Chapter 4 Writing and Signing a Will

Deciding Whether a Will Serves Your Needs

In one sense, asking yourself whether a will serves your needs is an easy question. Everybody has needs that can be served by a will, so everybody should have a will.

And your estate plan may be able to be managed with just a will. If you don’t have estate tax concerns, aren’t concerned about probate or having your will made part of a public court record, and simply want your estate to be distributed to your heirs when you die, a simple will may be all you need.

Until you’re near retirement age, a living trust probably won’t help you, but it will cost you time and money to create and update, and it will be more cumbersome for you to work with assets that you transfer into the trust. Sure, even younger people can suffer a sudden illness or die unexpectedly, but if you’re in pretty good health, you can cover your bases pretty well with a will, durable power of attorney, and healthcare proxy.

Trusts are most useful in your estate plan when

Your estate may be subject to estate taxes. In 2018, your estate must be worth more than $5.6 million to pay federal estate taxes.
You want to avoid probate court.

Most states have significantly improved the probate process, and smaller estates often qualify for simplified probate. It may be cheaper to probate your estate instead of creating and funding a trust.

Simplicity often leads you to a will

The fewer assets you have, and the less complicated your plans for the distribution of your estate, the more likely it is that a will is all you need.

Similarly, if you’re married and want to leave most or all of your estate to your spouse, you probably don’t need a complicated estate plan. Your spouse should automatically inherit your share of jointly owned property, and you may not have much left to go through probate.

Do you own real estate in more than one state? The probate court in the state where you die doesn’t have authority over real estate located in another state or country. To probate out-of-state real property, the administrator of your estate will have to start a separate probate action in the state where the property is located. You can easily avoid this complication with a living trust. (See Book 5, Chapter 3 for more on this process.)

Do you own your own business? If so, even during your prime working years, you should start thinking about business succession. If your business may falter or fail without you, you also need to create a plan for your incapacity. During the time it takes for a probate court to appoint somebody to take over your business, it may suffer significant losses or become broken beyond repair.

You can create and fund trusts with your will. You can get the estate tax benefits of a bypass trust or restrict when and how your heirs receive their inheritances, by including pour-over provisions in your will to fund an existing trust or providing for the creation and funding of an entirely new testamentary trust.

If you live in Louisiana, whatever your circumstances, your estate may be too complicated to plan by yourself. Your state has forced heirship laws that require you to leave bequests to certain heirs and has strict requirements for the execution of a valid will. If you reside in Louisiana, you should probably hire a lawyer to draft your will.

For people in other states, the larger and more complex your estate, the more likely it is that you’ll benefit from having a professionally drafted will. If you require tax-planning services, want to disinherit an heir, or have children from a prior relationship, a lawyer can help you figure out exactly what you need to do to plan your estate and help you avoid traps that can seriously disrupt your plan for your assets.

For more information on estate planning traps, see the chapters in Book 5.

Assets not covered by a will

As you review your assets, consider whether they’re jointly owned or already have a designated beneficiary. If you’re married, many of your assets are probably jointly owned with your spouse. Your insurance policies and retirement accounts name a beneficiary.

When joint ownership or a beneficiary designation define who will receive property upon your death, it doesn’t matter what you put in your will. Whatever your will says, the assets pass according to the title or beneficiary designation and never become part of your probate estate. These transfers are thus said to occur outside of probate.

The following sections address the different types of assets not covered by a will.

Insurance, annuities, and retirement accounts with designated beneficiaries

When you designate a beneficiary for an insurance policy, annuity, or retirement account, the asset is transferred to your beneficiary upon proof of your death. These assets are generally still included in your estate for the calculation of estate tax, but the probate court isn’t involved in the transfer of the asset to your beneficiary.

Your heir may receive significant benefits from receiving a retirement account outside of probate. (See Book 1, Chapter 7 for more on retirement accounts.)

Insurance can be a very important part of your estate plan, and it may be possible for you to keep insurance proceeds out of your taxable estate. See the chapters in Book 3 for more on insurance.

Property with a right of survivorship

If you’re married, you and your spouse probably jointly own your home. If your deed says that ownership is by the entireties or refers to a right of survivorship, your co-owners should receive your interest in the property without going through probate.

Joint bank accounts

The money in your joint bank accounts is available for either account holder to withdraw, at any time. Unless you set up the account to require the consent of all account holders, your joint account holder doesn’t need your permission to withdraw funds. When you die, your interest in the account passes to your joint account holders.

You need to be careful with joint bank accounts for several reasons:

The IRS will try to count the entire balance of your joint account in your taxable estate and will require the joint account holders to prove that they contributed money to the account balance.
Your joint account holder can empty your account. There are many sad stories where an elderly person added a younger sibling or child to the account to “help” pay her bills and manage her assets, only to have the “helper” pocket the money.

If you intend to maintain total control over the account until your death, you may be better served by adding a transfer-on-death provision to your account rather than joint ownership (see the next section).

Transfer-on-death accounts and titles

As an alternative to joint ownership, you can give somebody an interest in property or financial accounts that doesn’t take effect until you die. Although the asset is included in your estate for gift tax purposes, the transfer-on-death provision transfers ownership to your beneficiary upon your death without the necessity of probate. You keep total ownership and control of the asset during your lifetime.

You need to be careful using this technique. If your family circumstances change, your transfer-on-death provision may become outdated, as in the following cases:

If you set up a deed to transfer ownership to your three children upon your death and a child dies before you, the property will go to your surviving children unless you included your grandchildren as contingent beneficiaries.
If you later have or adopt another child, unless you update the provision, that child won’t inherit.
If you set up an asset to transfer on death to your spouse, you must remember to update that provision after divorce, or your ex-spouse will receive the asset.

Exploring the Types of Wills

Wills come in many different types. For the most part, the difference is one of complexity. The basic elements of a simple will are also present in a highly complex will, but additional provisions have been added.

The statutory will

Most states offer a statutory will, a very simple will that, if properly executed, will be accepted by a probate court. Statutory wills are often made available as fill-in-the-blanks forms, so they’re pretty easy to complete. You may be able to get a form by asking your state representative’s office to provide one, and in many states, they’re available for download from the state legislature or state courts’ websites.

At the same time, statutory wills are very simple. They can help you implement a basic estate plan but aren’t meant to help with tax planning or more complicated estates. Although unquestionably “better than nothing,” a statutory will is most useful if you have a very small estate and desire a very simple estate plan.

The handwritten (holographic) will

A holographic will (or in Louisiana, an olographic will) is written entirely in your own handwriting and is signed by you but isn’t witnessed. Most states disfavor holographic wills and recognize them only under narrow circumstances, such as when they’re prepared by a soldier who is engaged in combat.

A cousin of the holographic will is the oral will, sometimes called a nuncupative will, where there is no written document at all. A court will entertain an oral will in a few circumstances — typically only where the person making the will faces imminent death, where disinterested witnesses produce a written record of the will shortly after the person’s death, and where only small amounts of money are involved.

Sometimes you can go through the trouble of writing or articulating a will, but you can’t produce a written will that is properly witnessed. Make sure that your wishes will be respected by following your state’s formalities for the execution of your will.

A will of your own

Your will is more powerful than you may realize. In addition to parceling out your estate to your heirs, you can create and fund trusts, implement parts of your estate tax avoidance strategy, designate caregivers for your minor children, and outline your preferences for your funeral and memorial service.

As a general rule, when you create a will, it’s sensible to

Follow state law formalities for the execution of your will. Otherwise your will may be rejected by a probate court.
Whenever possible, keep your estate plan simple. Don’t complicate your will unless you’re truly convinced that the added complexity is necessary to your estate plan.

Other wills

Usually a will may appoint an administrator, designate people to care for your minor children, and allocate your estate between your heirs. But you can do a lot more with your will:

Testamentary and pour-over wills: You can create a trust with your will or direct your estate to put assets into a trust.
Joint wills: You can create a joint estate plan with your spouse and may also be able to make your joint estate plan legally binding even after your death.
Self-proving wills: You can add an affidavit to your will to simplify the process of submitting it to probate.

Testamentary and pour-over wills

When you create a living trust, you traditionally transfer assets into your trust during your lifetime. That transfer of assets simplifies probate and helps with disability planning.

But what if you never get around to transferring your assets into your trust or want to keep ownership in your own name during your lifetime? You can use your will to create or fund a trust. How is this done?

A pour-over will funds an existing trust. A pour-over clause may add additional funds or assets to your living trust. But you can also execute a trust that you have no intention of funding during your lifetime and direct assets into the trust from your estate.
A testamentary trust will includes language that creates a trust that becomes operative upon your death. You can even make the creation of the trust conditional — for example, directing inheritances for your minor children into a trust but allowing them to directly receive their inheritances if they reach adulthood before you die.

Testamentary trusts can be useful as part of a tax-avoidance strategy. For example, if you’re married, you can create a testamentary bypass trust to maximize estate tax exemptions for your combined marital estate.

Joint wills

In simple terms, a joint will is executed by both you and your spouse. When the first spouse dies, the surviving spouse inherits the entire estate. When the surviving spouse dies, the estate is distributed according to the terms of the will.

A joint will is a simple way to provide for your spouse and heirs, but it’s not much more complicated for you and your spouse to both execute your own separate wills.

If your joint will doesn’t prevent the surviving spouse from changing the will after you die, your spouse may change your common estate plan. If you’re trying to provide for friends or relatives that your spouse doesn’t care for, or for children from a prior marriage, that may be a risk you don’t want to take.

If you want to be sure that, if you die first, your spouse can’t change your joint estate plan, many states permit you to enter into a contract will. You and your spouse enter into a joint estate plan.

As long as you remain alive, you and your spouse may change the plan or even scrap it.
Upon your death or the death of your spouse, the estate plan becomes binding and irrevocable.

For a smaller estate, a contract will may be a sufficient means of ensuring that your heirs receive their inheritances, even if your spouse might prefer to disinherit them after your death. But a contract will does have disadvantages:

Your spouse may not be able to sell or dispose of assets that are identified in the joint estate plan. For example, will your spouse be able to sell the marital home and move into a condo or apartment? What if your spouse can barely afford the house payments, let alone the cost of maintenance?
Your other heirs’ inheritances may be tied up for the life of your spouse, which could be 20 or 30 years. Do you want your children to receive their inheritances when they’re getting established in their lives or when they’re approaching retirement age?

If you’re considering a binding, joint estate plan, you should consider using a trust. The bypass trust is a powerful estate planning tool that lets you direct assets to your heirs while providing lifetime support for your spouse. You can also use trusts to allow your younger spouse to remain in the marital home for a period of years following your death, with the home then being inherited by your children from a prior marriage.

Self-proving wills

It’s unlikely that somebody is going to challenge the validity of your will. Most of the time, everybody agrees that the will submitted to the probate court is genuine. But if a disagreement does occur, tracking down witnesses to your will can be difficult. Your witnesses may have moved, and some may even be dead.

A self-proving will includes an affidavit, executed and signed by your witnesses in front of a notary public. When the affidavit is properly executed, your will may be submitted to probate without any statements from your witnesses.

Elements of a Will

To be effective, your will must describe who you are, what assets you have, who you want to receive your assets, and how your assets are to be divided. Beyond the basic elements, your will appoints a personal representative to administer your estate and can also appoint caregivers for your minor children. It can create or fund trusts to hold and manage your assets after your death. Your will can also describe your funeral and burial preferences.

Who are you?

The popular conception is that a will commences with the declaration, “I, John Smith, being of sound mind and body… .” However, it’s not necessary to describe your health. And if you’re not mentally competent, it doesn’t make any difference to say you are.

All you really need to do is identify yourself sufficiently so that people will know that it’s your will.

What are your assets?

Part of the estate planning process is figuring out what you own. Your possessions will typically include

Personal assets:
- Cash, savings, and checking accounts
- Investments
- Home furnishings
- Jewelry
- Art and antiques
- Collectibles
- Your wardrobe
Real estate, including your primary residence and any vacation property
Insurance policies and annuities
Retirement plans

If you’re a business owner or are a partner in a small business, your estate also includes your interest in the business.

Not all your assets will go through probate. Insurance policies and retirement plans probably have a designated beneficiary. Your home may automatically go to your spouse as the joint title holder. But you should still consider those assets when planning your estate, because they can affect how you distribute your other assets. For example, if one of your children is the beneficiary of a life insurance policy, you can leave a larger bequest to your other child to balance out the inheritances.

You should also take inventory of your debts, including mortgages and bank loans, credit cards, student loans, and car loans.

Your estate will pay off your debts before your heirs receive their inheritances. If some of your property has to be sold to pay your debts, a specific bequest of that property will fail, or your estate may not have enough money left over to fill all your bequests.

Who are your beneficiaries?

After you know what you own, you need to figure out who you want to give it to. Put together a list of your possible heirs. Be overinclusive. You don’t have to leave something to every person on your list.

Here are a few ideas to get you started:

Your family, including
- Spouse
- Children and stepchildren
- Grandchildren and great-grandchildren
- Parents
- Sisters and brothers
- Aunts, uncles, and cousins
- Nieces and nephews
Your friends
Educational institutions
Charities

You need to also consider the circumstances of your heirs. Young children may benefit from having their inheritances left to them in a trust, providing for their support and payment of educational expenses over a period of years. An heir who doesn’t manage money well may benefit from a spendthrift trust. An heir who receives public assistance due to a disability may benefit from a special needs trust. You can find more discussion on these special circumstances in Book 2, Chapters 2 and 3.

What are your bequests?

You know what you own. You know who your heirs are. You now need to figure out who gets what (and who gets left out).

The law limits your ability to disinherit your spouse and sometimes your minor children.

When you’re drafting a will in Louisiana, you operate subject to your state’s forced heirship laws. These laws compel you to leave minimum bequests to certain heirs, principally your spouse and children, and define very narrow grounds under which you may disinherit an heir or provide a lesser bequest than the law specifies. These laws make it very difficult for people to plan their estates without the assistance of a lawyer.

Avoiding failed bequests

Your bequests may fail in one of two ways:

Your heir may die before you or may decline an inheritance.
You may leave a bequest of property that is no longer part of your estate when you die.

The first problem is pretty easy to address. If you have a specific item of property that you want to remain in the family, designate an alternate beneficiary. For example, if you leave your grandmother’s engagement ring to your eldest daughter, name her younger sister as the alternate beneficiary.

Naming an alternate beneficiary is also important because your bequest to an heir who dies before you may pass to that heir’s descendants instead of staying in your estate. If you don’t designate an alternate beneficiary for Grandma’s engagement ring, it may end up going to your son-in-law.

If you leave a bequest of a specific asset that is no longer in the estate, your bequest failed. This problem can arise with anything that is sold, lost, spent, or destroyed, including cars, collections, investments, and cash. For example:

Your will bequeaths “My house at 1212 Cherry Tree Lane” to your son. You subsequently sell the house, move, and don’t update your will to leave your new home to your son. His gift fails. Your first house is no longer in your estate, and your new home doesn’t automatically get substituted for the old. Although a more generic description, such as simply saying “my home,” may prevent the failure of your bequest if you own a different home at the time of your death, it won’t help if you no longer own a home.
You have an investment account worth $500,000. You leave $100,000 to your brother, with the balance to be split between your children. Before you die, you suffer an illness that runs up large medical bills. After your medical bills and the other debts of your estate are paid, only $80,000 remains in the account. Part of your brother’s gift fails, because he receives only $80,000 of the $100,000 you intended him to receive. But although you intended them to each inherit $200,000, your children receive nothing from the account.

Sometimes a gift will fail by accident or oversight. Say that you have two children, Jack and Peter. Your will leaves bequests to “My children, Jack and Peter.” You later have a third child, Sue, but forget to update your will. Even though she’s one of your children, you’ve excluded her from that bequest. Note that this omission may not leave her empty-handed.

With a bit of extra thought, you can help make sure that your bequests succeed.

You can use generic descriptions, such as “my personal residence” or “my car” so that changes in your assets are less likely to cause a gift to fail.
You can gift in percentages (“20 percent of my stock account to my brother, and the rest divided equally among my children”) rather than in specific dollar figures.
You can give class gifts, “to my children” or “to my grandchildren,” rather than naming specific individuals.

Creating a moral obligation or a binding inheritance

Sometimes you have reasons you don’t want to leave property directly to the intended recipient. Here’s a common example: Perhaps you have a child who is disabled and receives public assistance. Instead of creating a special needs trust, you may choose to leave that child’s share of your estate to another sibling, trusting that your children will take care of each other.

Most of the time, things work out the way you want. Probably 95 percent of the time, the heir who holds an inheritance for the benefit of somebody else will do exactly what you wanted. Sometimes, though, perhaps out of personal financial hardship or out of greed, the person holding the money will spend it, and the person she was supposed to look after has no legal remedy.

Even when things work out, this arrangement can burden a family relationship. The child trusted with the money may come under constant demands for more money, perhaps amounts well in excess of what you left, from her sibling.

If you want to create a moral obligation on your heirs, you can take some comfort in the odds. But be sure that you also consider the burdens and risks you may create.

Reference to a tangible personal property memorandum

Some states allow you to make reference in your will to an external document that lists items of personal property and who inherits them. This memorandum allows you to leave your household furnishings and personal possessions to specific people, change the list to add new items, remove things you no longer possess, or change who gets what, without changing your will.

The formal requirements for the memorandum can be very different, depending on the laws of your state. Some states are content with a list you sign and date, while others require formal witnessing and execution. Not all states permit this type of memorandum.

If your state permits and you create a memorandum, make sure that you keep it in a secure place known to your personal representative. If it gets lost or misplaced, it can’t be followed.

What happens with the residue (if any) of the estate?

After all your bequests are made, odds are that something will be left over. Items of personal property that weren’t specifically described in your will, some of the money that was set aside to pay the expenses of your estate — your clothes, a bequest that failed — whatever it is, the leftover items are the residue of your estate.

A residuary clause describes how those leftovers are to be distributed to your heirs. For example, “The residue of my estate is to be divided equally between my children.”

If you don’t include a residuary clause, anything left in your estate will be distributed according to your state’s laws of intestate succession. Truly, including a residuary clause is so easy that you have no excuse not to have one.

Payment of debts by the estate

Your estate is obligated by law to pay your debts. Your personal representative provides notice to your creditors, consistent with the laws of your estate, those creditors submit claims for payment, and your estate pays those debts found to be valid.

Help your personal representative by leaving, along with your will, a list of your debts. That list will make notifying your creditors of your death and their obligation to submit claims to your estate so much easier for your personal representative.

Most wills include a clause directing your personal representative to pay your bills. Some are more demanding, suggesting that your personal representative should affirmatively seek out and pay your creditors.

A clause relating to your debts can’t reduce your estate’s obligations to pay its debts under state law. It can only enlarge the responsibilities of your personal administrator. Some consider this clause to be optional and suggest leaving it out of your will.

Describing your funeral and burial wishes

If you have specific wishes for your funeral and burial, you can describe them in your will. Topics you may want to address include

Whether you want to be cremated or buried or have other wishes for the disposition of your body
Where you want to be buried
What type of funeral and memorial service you desire and any specific people you want to have invited to your service
Any poems, scripture, songs, quotations, or readings you’d like shared at your service

Your estate plan should anticipate the payment of funeral expenses. Funeral costs, along with your other bills, are paid before any distributions are made to your heirs.

Designating a personal representative

Your personal representative, also called an executor, manages your estate in the probate court. This role is important and sometimes difficult, so you need to choose somebody who has the necessary interest and qualifications to administer your estate. You want somebody who is mature, financially responsible, and trustworthy.

You can describe in your will how your personal representative is to be compensated. Unless your personal representative is your primary heir, you should probably provide for payment.

You should also designate an alternate personal representative, in case your first choice is unable or unwilling to serve. If you don’t choose a personal representative or don’t have an available alternate when your first choice is unavailable, the probate court will appoint somebody to administer your estate.

Designating a guardian for any minor children

If you’re providing for your minor children, you should designate a person you want to care for your children if you die. You can separate physical care from finances, designating one person to take physical care of your children and another person to handle their money.

You’ll also want to designate successor caregivers, just in case your first choice is unable to fulfill their duties.

Your signature

After you finish drafting your will, you must sign and date it. Some states require that you sign your will in front of your witnesses. Others allow you to sign it at an earlier time, as long as you inform your witnesses that it’s your signature and acknowledge that the document is your last will and testament.

Writing and Signing a Will