What is a Will?

What is a Will?

One of the primary goals of the estate planning process is to explain how to manage and distribute your assets after you're gone. The will (also referred to as a Last Will and Testament or Testamentary Will) is one of the most commonly used tools for this purpose.

Executing a properly drafted will allows you to specify who gets your money and property and in what amounts they will be distributed upon your death. You can bequeath specific items, dollar amounts, or percentages of the total assets you own at the time of your death. You can give your assets to one or more family members, charities, other institutions, or combinations of heirs. 

In addition, your will allows you to appoint the person you would like to be in charge of administering your estate. Your state may refer to them as a personal representative or executor. The person you nominate to serve as your personal representative will be responsible for locating and collecting all of the estate’s assets, liquidating property to the extent necessary or desirable, paying final expenses and debts, filing tax returns, and distributing items as specified in your will. Your personal representative can be a family member, attorney, or other trusted individual.

What Happens to My Money and Property If I Don't Have a Will?

If you don't have a will and don't engage in any other type of estate planning, your assets will pass according to your state's laws of intestate succession and, with few exceptions, will require a probate proceeding. The laws of intestate succession dictate who, in what order, and the amount received of your assets following your death. Therefore, by failing to put an estate plan in place, you won't get to decide who benefits from your estate or who serves as the personal representative. Further, in probate proceedings without a will, the personal representative is required to post a bond to serve in that role, which increases the costs of the probate.

If I Execute a Will, Must My Estate Pass Through Probate?

Yes, by executing a will without any additional estate planning strategies, you are ensuring that your estate will be administered through a probate proceeding. Probate is a court-supervised process that validates your will and requires the appointment of a personal representative to take charge of the administration of your money and property. 

While not always as costly as many people believe, probate does require an investment of time, effort, and expense. Further, probate requires that certain statutory time periods be observed, which means that the administration of even the most straightforward estate takes at least six months. You may want to speak with a qualified estate planning attorney about techniques that can eliminate the need for probate. 

Do All Assets Pass Through Probate?

No. Some types of accounts and investments, such as IRAs, 401ks, and life insurance proceeds, can, and usually should (primarily for estate and income tax reasons) pass to their heirs directly through beneficiary designations. For these types of assets, you must work with your estate planning attorney and other professionals (such as your retirement plan administrator, insurance agent, or financial advisor) to make sure that you properly complete the necessary forms for the assets to pass directly to your heirs.

Are There Any Rules When Creating and Executing Wills?

Yes. Each state has laws regarding how documents are created, signed, and witnessed to be considered valid. If your will does not meet these requirements, it is not valid, and your estate will be distributed as if it didn't exist. The probate court may have no choice but to administer your estate according to the laws of intestate succession. Therefore, it is important to have your will drafted by an attorney familiar with these requirements rather than run the risk of frustrating the process and your heirs by making common mistakes.

Is a Living Will the Same as a Testamentary Will?

No. A living will is a type of advanced directive used by some to formally document their wishes concerning medical care and life support in the event they are terminally ill or incapacitated by an accident or an illness. A living will has nothing to do with the distribution of assets or the management of a probate administration. 

Can My Financial Power of Attorney Handle Estate Administration?

No. Your financial agent’s authority to act on your behalf ends at the moment you pass away and risks personal liability by managing or distributing your assets following your death.  Therefore, having a financial power of attorney doesn't eliminate the need for additional estate planning (such as executing a will). However, through your will, you can nominate the person you appointed as your financial agent to also serve as your personal representative.

Limitations and Disclaimers

This article is intended to provide an overview of some of the issues and considerations concerning wills and the estate planning process. It is not intended as a complete explanation or summary of the laws and other considerations affecting the document. The laws governing wills, estate planning, and probate vary by state law, and each individual’s situation is unique. Find an attorney near you before creating your will and learn how a complete estate plan can be customized to your unique situation.