The Retirement Watch Guide to Understanding the Last Will & Testament

There’s a lot more to know about wills than many people realize. The additional knowledge can often result in a much improved estate plan.

Let’s first review some basic terms and concepts of the will.

A will is a written statement of your instructions and intentions regarding your estate. The phrase “last will and testament” is anachronistic.

In old common law, a testament directed how a person’s personal property was to be disposed, while a will directed the disposition of real estate.

Now, a will covers both types of property plus other issues.

To be valid, a will generally must be written with the testator’s signature witnessed by two or more disinterested people.

About 20 states allow oral wills, but only under limited circumstances.

A few states recognize handwritten wills, also known as holographic wills, without witnesses in limited circumstances.

When you leave property to someone under the will, that’s known as a bequest and the person receiving the property is a beneficiary. The maker of the will is the testator.

The person who oversees administration of the estate and compliance with the terms of the will is known as the executor, administrator, or personal representative, depending on the state.

Probate is the process under which your will and estate are administrated and settled.

Some states have a separate probate court, while in others, a family court or the regular district or circuit court handles probate.

Dying without a will is called dying intestate. When someone dies intestate, state law determines how the estate is distributed and the court appoints someone to act as executor.

More than property

The main purpose of a will is to direct how you want property distributed, but you can include other directions.

You can appoint one or more people to serve as executor. Often the court accepts the appointment, but it might not be required to do so.

If you have minor children or dependents, you can designate their guardian or guardians.

If you don’t, state law will determine who becomes responsible for them.

You also can include any desires you have concerning the funeral, memorial service and what’s done with your body. In some states, these directions are binding, but in others, they are treated as suggestions and preferences.

Disinheritances

In the will, you can disinherit anyone who might be considered a natural object of your affection or who would inherit under state law if you had died intestate.

The only exception in all states is your spouse.

Spouses generally inherit a minimum portion of the estate (usually one-third or two-thirds) unless the right is waived in a valid premarital or post marital agreement. There are different reasons for disinheriting someone.

A child who’s done well financially and doesn’t need additional wealth might receive a small bequest or none, especially when other children could use the support.

Or an inheritance might be provided outside the will, such as through a trust, life insurance, or jointly owned property.

Of course, someone might be disinherited because he or she is estranged from the testator, has been irresponsible with money, or has substance abuse or gambling problems.

To most effectively disinherit someone, name the person in the will and state that you knowingly and intentionally aren’t leaving them anything.

You can provide a brief reason, but you don’t have to. If you don’t do this, the person could argue in court that leaving them out of the will was unintentional.

An alternative is to leave the person a modest bequest and have an anti-challenge clause in the will, as explained below.

Will challenges

A will can be challenged by anyone who claims to have an interest in your estate.

Usually, a challenge is from a relative or someone claiming rights under state law or a promise or contract.

Will challenges often allege that someone exerted undue influence over the testator or that the testator had diminished mental capacity.

Sometimes a challenge alleges there’s a technical fault in the will, such as that it wasn’t properly witnessed.

Challenges argue that a prior will or state law should be followed.

The potential for a challenge can be reduced by adding an anti-challenge or in terrorem clause, saying that anyone who challenges the will and loses doesn’t receive anything from the estate.

Most states allow such clauses. To make the clause more effective, leave a potential challenger a modest bequest that’s large enough he or she doesn’t want to risk losing it.

You also can take steps to establish your mental competence, such as making a video version of the will or have a doctor’s exam near the time you execute the will.

Doesn’t cover everything

Many assets aren’t transferred under the terms of your will and also avoid probate. Every time your will is reviewed, also consider how these assets are distributed.

The original copy is important. Many states require the original copy of the will to be filed for probate.

A photocopy can be submitted only when an original isn’t available, and the court won’t have to follow the copy as closely as it would an original. Also, not having the original makes it easier for a will to be challenged.

Keeping a will in a safe deposit box at a bank or other financial institution can cause problems when the testator is the only one legally authorized to have access to the box.

After the testator dies, bank policies and state law determine who has access to the box. Sometimes a court order is needed. It is better to keep the original will in a waterproof and fireproof safe in your home or other accessible location.

Wherever you keep the will, be sure the executor and key family members know where it is and can gain access to it.

Trusts and wills work together

There are several ways to integrate your will with one or more trusts. You can create a trust in the will.

Suppose you want assets to benefit your children, but they are minors or financially unsophisticated.

Your will can state that the property will be transferred to a trust for the children’s benefit.

The trust agreement can be attached to or be a section of your will. You can create a revocable living trust to hold and manage most of your property during your lifetime.

After you pass, it converts to an irrevocable trust.

Your will can state that property covered by the will is transferred to the trust. Or you can create a trust during your lifetime but transfer few or no assets to it. In your will, you direct the executor to transfer assets to the trust.

These last two arrangements often are known as pour-over trusts, and the will might be referred to as a pour-over will.

Strings and conditions of the last will & testament

You can put any condition on a gift or bequest, as long as it isn’t against public policy.

Courts generally have allowed any restriction that isn’t race-based and doesn’t violate or encourage the violation of a law.

Some conditions that have been found enforceable include bequests contingent on the beneficiary’s being married, staying married or being employed.

There’s a question of who will enforce restrictions that apply over time instead of at a point in time. But usually such will provisions are valid.

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