What Does a Will Do?
A Will determines how your property will be distributed upon your death and makes a variety of appointments that control your estate and protect your family.
If you don't have a Will, state law determines who receives your property. So the primary reason to execute a Will is so that you, not the state, determines who gets your property and who has the power to wind up your affairs.
You may dispose of your property in any way you choose.
Your right to dispose of property as you choose, however, may be subject to some state laws which prevent you from disinheriting a spouse or children. New York and Connecticut allow a spouse to claim a certain interest in your estate regardless of what your will says.
In addition, your will does not govern the disposition of your property which has a named beneficiary or is jointly owned with another ("non-probate assets"). These include property titled in joint names with rights of survivorship, payable on death accounts, life insurance, retirement plans and accounts, and employee death benefits. These assets pass automatically at death to another person and your Will doesn't apply unless you named your estate as the beneficiary.
Your "probate estate" consists only of the assets subject to your Will. It is the assets over which the probate court has authority.
This is why reviewing beneficiary designations, in addition to preparing a Will, is a critical part of the estate planning process.
It is important to understand that property which is part of your probate estate does not determine if it is taxed for estate tax purposes.
Wills can be of can be used to achieve a wide range of family and tax objectives. If a Will provides for the outright distribution of assets, it is sometimes characterized as a Simple Will. If the Will creates one or more trusts upon your death, the Will is often called a Testamentary Trust Will.
Alternatively, the Will may leave assets to a Trust you already have, in which case the will is called a Pour Over Will. Existing Trusts are normally called Revocable Living Trusts. The use of Trusts help ensure property management, divorce and creditor protection, protection from irresponsibility, provisions for charities, or minimization of taxes.
Aside from giving away your property, a number of other objectives will be accomplished in your Will.
- You will designate a guardian for your minor child or children.
- You will appoint a Trustee to manage your children's property until they come of age.
- You will designate an Executor to control who disposes of your assets and eliminate the need for a bond.
- You will designate the custodian of assets of a child or grandchild under the Uniform Gift to Minors Act and avoid the expense of a court appointment.
What Does a Will Not Do?
A Will does not govern the transfer of non-probate property, which by operation of law (title) or contract (such as a beneficiary designation) passes directly to someone on your death. For example, real estate and other assets owned with rights of survivorship pass automatically to the surviving owner. Likewise, an IRA or insurance policy payable to a named beneficiary passes to that named beneficiary regardless of your Will.