A will is a legal document that specifies how the creator, known as the testator, wishes certain things to occur upon his or her death, including how property is to be divided, how debts are to be handled, and any funeral and burial preferences. It also serves as a backup for any living trusts the testator might have. Wills must be drafted and executed in accordance with state law and become irrevocable upon the testator's death.
Testamentary trusts are those set up by a last will to go into effect upon the testator's death. There are many advantages of putting testamentary trusts in a will, including:
In the last will and testament – with trusts, if you do not put all your assets into trusts, you will also specify how you want your personal and real estate property to be distributed upon your death as gifts. Personal property means any tangible piece of property you have that is not real estate—for instance, books, TVs, collections, cars, pets, etc.–and also includes any intangible property you own, such as bank accounts, stocks, bonds, certificates, etc. Your main piece of real estate is usually your home.
You have all the flexibility you want in deciding what to do with your property. In the will you can state that you wish one person to receive all your personal and real estate property (usually your spouse), you can list specific individuals that should receive specific property, or you can do both, with certain people receiving specific gifts and everything else going to a certain person. Note that you can list as beneficiaries people, businesses, charities, or other entities. Still, it is important to be specific in describing exactly to whom you are giving something and what exactly you are giving them. The more ambiguous you make your will, the more likely a court battle will ensue after you are gone.
You will need to specify in the will the person or entity you want to receive the "residue" of your estate. Residue is simply a catchall word that includes everything you own that is not specifically mentioned in the will. This way, if you forget to list something or acquire new property after you sign the will, it will still go to the person you list here. For example, if you want all your personal property to go to your spouse, then you will specify in the will that all your personal property shall go to your spouse and that the residue shall also go to your spouse. You can then do the same for your real estate property. This way you can be assured that you left nothing out of the will.
In your will you will appoint an executor. This is the person who will be responsible for administering your estate once you are gone. Pick someone you trust to ensure that your debts and taxes have been paid and then transfer your remaining assets as you have directed in your will. It is important that they are organized, responsible, and trustworthy, and it helps if they are good with numbers. The task of administering your estate may be quite burdensome. Whoever you appoint may be personally liable for late filings and unpaid taxes. For this reason, if you have a large or complicated estate, we recommend using a lawyer or a bank as executor.
While the responsibilities of being an executor can continue for a few years, the responsibilities of a trustee can continue sometimes for generations. The same considerations of choosing someone who is trustworthy and responsible apply here; however, the financial skills required are even more demanding of a trustee than of an executor. Often, trustees will need to know how to invest money, pay bills, collect assets, manage and distribute money, and file accounting statements. While using a relative as a trustee may save you from having to pay the trustee a fee to maintain the trust, there may be family conflicts that arise after you are gone that make it difficult for your relative to administer the trust fairly. One possibility is to designate co-trustees, with your spouse serving as one trustee and a lawyer or financial advisor serving as the other. Then, if one trustee dies, the other will continue to serve. At a minimum, a bank or similar institution should be designated as the last successor trustee so that there will ultimately be a trustee to take over after any appointed individuals have passed away.
In order to make your will legally valid, you need to ensure that it is properly executed. This means you must sign your will in the presence of two witnesses (three witnesses are needed in New Hampshire and Vermont). You must be at least 18 years old to sign the will (16 years old in Louisiana and 14 years old in Georgia). Also, you should avoid the appearance that you are being pressured to execute your will according to someone else's wishes or that your true intentions are otherwise being restrained.
You should pick people who are disinterested parties to witness you sign your will. Note, if you are unable to physically sign the will, you may direct another person to sign for you. This means that you should not use as witnesses any person named in the will itself. You also should not use any relative, since a court will probably find that they have an interest in your will whether they are named in it or not. Finally, the witnesses should be over the age of 18.
After the will, you will find a document called "Self-Proving Affidavit." This document is useful for speeding up probate of the will by helping to establish that the will was properly executed and witnessed. Note that courts in the following states will not likely accept such affidavits: Washington, Louisiana, Minnesota, Tennessee, West Virginia, Ohio, Maryland, District of Columbia, and Vermont.
A codicil is the document used for later making changes to your will after the will has been executed. It basically lists anything you wish to add or subtract from your will, and it is considered part of your will after it is executed. LegalNature provides a simple and effective codicil form for you to use should you decide to make any changes to your will in the future.
If you are married, what property is considered yours and what property is considered your spouse's depends on which state you live in. In most states, if your name is on the deed or title paper, the property is yours to give away as you please. If both spouses have their name on the property, each owns half. Your ability to give away this half-interest depends on how you and your spouse share ownership. If the property is owned as a "joint tenancy with right of survivorship" or "tenancy by the entirety," then whichever spouse survives longest owns the property, so if you die first, you cannot give it away to someone else. However, if the property is owned as a "tenancy in common," then you are free to give away your half-interest and your spouse will retain their half-interest. If you paid for something or received it as a gift, then you probably own all of it. Also note that regardless of how you distribute property in your will, if your spouse survives you, then they will probably be entitled to a significant portion of your estate.
In certain states, called "community property states," things work a little differently. These states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, money and property gained by either spouse during marriage is owned equally by both spouses. The same goes for the debts of either spouse. Still, property inherited by just one spouse or received outside of marriage will belong to just that spouse.
NOTE: WILLS ARE IMPORTANT LEGAL DOCUMENTS THAT IMPACT YOUR PROPERTY AND RELATIVES. YOU SHOULD CONSULT A LAWYER IF THERE IS ANYTHING IN A WILL THAT YOU DO NOT UNDERSTAND.
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