One of the most important decisions that an adult can make is to choose to have a will created for yourself. Although the document's drafting does not have to be complicated and the actual process itself is pretty straightforward, there is something about drafting a will that can be intimidating or scary for many people. The reality of the situation is that it doesn't have to be. Drafting a will is an extremely noble and responsible activity to engage in.
For starters, every adult, in my opinion, over the age of 18 needs to have a will. It doesn't matter if you have no property, a great deal of property, debts, or no debts. The fact is that having a will is responsible and will provide a great deal of clarity for your heirs and loved ones when it comes to being able to determine what your wishes are for your property at the time of your death. It can be intimidating to have a wheel drafted. It causes you to think about unpleasant subjects; yeah, it may bring you into a position where you have to make decisions about aspects of your life sooner than you would have liked.
However, what drafting a will does not do is increase the likelihood of your passing away. I can promise you that it may cause you to come face to face with your mortality; there is nothing about drafting a will that puts you any closer to the end of your life. This may sound silly to say, but it is the truth. However, having a will that directly benefits you when it comes time to utilize what you include means that your loved ones and family will have a much greater Peace of Mind. That will allow them to spend their time applying their attention to your passing rather than any issues regarding money or your wishes.
Property in trusts
Any property you place in a trust will pass automatically to the person named as a beneficiary in the trust document. As a result, you will not be able to pass this same property in your will. For example, you may have created a living trust or another type of trust where you have relatives or different organizations named as beneficiaries. The trustee of that trust would be able to disperse the property at the time of your passing. Therefore, it is unnecessary to include property included in that trust also in your will.
Right of survivorship property
This is relevant to the property you share with another person via a joint tenancy, tenancy by the entire team, or Community property with the right to survivorship. As we saw in the prior section regarding trusts, your share of any property held in partnership like this belongs to the surviving Co-owner once you pass away. Once you pass away, the property would automatically go to the other person.
Additional types of property that should not be included in your will
Reading this blog post may have checking or savings accounts set up through your bank where the money is payable on a death account. This means that the money in your accounts designated as such would go to a specific person at the time of her death. This beneficiary would need to prove to the bank that you have passed away, and any money in those accounts would automatically go to them. Keep in mind that if you want to change the person listed as the beneficiary on any account, you need to contact that bank directly.
Having a life insurance policy is pretty commonplace nowadays. It allows a beneficiary to receive some form of financial benefit if you pass away with an active policy in place. Many people use this as an inheritance measure if they have not yet reached a financial wellness level where they have available money to pass on to their loved ones. Sometimes even in a divorce or child custody case, a party obligated to pay child support is also obligated to take out a life insurance policy naming the other parent as the beneficiary.
Whatever your circumstances are, I would recommend not including anything about a life insurance policy in your will. The fact is the terms of the life insurance policy will spell out how to activate the payout on that policy once you pass away. Typically involves some combination of obtaining a death certificate and then contacting the life insurance company. On the whole, life insurance policies are typically paid out fairly quickly after someone passes away.
Whatever your circumstances are, you do not necessarily need to include money held in workplace retirement plans in your will. This is, however, a good reminder for you to name a beneficiary and secondary beneficiary on any 401K accounts, individual retirement accounts, or pension plans. These forms of the property will pass to the beneficiary regardless of your including them in your will. It could be argued that including them in your will may confuse or muddy the waters when you pass away. You could run the risk of including something contrary to the retirement savings plan in your will.
Like retirement plans would be brokerage accounts, stocks, or bonds wherein you have named a beneficiary. This property will automatically transfer to your beneficiary at the time of your passing. If you have not named a beneficiary on any of these accounts, you can contact your investment company or brokerage house to make sure their beneficiaries are listed for any investments that you have period oftentimes; this can be processed online these days.
How should you handle funeral instructions when it comes to your will?
In all likelihood, any funeral that you have set up by loved ones after you pass away will take place before your estate being probated or will be probated. If you have ever known someone close to you who has passed away, you will know one of the first things the loved ones will attend to is making sure that the funeral matters are taken care of. It happens with some frequency that the funeral takes place so quickly after a person passes away that relatives often find instructions about a funeral after it is already too late.
The most effective thing that you can do when planning ahead of time for your funeral is to talk with a loved one about what you want to see happen with the funeral if anything. Do not leave your wishes for the funeral included in a will. Many people choose to create a separate document that will include instructions specifically for their funeral. You can plan the funeral ahead of time and provide that information to the executor of your will. This is much more straightforward than putting specific language in a will regarding your funeral that may not even be read in time for the funeral to take place.
Are there benefits when it comes to state taxes in drafting your will?
State taxes still apply to your will. There is no way to avoid paying estate taxes if you qualify from an income perspective, simply by including certain provisions or saying certain things in your will. Rather, you should speak with an experienced estate planning attorney with the Law Office of Bryan Fagan to determine if a trust or other arrangement is more ideal for you and your family.
By creating trust, you can escape some of the harsher elements of the state taxes, thereby allowing more money to stay with your family rather than go to the government. I know that this is a major concern for many people who have spent years saving money and paying money on that money that had been saved. The government essentially double dips on taxes within a state tax, and as a result, you may be interested in taking advantage of whatever method you can to avoid that kind of fate.
He may be wondering why this is. After all, it would seem that money going from your account to a beneficiary would have to be taxed no matter what the scenario is. The reality is that property included in a trust does not pass directly to your beneficiary. Instead, the property would go to a trust account. Since your loved 1 does not have direct control over the trust, no taxes would be in curd as a result.
If you have a will, it still may need to be probated.
Another misunderstanding that people have is that you help your family avoid the need to go through probate proceedings by drafting a will. This is not true, however. Having a wheel in and of itself is not allow you to bypass probate in all situations. The unfortunate truth is that the probate process can take months or even longer. The case is that by having a will, you can speed up the probate process considerably. What are the reasons why this is is because the probate court does not have to divide the property up for you.
The executor would be able to follow through on the terms of the will and divide up your property according to your instruction. In Texas, an independent administration of the estate would allow your executor to execute on the terms of the will without day-to-day oversight from the court. This saves not only time but also money.
There are ways, however, to avoid going through probate for your estate. The most common would be to create a trust and named beneficiaries as you would have in your will. By not transferring property directly to that person, you avoid the need to probate the estate and will. Trust can often be complicated matters, so I recommend that you speak with one of our attorneys before engaging in the drafting process.
How are gifts handled at the time of your death? What happens many times when someone passes away is that day gift property or assets to people but do so with certain conditions in place. These are known as conditions precedent whereby the necessary condition must be in place before the gift being made. For example, if you want a loved one to get married, get divorced, or have children before a gift is made in your will, you should know ahead of time that this is not legal.
If your will goes to the probate process, then you should know in advance that there are many conditions on a gift that a court will not enforce. However, conditions on gifts that require a person to do something like graduate from college are allowable. You could also grant property to a person of your will so long as the property is utilized for a specific purpose. However, the more conditions you put on a gift, the more complicated things become. The more complicated things become, the more burdensome it is for the executor of your will. Unless you have spoken to the executor of your will before your passing, and hopefully you have, then you should not assume that the executor is going to have the wherewithal to follow through with your conditions exactly as you see fit.
Do not attempt to break the law through some provision in your will.
I do not assume that most of you, or even any of you, that are reading this blog post, would ever try to break the law by including some illegal transaction or instruction as a part of your will. However, I think it is more interesting than anything to note that some people attempt behavior like this, and I will warn against anyone trying to do so.
This most frequently happens when it comes to gifting purposes. Any section or provision in your will that relates to illegal circumstances would be removed, and possibly the entire document will be declared void on its face. To avoid problems like this after your passing, you should never put anything in your will that even has the shadow of a doubt of being illegal. I would recommend working with an experienced family law attorney before including anything in your world that you suspect may be illegal.
Create separate documents when it comes to caring for loved ones who have special needs
A special needs trust is the preferred way in Texas for you to account for the needs of a loved one in the future. For example, if you want to set up care for your loved one or reserve certain amounts of money for them in the future, you are better off creating a special needs trust than trying to put anything regarding that person into your will. Again, you can talk to an estate planning attorney to learn how to follow through with this step and ensure that your loved ones are taken care of.
How do you begin the process of drafting the will?
Now that we have gone over what you should not include in your will, we can discuss what to do if you are interested in creating a will for the first time or even updating a will. If you find yourself in either of these positions, I would recommend that you reach out to an inexperienced estate planning attorney.
As I mentioned in an earlier section of today's blog post, I believe every person over 18 needs to have a will. It doesn't matter if you have little to no property or if you have no children. Someone somewhere is going to have to look after your property at the time of your passing. This is true whether it is a loved one, spouse, or the state of Texas. Speaking of which, by drafting a will, you are virtually guaranteeing that your property will end up with a real-life person rather than the state government of Texas.
Even if you have no idea where to start when it comes to drifting away, you should still move forward with the process. It is not intimidating, and it certainly can serve a worthwhile purpose for your family moving forward. Interested in taking the next step? Well, look no further than this website.
Questions about the material contained in today's blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today's blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas probate law and how the estate planning process may impact your family.