Making a will is an important and responsible step your clients should take to secure their loved one’s financial future. It’s likely that most of your clients are clear on what they want to put in their will, but some may not know there are certain things they shouldn’t include, either because it’s illegal or will only complicate other people’s lives. Wills should be kept as simple as possible so as not to slow down the administration process when the time comes.
With this in mind, let’s explore the purpose and importance of wills and a few things to advise your clients to avoid when crafting them.
Making a will is important for ensuring your clients protect the loved ones they will one day leave behind. If your clients don’t make a will, they will die “intestate”, and the probate court will follow state laws to distribute their money, personal property, and real estate.
Wills also help speed up the probate process. If your clients leave a valid will, their loved ones, lawyers, and the probate court aren’t forced to decide how to divide their property on their behalf. The court will follow your client’s wishes because they’ve already left detailed instructions on how their assets should be distributed.
So, what should be included in a will? The answer to this question may vary but, ultimately, the intention of the document is to allow your clients to precisely outline who they want to manage their estate, inherit their property, and care for any minor children.
Next, let’s consider items that do not belong in a will.
If your client has life insurance or annuity policies, a pension plan, an individual retirement account (IRA), or a 401(k) plan, they would have been required to name a beneficiary at the time of taking out these plans or policies. To change a beneficiary, your client would need to follow the process set out by the account administrator.
Alternative Solution: Because your client’s beneficiary designations for the types of assets discussed above override any provisions they make in their will, it’s vital they keep their designations up to date. Remind your clients to check and update their beneficiaries upon significant life events such as getting married or divorced or having children. If a beneficiary passes away, they should name an alternate one as soon as possible.
All property included in a will goes through probate, but anything included in a living trust does not. Assets in a living trust are managed by a trustee and go to the beneficiaries of the trust when someone dies. Therefore, your clients should not leave property to someone in their will when that property is already in a living trust.
Alternative Solution: If your client wants to change such an arrangement, they must complete the relevant trust forms and documents.
Attaching conditions to gifts left in a will isn’t legal and would, in any case, be difficult if not impossible to enforce. Any conditions relating to marriage, divorce, or the change of a beneficiary’s religion cannot be provisions in a legal will.
Alternative Solution: If your client has serious misgivings about leaving someone money or property in their will due to their inability to manage it responsibly, they might consider establishing a trust.
Assets that are jointly owned, such as joint bank accounts and jointly owned real estate, come with rights of survivorship. So, if one of the joint owners dies, the full ownership of the property immediately transfers to the other owner or owners.
Alternative Solution: In this case, there is no viable alternative solution; there is no point in your clients including these assets in their will since they have automatic mechanisms for distribution.
While it’s understandable a client may want to make arrangements for the care of someone with special needs (such as a child, sibling, or parent with a mental or physical disability), their will is not the place to do it.
Alternative Solution: Talk to your client about establishing a special needs trust, which is designed to hold funds to cover a beneficiary’s care without impacting their eligibility for other benefits like disability or social security payments.
Make your clients aware that they cannot list any belongings in their wills that are leased, financed, or currently under a credit agreement, for example, a vehicle leased on PCP or Hire Purchase. Such items are not legally theirs to gift as they belong to the leasing or financing organization until all agreed-upon payments have been met.
Alternative Solution: Ensure your clients understand these items cannot be legally passed on. Encourage them to discuss their wishes for these items with their family or leave instructions for their executor.
Attempting to transfer business interests through a will can get complicated, especially given that business ownership and control are often bound by specific legal agreements. As such, a will isn’t the appropriate place for such instructions.
Alternative Solution: Ideally, your clients should create a separate business succession plan that outlines who will assume ownership of their business or shares.
Settling deceased estates and probate proceedings usually don’t happen until after someone’s funeral. This means that family members may not be aware of any funeral wishes your client stated in their will until after the funeral.
Alternative Solution: Instead of stipulating their funeral wishes in their will, suggest that your clients speak to their loved ones about what they want, document these instructions, and provide a copy to the executor of their estate.
Pets cannot legally inherit assets or property, but your client can make provisions for the care of their pets in their will.
Alternative Solution: Your client can name a trusted individual as the pet’s caretaker and provide funds to cover all costs of care. Your client might also consider making a donation to a relevant animal charity.
In today’s digital world, it’s vital to ensure your clients consider what will happen to their online accounts and other digital assets after they pass. However, their will is not the ideal place to make arrangements for these assets.
Alternative solution: Your clients should create a separate document or use an online service to store details and instructions about their digital assets. This should include information such as usernames and passwords and other important data their loved ones may need to close out their digital presence (such as social media accounts) and retrieve valuable information (such as digital photographs).
Your clients may be tempted to be very specific in their will about who gets what. For example, a client may think it’s a good idea to say he wants to leave his home at 123 Green Street to his daughter. But imagine if he’d already sold that property and bought another by the time he passed away. Or if he’d had another two children by the time he passed.
Alternative Solution: To sidestep these issues and potential disputes between siblings down the line, encourage your clients to keep the wording in their wills more flexible. So, in the above example, your client could say: “I want my real estate property to be shared equally among my children who are still alive when I die."
Many people have difficult family relationships, so it might be tempting for them to use their will to express some of their frustrations or disappointments or somehow “get the last word” in a turbulent relationship. However, including such remarks in the will can lead to confusion and difficulties in the estate administration process.
Alternative Solution: Emphasize to your clients the wisdom of exercising restraint. Remind them that leaving disparaging remarks in their will could cause emotional distress or ill will among family members and also potentially lead to legal challenges.
A will is an important document that should reflect your client’s wishes for the distribution of their property after they pass. However, it’s vital to ensure clients understand that not everything should go into their will. By helping them avoid these 12 items, you can help them create a clearer and more effective will that accurately reflects their wishes.
A clear will lays the foundation for efficient estate administration further down the line—which is where Estateably comes in. The Estateably platform offers a one-stop software solution that powers up this next stage of the process. Through document automation, report generation, and robust accounting tools, we help legal professionals streamline estate administration and create more ease within the succession process. Schedule a demo to find out more.
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