What Not to Include in Your Will

If you are considering preparing a will, this is a great first step in planning for the future. After reflecting on the basics, such as whom you want to be in charge of administering your wishes, you may wonder if there’s anything you shouldn’t include in your will. The answer is yes. There are some things that you should avoid.

Personal Preferences or Desires

Sometimes it is best not to state personal or specific feelings in your will. To simplify the administration of your will, you should not make very specific requests or engage in discussions about your feelings.

For example, you may wish for a certain religious ceremony to be performed at your funeral or you want a celebration of life event. However, it is best not to address this in your will.

A will goes through a public and court-supervised probate process. This often occurs well after someone is laid to rest. An executor will not necessarily be able to implement these wishes after the fact.

A better option may be to provide your family with a letter of instruction containing these details. If you want your burial to be done in a certain way, you can prepurchase a burial plot and, in some areas, prepay for specific arrangements. Alternatively, you can create a fund for any event you would like, with a payable-on-death designation to someone you trust.

It is also probably best not to elaborate on personal feelings about others in your will, as this can set the tone for the administration of your estate. For example, your executor may feel some trepidation about being part of a situation where there appears to be hurt feelings or potential conflict from the outset.

Organ Donation

If you wish to be an organ donor, you should not use your will as a place to specify this wish. In most states, there are specific ways to document your desire, such as listing it on your driver’s license. By the time your will is reviewed, it will be too late to do anything about your organ donation wishes.

Health Care or End-of-Life Decisions

Your will is not the right place to document what you would like to happen if you have suffered a substantial and irreversible loss of mental capacity or have an incurable or irreversible condition. You should do this in a living will.

You should also have a separate health care proxy that designates an agent to be able to speak with your doctors and make health care decisions on your behalf should you temporarily become unable to do so.

Be Careful About Leaving Inheritance to a Person With Special Needs

If you wish to provide for a person who has special needs upon your death, it is not a good idea to leave them an outright bequest in your will.

This may disqualify them from critical health and other benefits they need to manage their day-to-day life. It can also put them in a situation where they are forced to place your generous gift in a special needs trust that goes to the government upon their death if not used up. Instead, consider creating a first-party supplemental or special needs trust now or through your will.

Non-Probate Property

Another consideration of what not to include in your will is “non-probate” property. This can encompass many things, but some of the most common examples are:

• Property held in a trust — The main point of placing property in a trust is often to avoid probate. If you have property in a trust, it doesn’t need to be in your will, as there is already a plan for handling it upon your death.

• Property that already has beneficiary designations — For example, including things like your 401(k), IRA, or life insurance in your will can make things unnecessarily complicated or slow things down when it comes to your beneficiaries getting the funds. The best thing to do is to confirm your beneficiary designations are up to date and in line with whom you want to receive the funds.

• Property that is jointly owned with right of survivorship — This property will pass naturally to the other person upon your death. An exception is where the other person is no longer living or has given up their rights to the property in a divorce or otherwise.

The above examples are not exhaustive. There may be more items pertaining to your situation that should not be in your will. Since every estate plan is unique, it is best to speak with your estate planning attorney.

No Will? You're Putting Your Kids at Risk

Many people delay the conversation or thoughts of having to prepare a will. Confronting the possibility of one’s death is not easy. However, as the recent death of Anne Heche shows us, not having a will can place a significant burden on your children and cause undesirable complications. Even if difficult, planning ahead may be a better solution than the alternative.

What Happened With Actress Anne Heche?

Anne Heche’s case is a good example of why a person may want to consider creating a will sooner rather than later. Heche was divorced with two children from different relationships when she passed away. Her eldest son is 20 years old, but her younger son is still a minor.

Although they are assumed to be her sole heirs, only her oldest son is of age to administer her estate. He has filed a petition for a guardian ad litem to be put in place to protect his younger brother’s interests. The guardian ad litem may be a financial burden to Heche’s estate, and the costs of securing this professional will potentially reduce the assets available to her sons.

Even though her eldest son is dealing with his mother’s estate, this is undoubtedly very difficult for a person to go through at such a young age. Heche’s eldest son likely will not be able to do this all on his own and will need the services of a probate attorney — likely further increasing the costs of administering her estate and depleting how much is left for her children.

It has also been reported that an inventory and appraisal of her estate is needed to determine its worth and what assets she had. This process requires further professional involvement and fees that her estate must pay. In addition, it is possible that the father of her youngest son may seek to intervene in the estate’s administration to ensure he is treated fairly. Litigation costs could rack up quickly if there is any disagreement related to this.

Preparing a will and other estate planning documents can make legal proceedings significantly less complex and expensive and keep your situation as private as possible. It can also make it easier for your loved ones to know exactly what you want to happen to your assets and possessions.

Who Inherits When You Die Without a Will?

Many people do not realize that if you pass away without a will, your local state laws on intestacy will determine who qualifies as your heirs and inherits your property.

For example, in many states, if a person passes away unmarried but with children, the children will inherit everything. But what if the person had a long-term partner or was engaged to be married? They may have wanted their significant other to inherit some of their assets, but a “default” state law may lead to a different result. Or, what if you have no living children, siblings, parents, or spouse? Your property may go to the government instead of friends, grandchildren, nieces, or nephews. Having a will prevents these scenarios from happening.

Choose a Guardian for Your Children

Another benefit parents should consider is their ability to choose a guardian for their children in advance.

This matters, for example, when the other parent is not living or cannot be located. If a person does not set forth their wishes ahead of time, multiple parties may step up after a person’s death and argue over who should care for any minor children.

A court may be tasked with making this decision, and it may not be what you would have wanted. This can be expensive, traumatic for all involved, and a long process. Courts will generally try to appoint the individual a person has selected if your wishes are in a will or other planning document.

The Bottom Line

The bottom line is that having estate planning documents in place makes your wishes more likely to be honored and less likely that a court will decide what happens. This is also true where you may be incapacitated and unable to voice your wishes. While Anne Heche’s situation is not unusual, it is avoidable.

For information on preparing a will or other estate planning documents, contact your attorney. 

Photo credit: Mingle Media TV

Issues When Gifting Unequal Shares to Children

As a strong recommendation that I consistently encourage clients to adopt, parents overwhelming choose to leave their children equal shares of their estate, but due to personal circumstances this is not always the case. If you plan to provide more (or less) for one child in your estate plan, understanding the consequences is key. 

It is natural for parents to want to treat their children equally in their estate plan. However, there are special circumstances in which a parent might choose to leave children unequal shares. For example, if one child is providing caregiving of an elderly parent in lieu of pursuing a career, a parent might understandably want to compensate that child for their lost income earning potential. Alternatively, if one child is overwhelmingly financially better off than another child, then the parent might want to provide more for a child who has a greater need for the funds. 

In a different context, the decision of how to allocate funds amongst a parent’s children may be due to one child having special needs or if there is a family business that one child has adopted as a career and wishes to succeed their parents after they are gone. It’s also possible that the parents have already provided more for one child during their lifetime, perhaps by advancing funds to pay for higher education or providing funds to assist with the purchase of a house. 

Whatever the reason for leaving your children unequal shares, the important thing is to discuss your reasoning with the children. Sit down with them and explain your decision-making process. If you feel like the conversation could be difficult and contentious, you could hire a mediator to help facilitate the discussion. These circumstances can frequently result in misunderstanding and feelings of favoritism or jealously by children who have been provided less. The classic example is the caretaking child who stays with mom or dad and provides full time care as parents age, and non-caretaking children assume theft or self-dealing is occurring due to the regular interaction with an aging parent. And even more unfortunately, these accusations, true or not, can frequently cause lifelong estrangement of the affected children.

In an ideal situation, your children may be understanding of your decision, but if you are concerned about certain children disagreeing and/or potentially suing to challenge your estate plan after you die, you may want to take additional steps: 

• Draft your will and estate plan with the assistance of an attorney and make sure it is properly executed. Find an attorney near you. To avoid accusations of undue influence, do not involve any of your children in the process.

• Explain in detail your reasoning in your estate planning document and make it clear that it is your decision and not the influence of the child who is receiving more.

• Include a no-contest clause (also called an "in terrorem clause") in your will. A no-contest clause provides that if an heir challenges the will and loses, then he or she will get nothing. You must leave the heir enough so that a challenge is not worth the risk of losing the inheritance.

Learn more about how to prevent a will contest.

Love in the Time of COVID-19

One of the world’s greatest novelists, Gabriel García Márquez, wrote the famous novel “Love in the Time of Cholera” in 1985. The theme of the book, while not expressly addressing a pandemic like COVID-19, compared the similarity between lovesickness and the cholera pandemic disease that was occurring in the years between 1880 and 1930. While it was in essence a novel about love and loss, written in prose reflecting Marquez’ latin romance sensibilities, it also addressed its character’s contemplation of their own death and reflection on their history and legacy.

It is a timely reminder then, as we all experience the isolation of the current pandemic, and the regular news regarding the pandemics breadth and depth, to begin considering how we can ensure the safety and security of our family, friends and loved ones — and to take care of our affairs, including our relationships, our finances, legal needs, or otherwise.

After personally experiencing the loss of a relative recently who did not have an estate plan, the necessity of planning has come into clear relief - namely, the enormous task of dealing with his possessions, his legal and financial affairs, and comforting and informing his family.

Accordingly, in order to provide some detail of what a proper comprehensive estate plan consists of, below I will illustrate ways in which certain documents can considerably ease the stress that will inevitably fall on your living family members upon your death.

Revocable Living Trust

Unlike a “Last Will and Testament”, which only addresses property that is owned in a persons individual name (and not property owned in joint accounts, joint tenancy (including joint tenancy or community property with right of survivorship), or beneficiary designated property(i.e. Life Insurance, 401k, IRA, etc.)), a Revocable Trust is a new vehicle that becomes the legal owner of an individual or couple’s assets.

By creating a Revocable Trust, a “Trustor” (the person creating the trust) transfers or beneficiary designates all of their assets to a “Trustee” (typically in a Revocable Trust the initial Trustee is also the Trustor). The Trustee holds the assets for the benefit of the Trustor(s) during their life, and then upon the Trustor(s) death, depending on the trust terms, the Trustee distributes or hold the assets for the benefit of the Trustor(s) chosen beneficiaries.

Unlike an irrevocable trust, a revocable trust can be changed and amended at any time (unless the Trustor is incapacitated due to dementia or another mental or physical ailment that makes them legally unable to deal with their financial affairs). Also, unlike an irrevocable trust, a revocable trust itself provides no specific tax or creditor protection features; however, if properly created and funded, it can avoid the need for an expensive and time consuming probate proceeding with the courts.

This “probate avoidance” feature is why a revocable trust has become the new centerpiece of most individuals estate plans in place of a traditional Last Will and Testament (because of the limitations of a Last Will and Testament discussed below).

Last Will & Testament

While most people generally understand the necessity of having a “Will”, most do not understand the a Will’s limitations, and/or steps that will be required to ensure that the wishes of a “Testator” (the creator of a will) are followed.

As discussed above, a Last Will & Testament only deals with assets that are owned in a person’s individual name (i.e. a bank account owned only by John Doe) - it does not deal with jointly owned property, or property that has a beneficiary designation. Further, even if a deceased person has a Last Will and Testament, a probate proceeding in the probate court (and the attendant arcane procedures, significant expense (which is typically greater than the cost of a well created estate plan with a revocable trust), and time consuming efforts) to transfer the deceased person’s assets to their chosen beneficiaries.

However, when a person creates a Revocable Living Trust, a Last Will and Testament is also created, with the distinction (from a plan that contains only a Last Will and Testament) that any property that was not legally transferred and funded to a Revocable Living Trust should be transferred to the Trustee to distribute pursuant to the terms of the trust. If assets are not funded to the trust during the deceased person’s life, a probate proceeding will be required to ensure that your assets will be distributed pursuant to the terms of your trust.

It should also be noted that a Will is typically where families with minor children make choices regarding who will be the Guardians and caretakers of their minor children if both parents are deceased.

Note: this document is different than a “Living Will”, which is discussed further below.

Durable Power of Attorney

A Durable Power of Attorney is a legal document that allows an “agent” to deal with your financial affairs while you are unable to do so, specifically when you are incapacitated or unable to communicate your wishes. With a Durable Power of Attorney your agent can continue to pay your bills, deal with investments and the like to ensure that your financial affairs are taken care of while you are unable to do so.

A Durable Power of Attorney is “durable” because it continues through any loss of capacity (whether a physical injury or disability or a mental disease, such as dementia).

One distinction that is poorly understood is that a Durable Power of Attorney ceases at the moment of the “principal’s death. Thus, while an agent may have had power of attorney during a person’s life, this power is extinguished at the moment of the principal’s death. After a death, an executor (known in Arizona as a “Personal Representative”) or Trustee will step into the shoes of the deceased person to deal with their financial affairs.

Another issue to be aware of is that many financial institutions are skeptical of Durable Powers of Attorney and may require further bank specific documentation before they will honor a Durable Power of Attorney.

Advanced Health Care Directive

While most Arizona attorney’s choose to create separate “Health Care Powers of Attorneys” and “Living Wills”, we prefer a form called an “Advanced Health Care Directive” that deals with all issues related to a person’s health care situation — from being alive and healthy, through sickness and final illness, along with wishes regarding the disposition of deceased person’s remains.

Like a Durable Power of Attorney, an Advanced Directive allows an agent to make both physical and mental health care decisions on your behalf when you are unable to do so yourself. An advanced directive also addresses your wishes regarding how you wish to be treated when you have a terminal or irreversible disease (typically known as a “Living Will”)

While this is necessarily the “scariest” document in an estate plan since it requires you to contemplate your own demise, it is a fundamental document in a well rounded estate plan because it allows a person to make their express wishes known to their family or other decision makers.

In a Nutshell

One of the most common refrains that estate planners hear from the public and our clients is that they do not want to discuss planning because it requires the contemplation of their own death - a “morbid subject”.

The bottom line is that while thinking about death is certainly a grim topic, the truth is that we all will eventually die, and engaging in estate planning allows you to get your affairs in order and spare your family the added grief of determining what you may have wanted rather than empowering them to follow your guidance about what you actually want. The reality is that without an estate plan, people knowingly or unknowingly place the significant burden of dealing with a person’s affairs squarely on their relatives or loved ones, which compounds the difficulty and grief surrounding a person’s death.

In other words, estate planning is a gift of LOVE to your family — not a boring, unnecessary or morbid exercise.

These thoughts are particularly true during this period we are currently experiencing with COVID-19 which spares no age group, gender, ethnicity, class of wealth, or otherwise.

Like the theme of the novel, this period intrinsically makes us take account of our life, and our preparedness for the unknown.