Wills: Points to Keep in Mind

1. Wills: Points to Keep in Mind • If a party dies without a Will, that person dies intestate. A party who has a Will dies testate. • States have default (intestacy) rules for estates of people to die with no Will. • Parties to a Will: • Testator: Person who executes the Will • Executor: Person who is appointed to administer the state after the testator dies • Beneficiary: Any person who is to have any benefit from an estate under a Will Legal Document Preparation Class 7

2. Requirements of A Valid Will • Writing • In all but a few exceptions in a few states, Wills cannot be oral • Legal Capacity • The testator must be of sound enough mind to understand that nature of the Will and his or her assets • Signature before witnesses • Ceremony • The testator must acknowledge to the witnesses that this is his or her Will • Self Proving Affidavit not required but very helpful) Legal Document Preparation Class 7

3. Storage of Wills • Most often, the lawyer keeps the original and provides the clients with copies of the Will. • The client should be encouraged to place the will in an area (e.g. a dresser drawer) that a relative can access in case the client dies or becomes incompetent. • The relative should be told where to look if something happens to the testator • Sometimes, a relative (especially the designated Executor) is given a copy • Usually in a sealed envelope to be opened after the testator’s death Legal Document Preparation Class 7

4. Distinguish Wills from Related Documents • A Will is the only mechanism by which a gift can be effective after the death of the donor. • Other related documents are effective only as long as the client is alive. These include: • Power of Attorney. This gives another person the authority to act on behalf of the principal regarding financial matters • Healthcare Proxy. This gives another person the authority to act on behalf of the principal regarding healthcare matters • Living Will. This is a directive which discussed what Medications or life support treatments the principal wants or does not want Legal Document Preparation Class 7

5. Clauses in a Standard Will 1 • Introduction and Revocation • This clause states the name and address of the testator and that all prior Wills are revoked (a Will is inherently revocable at any time and for any reason). • Payments of Debts and Expenses • Since debts have to be paid anyway, many attorneys do not like this clause as it might serve to make enforceable debts that would otherwise be unenforceable • On the other hand, if the testator wants unenforceable charitable pledges and the like to be paid, this clause could accomplish that objective/ • Payment and apportionment of estate taxes Legal Document Preparation Class 7

6. Clauses in a Standard Will 2 • Specific Gifts • Keep in mind that if the item is no longer in the estate when the person dies, it will adeem • General gifts • It’s important to draft contingencies in case the beneficiary is not alive • There are default lapse and anti-lapse rules that deal with those contingencies, but they are confusing and may not always represent the will of the testator. • Residuary Clause • This can give all of the estate to one person or divide it in whatever shares the testator wants. • Again: Include contingencies! Legal Document Preparation Class 7

7. Incorporation By Reference • It’s important to keep in mind that if a Will references an outside document, the outside document usually does NOT become a binding part of the Will • Because it was not executed with the formalities of a Will • So, if a client wants to reference a personal note or list or whatever, either: • Include the whole note or list in the will; or • Reference the note or list but realize that it will be a suggestion only and not binding Legal Document Preparation Class 7

8. Clauses in a Standard Will 3 • Appointment of Executor with backups • You can appoint more than one person • Appointment of Trustee of any testamentary trusts • Could be a trust company or bank’s trust department • Testimonium clause • A declaration that the testator knows this is his/her Will, etc. • A description of the powers of the fiduciaries • Guardianship appointment, if the testator has minor children • Signatures of Testator and Witnesses Legal Document Preparation Class 7

9. Other Points Regarding a Will • A Will should not be altered in any way. If, by mistake, an original Will is tampered with, an affidavit should be prepared and executed explaining what happened and why • Without this, there may be trouble admitting the Will to probate after the person dies • A Will can be revoked by destruction, but this is a BAD idea, since people might not know it was destroyed and a photocopy might be admitted to probate. Instead it should be revoked by subsequent Will • A “second Will” or any Will that is in addition to a previous will that is not revoked is valid (along with the first one) and is called a codicil. Legal Document Preparation Class 7

10. Key Testamentary Trusts- the Marital Trust • To allow assets given to a trust to qualify for the estate tax marital deduction, the trust must have certain features: • The surviving spouse must be entitle to the income • No other person may be a beneficiary during the spouse’s lifetime • Decisions for the client: • Should the surviving spouse be allowed to withdraw more than just the income? If so, how much? • Remember that whatever s/he can withdraw will be vulnerable to creditors, etc. Legal Document Preparation Class 7

11. Key Testamentary Trusts- the Credit Shelter Trust • This is not part of the surviving spouse’s estate, although the spouse can have some rights to it, including: • The right to income from the trust • The right to withdraw up to 5% of the principal per year or $5,000, whichever is more • The right to additional funds, if the trustee agrees to give them to the surviving spouse • It’s best to NOT make the surviving spouse the trustee of this trust unless you make sure that s/he needs to consent of a third person before withdrawing more than the “5 or 5” amount each year. Legal Document Preparation Class 7