In our last blog post, we explained estate taxes which should be part of any thorough estate plan. Another part of that plan is a will. In this excerpt from author Joseph M. Maas’ book “Exit Insight: Getting to ‘Sold!’” pp. 168-170, we will explain the basics of the will:
As you know, the will is the legal document that determines the disposition of your property by identifying who will manage the distribution of your estate, and has the responsibilities for paying the estate tax on the assets of the estate, paying the liabilities existing at the time of death, and paying the costs of administration.
There are volumes written about wills! For our purpose, it is important to note that the will establishes the identity of your family. If you have children who will receive unequal portions of your estate, it is prudent to explain the reasons for the inequality to avoid a potential family dispute, which could end up in court. In addition, if you fail to name a child, some states permit the disinherited child to claim a portion of the estate.
The will also names your fiduciaries, or appointed representatives. Typically an executor may be sufficient. The executor is designated to ensure that all the property is distributed to the beneficiaries after all debts and taxes have been aid. The guardian’s role is strictly limited to the care of your minor children, to raise and educate them; normally your surviving spouse is the guardian. The trustee is named to manage assets in trusts; the trustee can be your spouse, a close family member or friend, a professional such as an attorney, or a bank.
There are several types of will, such as ‘simple will,’ a ‘contingent trust for the benefit of minor children,’ and a ‘marital deduction will.’ Your attorney will guide you with choosing the most beneficial type of will for your circumstances.
In addition, there are a variety of provisions for determining specific intentions, such as the survivorship provision, the spendthrift clause, the perpetuities savings clause, and attestation clause.
Finally, there is the testamentary letter, which can be a supplement to your will. The testamentary letter provides helpful information to your executor and family, and may also contain more personal information than belongs in a will, such as last rites and funeral services. The will has legal predominance, but the testamentary letter can clarify the decedent’s intentions.
This letter can also be useful in a variety of ways, including identifying the location of important documents, listing the names of your professional advisors, explaining large purchases or loans, and instructing your spouse about notifying certain agencies or companies like the Veterans’ Administration, the Social Security Office, etc. This letter is also helpful by including all the details that affect the business of the person’s life such as the safe deposit box’s location, changing the registration of bank accounts, vehicles, real property, IRA accounts, Keogh plans, etc.
Having a valid, properly executed, legal will is critical to ensuring your wishes will be carried out upon your death. If you don’t have one, we strongly recommend that you contact your attorney to create one now. If you have one, we encourage you to revisit it periodically and to review it with your financial advisors and other professionals to ensure that it adequately addresses your needs and gets updated when needed.
Have questions? Consult Maas’ book “Exit Insight: Getting to ‘Sold!’” available for just $24.95 at Merrell Publishing or Amazon.com, or call the financial planning experts at Synergetic Finance today at 206-386-5455.
To your wealth,
Joseph M. Maas, CFA, CVA, ABAR, CM&AA, CFP®, ChFC, CLU®, MSFS, CCIM
President of Synergetic Finance
