November 28th, 2022 |

• Estate Planning

WILLS 101 : What You Should Know About Wills

Reading Time: 4 minutes

When most people think about estate planning, the first type of document that probably comes to mind is a will—and for good reason. Wills are generally the centerpiece of an estate plan, allowing people to direct how their property should be divided and who should get it after they die.

Anyone can create a will with a relatively inexpensive online estate planning service, if there are significant assets or a complicated plan for dividing your property, you can pay an attorney several thousand dollars to draft one. In either case, it’s money well spent.

A will is the most basic estate planning document there is—and for some people, it represents the only estate planning they want or need to do. But it’s important to understand what a will is and what it does (and doesn’t) cover.

In a will, you can specify:

• What property you wish to leave to family, friends and organizations.
• Who you wish to act as guardian and manage property for any dependent children.
• What person should act as a personal representative or executor to manage your estate at death, pay debts and taxes, and distribute remaining property as you specify.
• Whether you want to cancel any debts still owed to you at death.
• How outstanding debts and taxes should be paid.

However, a will alone may not be sufficient to meet everyone’s’ needs if they:

• Expect to owe estate taxes when either or both of them die—which is most likely if they own property worth $2 million or more.
• Want to have some control over what happens to their property after their deaths, such as specifying that a house goes first to their children, then to their grandchildren (after their children die).
• Have any child who has a special need or disability, and they want to provide management for property that goes to him or her.
• Have children from one or more prior marriages who are likely to conflict with a current spouse.
• Fear that someone may claim their wills are invalid because they were mentally incompetent or subject to fraud or duress when writing them.

For those with such concerns, they should consider setting up a trust instead of—or in addition to—a will. Trusts are explained in more detail below.

What to Consider When Composing a Will

A will is not a one-size-fits-all document, and when it comes to preparing one there are some very specific things to consider. Of primary concern are the following three provisions:

After completing the checklist above, here are the next items of importance when planning your will.

Name someone to take all remaining property.

If you have opted to make specific bequests of property, a will is also the place to name people or organizations to take whatever property is left over. This property is usually called a “residuary estate.”

Give directions on dividing personal assets.

If you want assets divided among children, charities, or other beneficiaries, the will should note precisely what property is included in that pool. It should also specify whether assets are to go directly to beneficiaries or whether they’re to be sold and the value divided among the beneficiaries, either equally or according to stated percentages.

Give directions for allocating business assets.

Business assets are often separate from personal assets—and most business owners have very specific ideas about what should be done with them after their deaths. If you don’t have a written plan covering the windup of your business, you should see an experienced estate planning attorney to ensure that your wishes are clearly indicated in your will.

Specify how debts, expenses and taxes should be paid.

The will should spell out your wishes regarding how to settle debts and final expenses, such as funeral and probate costs, as well as any estate and inheritance taxes. Usually a specific source, such as a bank account, will be tagged to cover these costs.

Cancel debts others owe.

A nice added touch is that people making wills can use the documents to relieve those who owed them money from the responsibility of paying that debt—along with any interest that accumulated on it—to them or their survivors.

Indicate special instructions for maintaining real estate.

If you name someone to keep your house, you should list any specific instructions for its care and upkeep.

Provide a caretaker for pets.

Since the law considers pets to be property, the best way to assure a good home for yours is to leave the animal to someone named in the will who has agreed to give it a good home. Many people also leave that person an amount of money to help cover the caretaking expenses.