Many think that simply drafting a Will is sufficient to accomplish all their estate planning needs. While doing a Will is an important step, it does not guarantee that all your property will fall into the hands of people you trust. Here is more information about what Wills can and cannot do.
What Can Wills Do?
There are many things that a Will can do.
In general, a Will can direct the distribution of any property that is titled in your individual name. This includes any money and possessions you may own, including furniture, clothing, and jewelry. You can devise your personal property to specific family members and friends who you want to inherit from your estate. Suppose you don’t mind how your estate is divided among your surviving family members. In that case, you can direct the beneficiaries to determine what personal property they would like to inherit from your estate, or you can have your estate evenly divided among your surviving beneficiaries. Further, suppose you want a family member to inherit from your estate but question their ability to manage their inheritance properly. In that case, you can create a testamentary trust that appoints a trustee to steward the inheritance for the family member’s benefit properly.
In your Will, you will also have the opportunity to name the executor of your estate, otherwise known as the Personal Representative. This person will have to take possession of everything in your estate, ensure that all of the property in the estate is appropriately accounted for, and then, upon approval by the probate court, proceed with properly distributing the estate property to the beneficiaries of your Will. Since your Personal Representative will administer your probate estate through the probate courts, everything that your Personal Representative files concerning your estate, including the value of all of the property in the estate, is a matter of public record.
What Can’t Wills Do?
Even though there are many things a Will can do, there are also many things a Will cannot do. Property that is considered a non-probate asset will pass outside of a Will. The most common form of a non-probate asset is jointly-held property, such as a marital home or a joint-bank account. Jointly-held property passes by operation of law to the surviving joint-owner. In addition, assets governed by contract, such as life insurance, payable on death/transfer on death accounts, and retirement accounts, are also disposed of outside of the Will. To properly dispose of these assets, you must ensure that you have correctly designated your primary and contingent beneficiaries with the financial institutions administering the accounts. The assets in these accounts will not be probated. They will be immediately transferred to the designated beneficiaries on file at your death.
In addition, a Will may be limited in its ability to distribute property located outside of the state in which it was executed. Every state has its own rules for accepting the validity of a Will that was executed outside of its borders. If you own property that lies outside of the state in which you live, it may be best for you to consult with a lawyer in that state to make sure that your Will can properly distribute the property located in that state.
Further, while you can create a testamentary trust through the Will to benefit a person who may be unable to manage their inheritance properly, a Will cannot protect that person’s eligibility for public benefits programs, such as Supplemental Security Income (SSI) and Medicaid, which restrict the resources a person may have before applying for benefits. In these cases, it is typically best to create a Special Needs Trust to ensure that the beneficiary isn’t disqualified for public benefits when needed.
In many instances, I recommend that my clients create a revocable living trust to distribute the property in their estate properly.
There are many things that a revocable living trust can do that a Will cannot. A significant benefit to creating a revocable living trust is that the trust allows you and your family to handle your affairs privately; you would avoid paying fees and expenses associated with the probate process, and the value of your estate would not be a matter of public record. In addition, a revocable living trust can properly administer estate property in any state. Finally, a revocable living trust has less stringent execution requirements than a Will and is more difficult to challenge in court. If your Will was improperly executed, your estate would be subject to the Maryland Intestacy Statutes, which would direct how your estate would be distributed regardless of what your intentions were in your Will.
All told, it is crucial to have an experienced estate planning lawyer go over your options with you to determine whether doing a Will or a Trust will be best for accomplishing your estate planning goals. Please call my office today if you would like to schedule an initial consultation.
Founded in 1998 in downtown Silver Spring, Maryland, Andalman & Flynn has forged a distinguished reputation for legal excellence. The Firm practices family law, estate planning, and probate throughout Maryland and the District of Columbia, and represents individuals seeking disability benefits throughout the country. The Firm focuses on cases that impact the rights of everyone, and are there for clients when responsive legal help is most critical. The Firm has provided legal analysis on national and local television and radio, and their attorneys often testify before legislative bodies and are routinely invited to contribute to prominent legal publications. For more information about Andalman & Flynn, please visit the website at andalmanflynn.com or call 301.563.6685.