What a will…won’t.

This article is about the basic misunderstanding most people have about wills. Here is how my average meeting starts when people schedule an appointment to talk about a will:

Me: I understand that you would like to talk about your estate planning.

Client: Yes, I need a will.

Me: I can definitely help you with that. Can you tell me what you want the will to do for you?

Client: Well, when I die I want to divide my estate among my children and I don’t want a probate. So I want a will to say where things should go.

Me: Ahhh, I understand.

Now it is time for me to become the Legal Mythbuster.

Me (again): We need to talk about what a will WON’T do. A will WON’T avoid probate.

Client: WHAT??????

Surprising as it is, this is the truth of the matter. A will is a document that contains a number of directions for how things are to unfold with your estate after you die. It includes your choice of person who will have legal authority to manage the affairs of your estate (“executor” or “personal representative.”) It includes any special provisions you have for certain types of beneficiaries, such as children. And ultimately, it says who gets what. However, none of those instructions are legally effective until the will is admitted for probate in a court of law. And the only way to admit the will in court is to open a probate case. That’s just the way it works.

Another related issue that people don’t understand is that the will only controls property that has to go through probate. Many things don’t go through probate. Let’s say that a person wants their assets divided between their four children equally. But during the course of their life, they added one child as a joint account holder on a checking account and named another child as a beneficiary of a life insurance policy. They also have an IRA that names all four children. None of these assets actually goes through probate at the death of the person, so the will is meaningless with respect to those assets. Regardless of what the will says, the joint account will go to the child who is the remaining joint account holder. The life insurance will go to the one child who is named. And the IRA will be divided between all four children without a probate.

I think it is often a good thing when a client has assets that are all set up to pass to named beneficiaries without probate. That saves a lot of money. This can be done with beneficiary designations, joint accounts, or a trust arrangement.  The best plan is based on a person’s particular circumstances so it is something to discuss with an attorney. The key is to make sure that the non-probate plan is consistent with the way the client wants things divided at death.

In some cases, it is important that assets DO go through probate. When one spouse is on Medicaid, it is important for the other spouse to have an estate plan that involves a “testamentary” trust which can only be set up through probate.

Even with a good non-probate plan, it still makes sense to have a will. For example, we may assist a client in putting together a comprehensive “living trust” arrangement, which involves making sure all of the client’s assets are properly connected to the trust so that they will pass without probate when the client dies. But we still do a will.  Why? Because even the best planning cannot anticipate everything.  What if the reason the client dies is due to a terrible car accident that was not the person’s fault? Then there may be a legal cause of action against the individual who caused the accident. But since the client is deceased, we need to open a probate so there is a person with legal authority to pursue the claim, and since the proceeds of the claim were not in the client’s estate when he or she died, we need the will to transfer them in the manner that the client would have wanted.  So the will is necessary even though all other assets were set up to pass without probate.

This does not mean a will is not a good estate planning tool. It is good as long as you understand what it will and won’t do. If you want more information about that, and about the other options that exist, ask a good attorney.