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Tuesday, February 07, 2012 |
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Practice Home | Wills | Trusts | Powers of Attorney | Health Care Directives
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Wills |
FREQUENTLY ASKED QUESTIONS
- What is a Will?
A Will is a legal document that speaks for you after your death. It is the one document that gives you the opportunity to designate the recipients of your probate property. It also gives you the opportunity to designate the person or persons who will settle your estate, and it gives you the opportunity to designate the person or persons who will serve as guardians for your minor children. Those decisions have to be made in the event of your death - a Will simply gives you the opportunity to make your preferences known.
- Who can make a Will?
In Massachusetts, any person 18 years or older who is of sound mind may make a Will. The Will must be in writing and signed by the testator or signed by another person in the testator’s presence and under the testator’s express direction. At least two competent witnesses must attest to the fact that the testator has published the Will as his or her own and sign the Will in the testator’s presence.
- How do I make a Will?
In order to be valid, a Will must comply with the specific requirements of the state in which you are domiciled; i.e., the state of your primary residence. However, almost all states will uphold a Will that is made in a foreign state or even a foreign country as long as (1) it complies with the laws of the foreign state or foreign country in which it is made, or (2) it complies with the laws of your state of domicile.
- When should I make a Will?
Ideally, you should make a Will when you are legally able to do so. Then, you should keep your Will updated for the remainder of your life.
As a practical matter, however, you should make a Will whenever you acquire any property that you want to go to specific people in the event of your death. You should also make a Will if you have minor children so that you can designate a guardian for them. If you provide support for an elderly parent or another adult, you should make a Will to provide continued support for that person. You may also want to establish a trust in your Will (a “testamentary trust”) in which you can place your estate property to be held and used for the care of your named beneficiaries (i.e., your minor children or elderly parents). If you have property that will require probate, then you should make a Will to designate a personal representative to settle your estate. A Will also allows you to give your personal representative additional powers that will make it easier for that person to settle your estate without having to seek constant court approval.
- Can I change my Will after I’ve signed it?
You can change or revoke your Will as often as you’d like. There are two ways in which you can change your Will. First, you can prepare an amendment to your Will (called a "codicil"). With a codicil, your Will remains in place, but one or more of its provisions are changed by the terms of the codicil. To be valid, a codicil must be executed with the same formality as a Will; i.e., it must be in writing, it must be signed by you, and it must be attested by two independent witnesses.
The second way in which you can change your Will is to make an entirely new one. The new Will can be identical to the original Will, except for the changes you wish to make. Because it is a Will, it will have to be made and executed with the same formalities as your original Will. The new Will automatically revokes the prior Will as a matter of law.
Many professional advisors recommend making an entirely new Will whenever you wish to make a change to your existing Will. Making changes through a codicil can get burdensome because you must keep the original Will and all the codicils to it. If you make an entirely new Will, then the old Will is revoked and only the new Will remains in effect. It's much easier to keep track of one document that a number of them.
- What happens if I die without a Will?
If you die without a Will, you are said to have died "intestate." In that case, the laws of the state in which you are domiciled at the time of your death will control the settlement of your estate and the distribution of your probate property.
The laws governing intestate estates are designed with one central purpose. That purpose is to pay your outstanding debts at the time of your death, then to pay the costs of administering and settling your estate, then to distribute your remaining probate property to your next of kin. If you don’t leave a Will to let people know how you want your property distributed, the state has to do the next best thing and try to guess at what you might want done.
The problem is, it’s never exactly what you want. Generally, in Massachusetts, if you are married and have children, your spouse gets half of your probate estate and your children share the other half in equal shares, by right of representation. If you are married and have no children, your spouse gets the first $200,000 of your probate estate and half of everything over that value. Your next of kin inherit the other half. If you have no spouse and no children, your probate estate goes to your parents equally or to the survivor of them. If neither parent survives you, your probate estate goes to your brothers and sisters, equally, by right of representation. Property that is unclaimed goes to the State, so if you die without a Will and you have no locatable next of kin, the Commonwealth of Massachusetts “inherits” your probate estate. Keep in mind that Massachusetts intestate laws make no provision for charitable gifts or gifts to friends; nor is there any differentiation among children with different needs. It seems the better choice would be to make a Will and leave your probate estate to those you choose, rather than let the Commonwealth of Massachusetts choose for you.
There are other considerations as well. For example, if you die without a Will, the State will appoint a personal representative to settle your estate. That could be anyone, including a local attorney, a professional administrator, or a family member. Moreover, the court-appointed representative will not have the authority to make many decisions without obtaining court approval beforehand. If you have minor children, the court would appoint guardians for them. There is no assurance, however, that the court will look for the same qualities in a guardian as you would have wanted. Court-appointed guardians are also entitled to compensation for their services, which can be a very expensive proposition and consume much of the money that is left for your children.
All things considered, it is never a good idea to die without a Will.
- What does a personal representative do?
A personal representative is responsible for the administration and settlement of your estate. If your personal representative is designated under your Will, then he or she will be called an "Executor." In some cases, a female who becomes qualified as a personal representative is called an "Executrix." If you die without a Will, the court-appointed personal representative of your estate will be called an "Administrator."
Regardless of the designated name, a personal representative is charged with the responsibility of administering and settling your estate. The duties include preparing an inventory of your assets and liabilities, notifying creditors to present their claims, determining the validity of claims presented, paying the debts of creditors and the expenses of administering the estate, then distributing the remaining assets to the proper beneficiaries. A personal representative is really an agent of the probate court in settling your estate.
- Does my Will control all of my property?
No. The only property that is disposed of by a Will is property that is solely owned by you at the time of your death. If you think about it for a moment, it does make sense. Solely-owned property is the only type of property that does not have a built-in beneficiary. A life insurance policy has a designated beneficiary - you don’t need a Will to know who gets that money. The same is true with annuity contracts. Retirement plans also have designated beneficiaries, including your 401(k) plan and your IRA.
Property held in a revocable living trust also has built-in beneficiaries. If property is held in a revocable living trust upon your death, the trust instrument determines who gets the property. That’s one of the primary reasons why living trusts have become so popular over the past two decades. It’s a very good way to avoid probate.
Finally, jointly-owned property "with rights of survivorship" is another form of property ownership that has a built-in beneficiary. When a joint owner dies, title to the entire property is automatically vested in the surviving joint owner(s) as a matter of law. Property that is owned jointly with a spouse is presumed to be owned with rights of survivorship. However, property owned jointly with someone other than a spouse is not presumed to be owned with rights of survivorship. Instead, the title to the property must clearly state that the property is owned jointly with rights of survivorship to have the title pass automatically to the surviving joint owner. If jointly-owned property is not deemed to be owned with rights of survivorship, then it is deemed to be owned as tenants-in-common. In that case, each owner is free to transfer his or her interest in the property to any other person upon death or otherwise.
It should be clear, then, that solely-owned property is the only type of property that becomes a problem upon the death of the owner - because there is no pre-determined beneficiary for that kind of property. Still, all 50 states want their citizens to say who will get their solely-owned property when they die. That’s the reason all 50 states have enacted legislation authorizing the passing of solely-owned property by Will.
- Does a Will increase the cost of probate?
No. In most cases, the existence of a Will does not increase the cost of probate. In fact, it will often cost somewhat less to probate an estate when there is a Will (a "testate estate") because a Will generally excuses the Executor from posting a bond, which generally costs a fair amount of money. It may also excuse the filing of an inventory and the obtaining of property appraisals. A Will also grants broad powers of administration to an Executor, which allows the Executor to perform his or her duties without constant court approval.
In addition, when a Will governs the disposition of probate property, the probate courts do not have to spend as much time determining who the heirs are or where they’re located, all of which results in decreased probate fees payable by the estate.
· How much money do I need to justify a Will?
A Will is important no matter how much money you might have. With a Will, you can insure that your money and property is distributed to your intended beneficiaries upon your death. It's also a way to designate guardians for your minor children. In addition, it allows you to name a personal representative to handle your final affairs and settle your estate.
Even though most of your property may pass to your designated beneficiaries other than by Will (i.e., through joint-ownership, through a revocable living trust, or through life insurance and/or retirement benefits), you should always have an up-to-date Will, since there is usually some property that will pass under your Will.
- Where should I store my Will when it’s done?
Your Will should be stored in a safe place - one that’s free from any potential fire, smoke or water damage. It should also be free from the possibility of theft.
If you have a fire-proof safe at home, that's a good place to store your Will. You should make sure, however, that your spouse or other trusted family members know the combination to the safe or where you keep the key. You might also give the combination or the key to your personal representative and/or your attorney so that someone has access to your safe.
Contrary to popular opinion, a safe-deposit box at a bank is not a bad place to keep your Will. Many people believe that a safe-deposit box is not a good place because the courts will freeze the box upon your death and no one will be able to get to your Will. In fact, there is no real rush to get to your Will. Most states require the Will to be presented within 30 days after death and, if it’s in your safe-deposit box, all you have to do is tell the court and it will arrange to get the Will. If you keep a copy of your Will at home or with your personal representative or your attorney, your family members and other loved ones will know what the Will provides.
- Is my Will still valid if I move to another state?
Yes, the U.S. Constitution requires that all states give full faith and credit to the laws of other states. So, if your Will is valid under the laws of the state in which it was made, then it will be honored in all other states. That does not mean, however, that you should not have your Will reviewed by a local estate planning attorney if you move to another state. There are always some things that may need to be changed, simply because of the differences in state laws that do exist.
- What else should I do when my Will is done?
First, you should discuss the fact that you have made a Will with certain family members or other loved ones. There are certain people in your life that need to know what to do in the event of your death or incapacity, so they should be told what plans you’ve made and where to find the documents that will be needed. These people might include your spouse, your children, a parent or a sibling, or it might be the neighbor next door.
Second, you have to decide whether you want to inform your loved ones of what your plan entails. This is a touchy subject with many people - some don’t have a problem telling everyone who gets what, others don’t want to tell anyone. Most professionals believe it’s better to tell people what you’ve done so that there won’t be any surprises, but it’s mainly a personal choice.
Finally, you must review your estate plan from time to time. Certainly, if there is a change in your personal or financial situation, a review is advisable. Otherwise, you should plan to review your estate plan at least every two years even if there haven’t been any significant changes in your life.
The above questions and answers are provided for informational purposes only, and
do not constitute legal advice. Individual circumstances differ significantly, and
I can give my legal opinion on a matter only after consulting with you and considering
the particulars of your situation.
Please contact me at you convenience if you wish
to discuss your specific estate plan.
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