those with special needs.
A graduate of Georgetown University Law Center, Hughes is licensed in the District of Columbia, Maryland, and Virginia, and has more than two decades of experience in estates, trusts, and wealth-planning.
Additionally, Hughes is a member of the Board of Governors of the Trusts and Estates Section of the Virginia State Bar; she is a Public Safety Trainer with the Commonwealth Autism Service; and she serves as legal counsel to Spectrum Housing Foundation, a tax-exempt organization that facilitates support for disabled adults.
Contact Lisa Hughes by email.