INTRODUCTION TO ESTATE PLANNING DOCUMENTS: WILLS, AND WHY YOU NEED ONE
What happens if you die without a will?
While you may not realize it, you have an estate plan, even if you have done no formal estate planning. This is because if you die intestate (i.e., without a will), state law provides an estate plan for you. While these laws vary from state-to-state, they typically provide that your spouse and children or, if none, your broader family members, inherit your estate. While state law may align with your estate planning goals, for many clients, it does not. For example, you may wish to provide for other family members, like stepchildren or grandchildren, or to direct that shares for your children should pass in unequal shares. Or you may want to nominate guardians for minor children, so that your wishes can be taken into account by a family court. Similarly, you may wish to provide bequests to charities, which state intestacy law does not account for. A will, then, is one of several key estate planning documents that allow you to create a bespoke estate plan separate from what state law would otherwise provide.
We will cover other important estate planning documents, and how to avoid the probate process, in other posts. For now, however, let’s focus on the will: what does it do and, just as importantly, what does it not do?
What Does a Will Do?
Your will governs property that you own in your own name individually, sometimes called “probate property.” Importantly, a will does not affect property that is owned jointly with right of survivorship, property with beneficiary designations (like life insurance, retirement accounts, and other accounts with a transfer-on-death designation), and property held in trust, and those “non-probate” assets pass in accordance with their own terms. See further discussion below.
A will is your opportunity to decide how your probate property will pass on your death. In your will, you might give your tangible personal property (i.e., your personal effects, art and furniture, car, etc.) to your surviving spouse and/or children – or direct that your Personal Representative (more on this below) sell such personal property or donate it to charitable organizations. As a point of caution, though, your will is publicly accessible as part of the probate process. So, for privacy reasons, a will often directs that the balance of your assets (after the distribution of your tangible personal property) passes to your revocable trust, which remains private. This ensures confidentiality regarding your wealth and your intended beneficiaries.
Your will also names a Personal Representative (formerly called the Executor in Massachusetts) of your estate. The role of the Personal Representative includes identifying the assets of your estate, valuing the assets, using the assets to pay your debts and expenses of your estate, filing your final income taxes and any estate taxes and then delivering the remaining estate assets pursuant to the directions of your will.
Similarly, if you have minor children, your will also nominates guardians of your children if you die while any of your children are still minors. Further, you can avoid court supervision of the minor child’s inherited assets by incorporating trusts for your children into your estate planning.
What Does a Will Not Do?
Your will does not control the transfer of non-probate property – i.e., property that has a beneficiary designation, is titled in joint ownership or is owned by a trust for your benefit. Such property generally passes automatically to the designated beneficiary, joint owner or by the terms of the trust on your death without the need for a probate process. For example, real estate owned by you and your spouse jointly passes automatically to your spouse on your death. Similarly, retirement accounts with beneficiary designations pass automatically to the named beneficiary (although there are income tax planning opportunities here that we will cover in a later post). Property held in a revocable trust continues to be governed by the terms of the trust upon your death, without any need for probate.
You may choose to avoid probate by ensuring that you own only non-probate property at your death. As discussed here, the probate process in Massachusetts is usually not onerous. There are court filing fees and attorney’s fees, and a few weeks to a few months of delay – so you may decide not to bother avoiding probate.
If you have questions or would like to discuss further, please contact us and we can work with you to craft an estate plan that uniquely fits your specific situation.
Bob Goldman, Managing Partner
Liz Drake, Partner
Jill Weiner, Senior Attorney
Frank Hannigan, Associate Attorney