So, you’ve decided it’s time to write your “last will and testament.” But where do you start? What questions do you need to ask, and what are the pitfalls to avoid? Consider the following four questions:
Do I need a lawyer to write my will?
While there are plenty of do-it-yourself options, they are not for the proverbial “faint of heart” or for those seeking to set up trusts, protect assets, or minimize taxes. The laws governing your estate after your death vary from state to state, so do seek local legal counsel to guide you through the process.
A good Trusts & Estates (T&E) attorney will be able to walk you through the entire planning process – from identifying heirs and selecting an executor or executors, to dispersing any assets, creating trusts, and so on. Your T&E attorney should be able to break down the complex legalese of a last will and testament into plain English and explain and help address any potential “what ifs” and disaster scenarios (potential disagreements among heirs that could result in litigation, etc.).
What’s your family structure? How do I determine who gets what in my estate?
Your testamentary plan (detailing where your stuff will go) and your fiduciary appointments (who does what job in the estate distribution process) depend greatly on the structure of your family. A married couple with minor children, a single man with no children, and an older couple with adult children will have vastly different needs.
One of the first questions I ask clients in a consultation is to describe their family structure. Why? Because your family structure and whether you are married, single, remarried, divorced, or in a long-term committed relationship can impact the way your will is drafted. It may not seem like it, but even the difference between marriage and long-term commitment has a significant impact on how your T&E lawyer will draft your documents.
Do you have minor or adult children? Any children from prior marriages? All of these variables must be considered in determining where and how your estate flows and who takes which roles in executing your plan.
Who and what matters to you for your estate plan?
Like water rolling downhill, money will always find a place to rest. Your will is a way for you to create an aqueduct to channel that water to your preferred destinations. You can even go as far as directing where specific droplets should go.
Do you have sentimental mementos in your life? Your will gives you the power to ensure the person that item means the most to receives it. You can also make determinations and prioritize how the bulk, or portions, of your assets should be distributed. With care, your estate planning advisor can craft a plan that ensures your loved ones are taken care of during their lifetimes and control the subsequent disposition after the primary beneficiary passes.
For example, correctly written, your will can stipulate the allocation of assets necessary to take care of your current spouse, but not necessarily the spouse of a subsequent marriage. Your will also grants you the opportunity to make sure your money is there to support your children. and protect those funds from potential misuse by an 18-year-old flush with cash for the first time. By sharing your family structure and concerns with your attorney, you can, for example, devise a trust that releases funds to your heirs on a schedule you decide that is controlled and overseen by someone you know shares your values.
No spouse or children? Your attorney will discuss who else you would like to inherit your estate. These can include siblings, friends, loved ones, and charities as primary beneficiaries of lump sums or objects, or as contingent beneficiaries of percentages of your total estate. In this, your will is an expression of your love, appreciation, and values.
Who do you trust to oversee the distribution of your assets and the execution of your will?
You will, in discussion with your T&E attorney, assign people to specific “fiduciary” duties as it pertains to the execution of your will and distribution of your assets. Every will requires an Executor to be named (click here to see how to select an Executor) to “execute” your wishes as outlined in your will.
If you are married, have children, or plan to give any money to minors, you’ll likely want to appoint at least one trustee as well. The trustee will manage and distribute any money bequeathed to a beneficiary in the form of a trust (that is to say, not given to the heir outright, but distributed under some predetermined, controlled schedule).
If you have a Marital Trust or a Credit Shelter Trust, you’ll want to pick someone you know as your trustee who will be sensitive to your spouse’s needs and share your values on what is and isn’t a judicious use of money.
For a Trust for Issue (your children, grandchildren, great-grandchildren, etc.), you’ll want to pick as trustee someone who understands what you value in rearing children. They should know whether you would be okay with your child spending money on a trip to Paris. Or investing in their college roommate’s new crypto-start-up. What about college? How many degrees are too many? You get the gist. So, ask yourself, “who in my life knows how I feel about this sort of thing, and who can I trust to dole, or not to dole, out funds for these expenses?”
And finally, one of the last standard appointments is the Guardian of your minor children. This person (or people) is often, but not always, the same person who is the Trustee for your children’s inheritance. But what if your sister is great with your kids and teenagers but terrible at managing money? Would she be the best guardian for your children? If your parents are great money managers but don’t have the energy to raise your child full-time, would they be better named as trustees?
Discuss who you want to name as guardian for your child with your attorney. You typically are looking for someone who will act as you do when you are no longer there. Do you want a person willing to answer your child’s questions about boys or dating? Set a curfew? Teach a child to shave? That is the person you likely will want as your children’s guardian. This may be different than the person you select as the trustee, who is the person who pays for a field trip, college, and maybe a new car.
Of course, your executor, the guardian, and your trustee can be the same person. Or you could assign three completely different people – one for each task to capitalize on the particular strengths each brings to their respective job. And then, you must think about specifying a second string of team players to serve as backup executors, guardians, and trustees. One of your team members may move, predecease you, no longer be interested in the position. So, talk with your attorney to determine who can serve as back-ups to your original team, and then as back-ups to your back-ups. It sounds grim, but you never know what might happen.
In the end, your last will and testament is an intensely personal document. It is a reflection of your values, an expression of appreciation of your loved ones, and an acknowledgment of the people you trust. If you have questions about how to craft a will that genuinely represents your desires, let’s talk. Call us at 212-867-9120 to schedule a consultation.