HAVE YOU MADE A WILL?
What is a Will?
A will is a written instrument controlling the disposition of an individual’s property at death. The laws of each state establish the formal requirements for a will. In Massachusetts, as a general rule:
- The testator must be at least 18 years old.
- The testator must be of sound mind;
- The will must be written (there are specific, limited exceptions).
- The will must be witnessed by two competent persons in a special manner provided by law. A beneficiary of a will or spouse of a beneficiary should not be a witness, because the beneficiary may lose benefits under the will as a result.
- The technical formalities required for the execution of a will must be followed precisely.
When Does a Will Become Effective?
A will becomes effective on the testator’s death, but its validity must be proved in the probate court.
Are There Limitations on Dispositions by Will?
Certain property cannot generally be disposed of by will. For example, insurance proceeds payable to a named individual “outside” the will. Similarly, jointly held property normally passes to the surviving joint owner by law and does not become part of the estate affected by the will. The only person who can’t be totally excluded by a will is the testator’s surviving spouse. But a spouse who has been excluded by will must exercise an election to take the statutory share of property within a prescribed amount of time. A testator’s children do not have a statutory right to a share of the estate, but a testator who wants to exclude his/her children must express that intention clearly in the will.
Does a Will Create an Additional Expense for the Estate?
Generally, no. If an individual leaves property in their own name at the time of their death, the estate will require administration in the probate court. A will names the person to administer the estate (the executor) and tells the executor what to do. If there is no will, the probate court must determine the testator’s heirs and appoint an administrator to act in accordance with the statues. Often a will can reduce probate expenses.
How Often Should a Will be Reviewed?
A will is valid until it is changed or revoked, and it may be changed or revoked as often as you wish. Changes in the family, changes in amount and kind of property and changes in tax laws may require changes in the will. A will should be reviewed at least every five years, somewhat like having a periodic medical examination.
What is the Effect of Marriage or Divorce on a Will?
Marriage revokes a will in its entirety unless it is expressly contemplated in the will. Divorce or annulment revokes only the disposition of property to (or fiduciary appointment of) the former spouse, as though he or she had predeceased the testator, unless the will shall expressly provide otherwise.
What Happens to the Decedent’s Property When There is No Will?
When a personal dies intestate, his or her property is distributed to heirs at law according to a statutory formula. The laws are inflexible and make no exceptions to those in unusual need. The law provides that after payment of the expenses of administration, funeral, last illness, debts, taxes and any family allowances, the decedent’s property is divided as follows:
- If the deceased leaves issue, the surviving husband or wife takes one-half of the personal property and one-half of the real estate. The balance goes to the issue.
- If the deceased leaves issue but no spouse, all real and personal property goes to the issue.
- If the deceased leaves no issue, but there are kindred, the surviving husband or wife takes all of the first $200,000 and one-half of the remaining personal property and one-half of the remaining real estate. The balance goes to the kindred.
- If the deceased leaves no issue and no kindred, the surviving husband or wife takes all of the personal property and all of the real estate.
- If the deceased leaves no spouse, no issue and no kindred, all property passes to the state.
- The law makes many other provisions depending on the circumstances.
Is Joint Tenancy a Good Substitute for a Will?
Joint tenancy always involves a gamble as to who dies first. In some cases, and for certain kinds of property, joint ownership may be a useful legal device in addition to a will. Countless problems arise from the indiscriminate use of joint tenancy. While the will may be changed as often as the testator desires, a joint tenancy creates a legal title in the other joint owners which cannot be revoked without their consent (except in the case of bank accounts and certain other types of property).
Joint tenancies should be used with a great deal of care, since they may involve federal and state tax problems. Contrary to popular belief, the creation of a joint savings account or joint ownership of stocks, land or other property does not avoid the problems of state and federal estate taxes. It also does not allow for planning for contingencies such as the death of joint tenants in a common accident.
What About Life Insurance?
As was stated earlier, life insurance proceeds are paid in accordance with the owner’s contract with the company – his or her designation of the beneficiary. Life insurance can, however, be used to provide cash for the payment of debts, administration expenses and other obligations for which the estate is responsible. An individual should have the lawyer and insurance underwriter work together to provide a life insurance program which will complement the individual’s estate plan.
What are Estate Taxes?
Estate taxes are a form of death tax levied against the estate of a decedent by the federal and state governments. The tax is levied on any property in which the decedent had any incident of ownership at the time of death, including life insurance, jointly held property and annuities.
A will can provide for substantial estate tax savings by careful planning and the use of such devices as the marital deduction and trusts. A will can also direct how the estate shall pay the estate taxes. The shares of certain beneficiaries may pass “free” of taxes while others may pay their share or more. If there is no will, or no provision in a will, a statute determines the allocation of taxes among the beneficiaries.
When and How Should Gifts be Made to Charities?
Gifts may be made to charities during lifetime or by will, and there may be both income and estate tax deductions available as a result of such gifts. An individual may leave the income from property to one or more persons for life and the remainder of the property to charity. Certain prescribed regulations must be followed in order to achieve the desired tax deductions, and it is advisable to review these plans with your attorney.
How Does One Make a Will?
The drafting of a will is complex and involves the making of decisions requiring professional judgment which can be obtained only by years of training, experience and study. Only the practicing lawyer can avoid the innumerable pitfalls and advise the course best suited for your individual situation. The “printed form” will may not suit your situation and your needs; it could create more problems than it solves.
What Does a Will Cost?
A lawyer generally makes only a nominal charge, if any, for a first office visit. Only when the lawyers spends actual time in working on a matter is a fee charged. Charges are usually based on the time and work involved, the difficulty of the problem, the result and the lawyer’s experience and standing. The subject of fees should be discussed frankly with your lawyer, preferably at your first meeting.