Without a doubt, a will is an important component of any estate plan. It’s primary use is for the testator to express their wishes as to how their assets will be distributed to their loved ones after death as well as name an executor to carry out the distributions. While the function of a will is integral to any comprehensive estate plan, it’s important to fully understand the legal capabilities of a will to make sure that you are as informed as possible when drafting these documents with or without your attorney.
By definition, a will has to go through probate (the process of validating a will in court, which can take up to a year and a half). If you’re looking to avoid probate, you’re better off inquiring with your attorney about setting up a living trust, naming your beneficiaries on your financial accounts, and/or set up joint tenancy with a right of survivorship.
Since a will is often read several days or even weeks after your death, any funeral plans outlined in your estate plan may not be adhered to. This will likely leave it up to your loved ones to decide how they will organize your funeral, which includes choosing the method of body disposal. Rather than including funeral plans in a will, consider drafting a set of instructions that everyone in your family is aware of and will have access to.
The fact of the matter is that by law, pets are considered property, and while obvious, you cannot leave money to your furry friends. That being the case, you can certainly designate someone to inherit your pets in your will, though if you choose to take this route, you should definitely set up a pet protection agreement or a “pet trust” to leave money to someone who you are confident will take proper care of your pet. Writing a will will only be of service naming the to-be caretaker.
Reduce or Avoid Estate Tax
While it’s certainly a useful document, a will is quite useless in avoiding or even reducing estate taxes. More effective ways of minimizing the tax liability on your estate include placing your assets into trusts, giving gifts to family, acquiring life insurance and directing assets to named beneficiaries, and more.
Distributing Your Property Right Away
As mentioned prior, before any assets can be distributed to the beneficiaries, the will must be “validated” in court through probate. Moreover, larger estates can take even longer and can incur significant legal fees, thus draining the value of the estate.
Transferring Certain Types of Assets
Not all property can be transferred. If the property has other owners, through a joint tenancy with a right of survivorship for example, one person’s share cannot be passed through a will. If you’re looking for an effective way of transferring property, setting up a trust is your best bet. Further, financial accounts with designated beneficiaries cannot pass through wills. You can leave instructions, but the only thing that will have any effect on how those assets will be transferred is the beneficiary that you designate in the respective account (IRA, 401(k), pension plans, life insurance, etc.).
Allowing Beneficiaries Immediate Access to Funds Which Require Probate
Once the will is probated, the executor must collect the funds from the estate and, under court supervision, distribute them as specified in the will. The executor is the only individual allowed to access any bank accounts in the estate.
Care For An Individual with Special Needs
By now it should be clear that a will serves a simple yet key purpose: to provide instructions for the distribution of probatable assets after death (of the testator). If you wish to provide funds and care to someone with special needs, you’ll need to set up a Special Needs Trust (SNT), which will support them with extra income without running the risk of losing essential government benefits.
Creating a will can be simple for some and very complex for others. If you or a loved one are looking to get a will drafted, we highly recommend that you consult a licensed estate planning attorney who can guide you through the rough waters of estate planning.