DO I REALLY NEED A WILL?

An occasional question I am asked as an estate-planning lawyer is: “Do I really need a Will?”  Typically the answer is “yes” and involves looking at many factors to determine one’s estate plan.  An estate plan is a written method of how to hold assets while alive and distribute them upon death as well as an appointment of someone to make medical decision for you and to handle your finances when you are unable to do so, for instance, in case of your incapacity.  A Will is one part of an estate plan.  A much easier question, however, is when doesn’t one need a Will?  I can think of three situations: 1) You own nothing – no “estate” as we say; 2) You have no minor dependents requiring guardianship appointments; and 3) Connecticut’s one-size-fits-all statute distributes your “stuff” the way you wish.  Owning nothing means no jewelry, automobile(s), household goods, etc., not just a home or investments.  But what if you die from some wrongful act that creates a judgment or settlement, such as a medical malpractice claim or car accident?  You then might have a sizable estate.  In Connecticut a dependent is an individual under the age of eighteen that one is legally responsible.  This could be a child or even a grandchild.  As for the one-size-fits-all statute, it may create unintended results, such as your spouse sharing assets with your children or your parents.  Not having a Will also leaves the matter of who manages your assets during the probate process to a person the probate judge, not you, chooses.  At the very least, one should discuss the matter with an estate-planning lawyer to not only determine the pros and cons of relying on this statute but also to become truly informed on its effects.

One misconception about creating an estate plan is that having a Will avoids probate.  It doesn’t.  If that is your main objectives then either consider a Trust (I’ll discuss this topic in a later article) or spend it all, one of my favorite recommended solutions.  Another misconception is that it is a painful, complicated process.  While it may force you to consider some uncomfortable issues, a good estate-planning lawyer could make the process rewarding, even providing much relief when all is completed and organized.  After all, the last thing you need to worry about in case of an accident or fatal illness is whether you have adequately provided for loved ones.

Recognizing that many people either haven’t made a Will or haven’t looked at it in some time, the following is a non-exhaustive list of factors to consider when creating an estate plan:  1) Taxes – income, estate, gift, capital gains and generation-skipping transfer taxes; 2) Creditor claims – yours and your children’s; 3) Avoiding the complications of the probate process – its time (1-2 years), public nature and costs (about 5-8% of estate); 4) Your desire to provide for loved ones; 5) Spouse’s/partner’s death; 6) Divorce; 7) Re-marriage, unmarried partners and prenuptial agreements; 8) Guardianship of minor children and adoption by non-biological parent(s); 9) Timing of the transfer of assets – at a certain age, for instance; 10) Disinheriting children from a previous marriage/relationship upon death; 11) Disability – affecting you personally, and/or the continuity of asset management; 12) Long-term care costs and its impact on your spouse and loved ones; 13) Your privacy; 14) Business partners – retirement, leaving the business and death; 15) Difficulty/ease in contesting your estate documents; 15) Your own management style and objectives; 16) Shifting assets that will greatly appreciate to the next generation to avoid estate taxes; 17) Charitable giving – perhaps to decrease income taxes, limit capital gains and increase cash flow; 18) owning real property in more than one state; 19) Size of your estate; 20) How you hold/ (title) assets: 21) Civil union recognition; and 22) USA citizenship.

A typical basic Will provides for how your debts, expenses and taxes are paid.  If you have children or dependents less than eighteen years, it appoints who you wish to be guardian after you (or you and your spouse) die.  It also provides for any specific gifts, such as for heirlooms or jewelry, you wish to make.  Next, it may simply provide that upon your death everything else goes to your spouse and then equally (or any proportion you wish) to your kids, descendents, charity, whoever.  It is all your choice.  It then provides for the appointment of an executor – the person that must mange your assets, pay expenses, handle tax returns, and ultimately distribute the net assets during the probate process.

A good estate-planning lawyer will have forms that assist you in organizing your objectives beforehand and can explain the whole process in normal language.  He is one that has years of experience, whose practice is specifically in estate planning and who knows how to help you create a sound estate plan in the best tax and cost-efficient manner.  To do it right takes details, not boilerplate documents.  The process is not that bad, really!


By Vincent A. Liberti Jr., J.D., LL.M. in Estate Planning and Elder Law