When people think of estate plans, the first thing that comes to many minds is a Last Will and Testament, often simply referred to as a Will. But what is a Will and how does it really help you?
There is a common misunderstanding of what a Will is and what it does. Contrary to radio or TV ads claiming all you need is a Will that can be created in fifteen minutes, or how Wills are portrayed in movies and books portraying them as impenetrable fortresses of assets, a Will is not a guarantee that the estate will avoid court or prevent arguments and fights over what the Will says.
The easiest way to think of a Will is as a binding letter to a court. A Will does not avoid court involvement after a person's death; on the contrary, it anticipates that a court process called "Probate" will take place and directs the judge to follow the deceased's wishes. A Will can tell a judge what a person wishes to have happen to their assets, who should take care of minor children, how to pay for funeral expenses, provide details of funeral arrangements and burial preferences, and who they wish to be in charge of handling all of those tasks when the person is passed on. However, a Will can be contested - from arguments of whether the Will was valid, signed appropriately, created fraudulently, should be set aside, was created under duress, equitably involves all heirs, or a variety of other arguments, the person's heirs have a legal right to fight over it. The court is then required to determine if those arguments have merit and make a ruling one way or the other. More often than not, the court will rule in favor of the Will's validity and terms, but not without great expenses in time and legal fees to get there.
Despite being a binding letter subject to the court process, a Will is a critical tool in any estate plan. A Will can work hand in hand with a Living Trust (a tool used to avoid the court process altogether and designate how assets are divided), directing a court to allocate any litigated assets into the Living Trust. Although a Trust is possibly the largest piece to an estate plan and manages the bulk of a person's concerns with their property, it cannot accomplish every goal on its own, such as nominating guardians over minor children. A Will on the other hand, while is not the most effective tool for asset division like a Trust, is highly effective in telling a court who they believe would be in the children's best interests as guardian and custodian.
A Will is also helpful to people with smaller estates (under a total value of $50,000), such as college students and young couples who are just beginning their paths in life. A young adult with a car, a small bank account, and not much else, may not need a full Living Trust at this point in their lives, but a Will can help direct their family to know what property they own and what to do with it. Young couples who may not have a large estate benefit from a Will as well, especially to clarify for in-laws and other family members to know what their wishes are.
In considering your own estate plan and what you want to leave as your legacy, it is important to remember what a Will is and what it is not. A Will is a crucial tool that works hand in hand with the entire estate plan to ensure no stone is left unturned. It is not the only tool you should rely on in an estate plan.
