Wills 101

A “will” or “testament” is a document a person (the testator) uses to determine the rights of others over his or her property or family after his or her death. If you make out your own will, the courts will recognize it. If you don’t make out a will of your own, your state will use their standard will for you. It likely will not result in what you want. Check out what your state’s will says here. You’re going to LOVE IT!

Your will dictates who will take care of your estate and affairs after your death. Tragically, many people never take the time to make even a simple will. They die “intestate.” Intestate means they die without a will. It doesn’t mean they die out of the state. “If you die intestate, the court proceeding necessary to distribute your property is called an “intestacy probate.”

There are many reasons why people do not make out a will. Some of them are actually funny. For example, some people misunderstand and think that if they don’t make out a will, their family will be able to avoid all of the courts and lawyers, because their estate will not have to go through probate when they die. So, they intentionally avoid making out a will. Unfortunately, the opposite will happen. There will be an intestacy probate. Others subconsciously want to avoid preparing to die. Preparing your estate plan brings a tremendous peace of mind, because your affairs are in order. Everyone, who wants to direct their own affairs, needs to write their own will or have the lawyers make one. Even if you have a revocable trust, you need a will. It is a big mistake not to have at least a will. There are dozens of reasons to write a will, and there isn’t one good reason not to write a will.

Naming Personal Representatives
The will names the personal representative (the executor or executrix). Your personal representative will be required to inventory all of your possessions; pay the bills; distribute your personal property; file your final income tax return; file an estate tax return, if necessary; collect the life insurance; and do all of the other tasks required to close out your estate. So, how do you decide who to use as your personal representative? A family member, who is geographically near the bulk of your estate, has good business sense, and can be fair with your heirs, is the person you are looking for. Don’t choose your attorney for your personal representative. It is basically malpractice for the attorney to name himself or herself as the personal representative. He needs to remain a neutral party.

Naming Guardians
The will also names the guardian for your minor children, if you have any. But, don’t forget your grandchildren. As a grandparent, you need to make sure that your kids have wills to protect your grandchildren. The guardians must stand ready to raise your children, not only if you die, but also if you become incompetent. Guardians must be adults able to act legally on behalf of the children. Whom do you appoint as guardians? Obviously, you appoint the people that you think will best care for and love the children. You should try to appoint guardians who feel the same way you do about religion, education, discipline and other important aspects of life. If you have minor children or grandchildren, you had better see to it immediately that a guardian is named.

It is a good idea to put restrictions on the guardians. Most wills simply state, “John and Mary guardians to my minor children.” You can do better than that. Coach the judge in your will. It should read, “John and Mary; provided they raise the children in our family home where the children are living at the time of my death.” “John and Mary; provided they are still happily married and harmoniously living together.” “Grandma and Grandpa; provided they have the health to take care of the kids.” “Grandma and Grandpa; provided they don’t sell the kids.” You get the picture. Taking care of the children, by naming the guardians, is one of the most important things you can do in estate planning.

Distributing Dollies and Doilies
One of the other very important parts of estate planning is directing the distribution of your personal property, i.e., the antique shot gun, the treadle sewing machine, the dollies and the doilies. Remember the vase that has sat in Mother’s front hall for years? Everybody that walks by says, “Mother, that is a beautiful vase. When you die, may I have it?” Mother says sure, and by the time Mother is dead, she has promised the vase to everyone in the family and half of the neighbors. That stupid vase starts the family fight and the kids don’t speak to each other for years. You are the one who best knows your children and how you wish to distribute your property. You should write what is called a “personal letter,” if your state law will allow one.

The personal letter is really just a list of items and corresponding names of the people who are to receive them. It has to be referenced in your will. The letter is not a formal part of your will until you die. After you die, the letter is brought in and treated just like it had been a formal part of your will all along. But, because it isn’t a formal part of the will until you die, it can be changed any time you want. All you have to do is rip it up and write out a new letter. Paying attention to this type of detail can save a great deal of family grief.

Trusts Created by Wills
A will may create a trust that is effective only after the death of the testator. Any trust created in a will is generally referred to as a “testamentary trust.” You probably don’t want a testamentary trust, because most people get a trust (a living revocable trust) to avoid probate. The lawyers love to set up testamentary trusts, because they get the big fees for setting up the trust and then they also get the fees for the probate. A testamentary trust will not avoid probate. Everything will be probated, then it will drop into the trust for distribution. Many people think they are getting a living revocable trust, and they are actually given a testamentary trust. The way to tell if you have a testamentary trust is to look at the document that creates the trust. If it says in the title or the first sentence or two that it is a revocable trust, then it is not a testamentary trust.

Wills and Probate
All wills are probated, if they transfer property after the testator’s death. If you want to avoid probate, read about probate in other articles on this site. You may or may not want to have your family go through probate. Most people should try to avoid probate, which means they will not be using a will as their primary estate planning document. They will use a living revocable trust, and have a companion will for the trust. The companion will is called a “pour over will,” because everything that passes through the will “pours over” into the trust for final distribution to the heirs (beneficiaries). This site spends a lot of time talking about trusts. You need to know about trusts, so you can get what you want and not just blindly trust your lawyer to give what he or she thinks is best. (What is “best” is usually what is best for the attorney, not you.)

Not everyone needs a trust. Many people just need a will. Learn what can be done, and make your decision. If you don’t get a trust, please have a will written. You can write your own will and/or trust. In the Accumulation and Preservation of Wealth Personal Planning System I have prepared forms that let you do exactly that – write your own will and/or trust. The set tells you how to make them “legal” without ever seeing or paying an attorney a dime.

My book, Protecting Your Financial Future, is a great place to start if you want to learn more about wills and trusts. Trusts are one of the primary tools of wealth the rich use. You can use one just like they do. The trust lets you move more money to your family, protect assets (if it is done right), avoid probate, and have peace of mind.