Preparing Your Will

You’re finally ready to sit down with an attorney to have your will drafted but are you prepared for what the attorney will need to know? Have you given thought to all the details that should be included in your will? Even if you think your estate is simple (“All my stuff goes to my spouse, easy peasy!”), there are many other questions you should be prepared to answer before sitting with an attorney. Thoughtful planning now can help you avoid the multiple meetings, lengthy process, and costly future changes that can result from quick decisions.

Questions to Consider When Preparing Your Will

Note: While this article references preparing your will, the same questions will need to be resolved if your attorney recommends you prepare a will and a revocable trust. For more on this read to the end.

What does your estate include?

• Individually owned assets—any bank, brokerage, business, or loan accounts that are in your own name. These assets are the only assets that will “follow” the direction you leave in your will.
• Joint assets “with rights of survivorship” or “by the entirety”—Assets held in joint name with your spouse or another individual will automatically become the property of the surviving joint owner, bypassing the directives of the deceased owner’s will. However, because they become individually owned assets of the survivor, these assets will follow the direction of the survivor’s will unless retitled.
• Joint assets “in common”—Different from joint assets with rights of survivorship, your heirs’ ownership of your share will be determined by a beneficiary designation on the account or by your will. The joint owner maintains his or her current ownership share and does not automatically inherit your ownership unless stated in the beneficiary designation or in your will.
• Beneficiary designated assets—This can include life insurance policies, retirement accounts, annuities, and various other types of special accounts. These assets will be paid directly to the beneficiaries named on the account(s) and will not pass through your will unless no beneficiary is named in the document or you specifically name your estate as the beneficiary.
• Closely held business interests—The succession of your ownership in limited liability companies and partnerships is specified by the organizational documents. Often, the surviving partners or owners will have the right to buy your ownership from your estate before the heirs named in your will have a right to the ownership.

Who do you want to handle your estate when you die?

• The role of executor (or executrix) is often first the surviving spouse and then a child (or children), but some care should be given to determining this role.
• Who has capacity? Who has time? What will be perceived as “fair” or an “unfair burden”?
• After the first spouse’s death, estate administration is usually quite simple. After the second spouse’s death, the settlement may be more complex due to the additional beneficiaries and possible additional assets to be split. Keep in mind that an executor has the authority to hire an outside advisor or attorney to handle much of the process but there will still be many administrative duties to perform after the second death.

Who do you want to receive your tangible personal property (TPP)?

• TPP is anything physical you own individually (jewelry, antiques, artwork, furniture, clothes, cars, etc.)
• Often, all TPP is transferred to the surviving spouse and then distributed to the surviving children as they choose to divide in as equal shares as possible.
• Any specific items you want to be distributed should be included in a separate memo to be kept with the will but which can be easily updated and replaced without having to update the full will. For example, if you want to make sure your granddaughter receives the family heirloom china set, this should be specifically stated or included in a separate memo to be kept with the will and updated as appropriate.

Do you have any individuals or organizations you specifically want to receive a certain amount?

• These are called specific bequests and should be distributed before any other assets.
• This is a good way to fulfill any philanthropic desires either charitable or to individuals in your life. (Note: there are a variety of ways to satisfy your charitable inclinations during your lifetime and after your death. Be sure to work closely with your advisors to determine the most tax-efficient way to fulfill your wishes.)
• Consider if you want to include a specific dollar amount or a percentage of your total assets for the amount of the bequest.

For your remaining assets, what do you want to achieve?

• Are taxes a concern?
• Is there someone with special needs whom you want to consider?
• Do you want to specifically provide for grandchildren? (Perhaps to ensure enough to pay for your children’s or grandchildren’s tuition?)
• Do you want to leave a legacy with a special organization? (i.e. Do you want to include charitable giving?)
• Is there anyone you specifically want to include (or exclude) from your plan?
• Do any children need to be treated differently in the will?

Who do you want to receive your remaining assets and how?

• Commonly, all assets will pass first to the surviving spouse, either outright or in trust. At the death of the surviving spouse, the surviving children will often be the recipients of the remaining assets.
  • If a child predeceases you, do you want their share to be distributed to their children or to your other children instead?
• How do you want your heirs to receive your assets? Outright? Or in trust?
  • Consider the age and capacity of the heirs receiving outright distributions. This may not matter if the amount is not significant; it may be critical if the amount is quite large.
  • You may want your spouse to receive at least a portion of your assets in a special trust that will bypass her own estate if estate tax is a concern.
  • If there are potential minors receiving assets, you may want to make sure assets stay under the control of the trustee or custodian until the minor reaches the age of majority.
  • If you would like to maintain any control over how your heirs can use their inherited assets, consider distributing your assets into a trust.
    • The trust terms will be included in your will. You will need to be able to describe how, when, and how much you want to allow your heirs to receive from the trust (in a broad sense). Your attorney can help draft the language to suit your answers to these questions.
    • You will need to name the trustee(s) of the trust. Similar to the executor, this is the person (or people) who will have all administrative responsibility over the trust as well as all control over the distributions. While the role of the executor is only needed until the estate is closed (usually about 6-24 months), the role of the trustee exists as long as there are assets in the trust.

Who are your contingent beneficiaries?

• If a beneficiary you’ve named in your will predeceases you or dies during the term of a trust you’ve established, who should receive the assets instead?
• In the event of a major catastrophe and all your heirs are no longer living to receive your estate assets, who would you want to receive them?
  • Typically this is either charity, more distant relatives or friends, or it can simply state that assets will pass as if you had died without a will by the laws of the state in which you reside (this is called intestacy law).

Additional questions depending on your circumstances:

Who will you name as the guardian(s) of your minor children in your will?

• Understand that the “guardian of the person” and the “guardian of the estate” can be (and often should be) two different people or parties. The guardian of the person is the individual(s) who will be responsible for the care and well-being of your minor children. The guardian of the estate is the person who is responsible for the financial affairs of your minor children. The skills involved for both roles do not always point you to naming the same person (or people).
• Don’t name a couple if you only want one person to serve.
• Consider naming a senior generation above you (i.e. your parents) or someone in your generation or younger (i.e. your siblings, close family friends).

How will your closely held business interests be handled?

• Do you have a buy-sell arrangement with your partners or other shareholders?
• Do you have a spouse or children receiving the stock who are not involved in the company? Is this what you want or do you need to make other arrangements?
• A myriad of issues can arise from poor business succession planning. Be sure to address this early and often so all parties involved are informed well in advance of your demise.

Are there children from a prior marriage (or outside of marriage) whom you need to address?

• At a minimum, these children should be named in your will to acknowledge their relationship to you, even if you do not intend to leave them anything.
• If you are in a second marriage and one or both of you have children from the prior marriage, there are a variety of ways your estate can be divided. Be sure you and your current spouse discuss and agree.
  • Distribution examples: to your spouse absolutely; to your own children absolutely; to your spouse while he/she is living then to your own children after his/her death; to the combined children of you and your spouse from all marriages, etc.

You might be wondering, where does a revocable trust fit into all of this? Commonly, individuals will create a very simple will that primarily states that all assets will be distributed into his or her revocable trust. The answers to all remaining questions mentioned above are then answered inside the revocable trust document rather than inside the will itself. This kind of planning is often called a “pour over will and revocable trust” because the will simply “pours” out directly into the trust. We are seeing more attorneys recommend this type of planning, for various reasons. A further explanation of planning with the use of a revocable trust is perhaps best left for another article. In the meantime, consult with your advisors to determine if a revocable trust may be necessary for you to include with your documents. You will need to be able to answer the questions in this article whether you draft just a will or you also include a trust.

Finally, there are a lot of things for your loved ones to understand, often before they can even begin to address your will. When organizing your estate plans, consider completing our “Planning Guide for Survivors.” It is a fillable form that can be updated to include important information like accounts, beneficiary names, and key contact names.

As always, please consult your estate planning attorney, accountant, and financial advisor before making any changes to your plans.

A special thanks to one of our clients for inspiring this article. We hope you find it as helpful in your planning as he does.