What is a last will and testament?
First and foremost a last will and testament (â€świllâ€ť) is a legal document. A will describes a personâ€™s final wishes, their desired distribution (wish list) of their property and assets, and the guardianship of minors. As a legal document, a will, to be valid, must follow strict rules that vary by state. If any of these rules are not followed, beneficiaries and potential beneficiaries may challenge the will in probate court. A will does not avoid the probate court process. When one dies with a will, or without one for that matter, the probate court oversees the distribution of property and guardianship of minors. Probate court may be a lengthy process and difficult to manage even when not grieving a loss of a loved one.
What can a â€świllâ€ť accomplish?
Wills accomplish certain goals well and others not so well. Wills do a very good job in two areas.
- First, a will appoints an executor or personal representative to follow the instructions of the will. This is the person that appears in probate court, presents the will to the court and accounts to the court for any distributions or debt payments under the will or by the estate. A will also is a vehicle to describe oneâ€™s â€śfinal arrangementsâ€ť in terms of burial wishes, funeral wishes and any other ceremonies one may wish their executor to arrange.
- A Will also establishes who will be the new guardians of any minors or dependents.
What are the disadvantages of a stand-alone will?
Although a will describes the intended distribution of assets and property, there are several drawbacks to using only a will to fulfill your last wishes:
- First, as described above, a will has to go through probate court which can be confusing, long (6 months to 3 years on average), and expensive (typically costs are 4-8% of the estate, depending on unforeseen issues or challenges that arise). Better methods exist to avoid probate court which are described later.
- A will is only a wish list of where one would like their assets to go. A probate judge uses it as a guideline, but the judge is the ultimate determinant where the assets go. He makes a decision based on his opinion of the validity of the will.
- A will is only part of the probate process. The probate process is public court hearing allowing all of your private wishes to be shared with the world. Everyone and anyone interested in your private business can attain information that you may not wish them to get including: all the assets you own, where they are going, the debts you have.
- As described previously, a will is only a piece of the entire probate process, and cannot help defend legitimate or illegitimate claims of your assets by creditors. If creditors claim the assets that you wanted to give to members of your family, the court will require the creditor be paid in full before any of your heirs will get ownership of those assets.
- A will also does not distribute property in such a way that avoids or reduces estate or â€śdeathâ€ť taxes. The federal government as well as many states have a low threshold of â€śfreeâ€ť inheritance and the federal government also may take from the estate.
- Another problem with having only a will is that the distributions are essentially gifts. These gifts go directly to the beneficiary and become their property. One can see how this would be an issue if the assets are going to an immature or young adult, a person with legal problems and/or drug dependence, or someone irresponsible in financial matters. The entire estate could be lost or squandered away. Hence, a will does not offer financial protection to the giver or the receiver.
- Also, as stated earlier, a will may, and often is, challenged by beneficiaries or potential beneficiaries. Even if the will stands, the process may keep assets and property away from loved ones for years.