WHAT IS THE IMPORTANCE OF A WILL?
THINGS WHICH CAN MAKE A WILL LESS IMPORTANT
Will Substitutes other than Trusts:
Many people believe that upon their death their property will be distributed according to their will. This belief is often completely or partly wrong.
Much property is held in will substitute forms. For example, if husband and wife own real estate, such as their home, in joint tenancy, then upon the death of one spouse, the second spouse automatically becomes owner of the real estate. In fact, any time people hold real estate as joint tenants, regardless of whether they are related, if one joint tenant dies, the surviving joint tenant(s) automatically get the interest of the dead joint tenant. (Some paperwork, such as an Affidavit of Death of Joint Tenant and Death Certificate, may need to be filed to clean up the title.) Bank or stock brokerage accounts may be held in joint tenancy with the result that upon the death of one joint tenant, the surviving joint tenant automatically gets everything in the account. Typically IRAs (Individual Retirement Accounts) are set up with provisions that upon the death of the account holder, the proceeds of the account will automatically go to one or more survivors. These are sometimes called "Payable on Death" accounts.
If in fact the major assets of a person are held in will substitute forms, that person's will might actually be ignored when the person dies. Personal property such as jewelry, art, furniture, etc., might be distributed among family members without any one bothering to hire a lawyer to take the will into court, especially if the family members are in agreement as to how the property should be divided. (Or the family members might use the will as a guide for division of the property without taking the will into court.)
Advantages and Disadvantages of Will Substitutes Other than Trusts:
For married couples without a lot of money the will substitute of joint tenancy usually works when the first of the couple dies. However, the will substitute of joint tenancy is less desireable for inheritance between generations. For example, if a widow holds property in joint tenancy with her son and her son become liable for some debt, the creditor may be able to take away all of the joint tenancy property to satisfy the debt. For this reason most parents don't want to share their property with their adult children as joint tenants. However, "Payable on Death" accounts can work well to transfer the assets in an account to someone else upon the death of the primary account holder.
Statutory Restrictions on Will Directives:
There are numerous laws in each state which restrict the will maker's options. For example, a surviving spouse cannot in most states be completely cut out and is entitled to a statutory share of the estate if less than what the will says. An adult child may be cut out, but only if the will maker specifically mentions that that child is being cut out. Otherwise, a court will presume that the child was unintentionally omitted. In community property states such as Nevada there are rules defining community property which gaurantee the surviving spouse additional rights.For example, what each spouse earns by working during the marriage is community property even if each spouse keeps their earnings in a separate account.
Will Contests:
A disappointed family member may contest that a will was written and signed under undue influence.
REASONS TO HAVE A WILL:
In addition to controlling the distribution of property upon death, subject to the limitations above, there are these additional reasons for having a will:
Expression of Wishes for Child Care:
If parents die leaving minor children and there is a conflict among relatives or friends as to which should have care of the child(ren), the court should decide the matter in "the best interests of the child(ren)." However, the court may give consideration to the wishes of the dead parents expressed in their will.
Trust Provisions in a Will:
A will may contain trust provisions. For example, parents who have minor children may provide a trustee to look after their childrens' money until the children reach a certain age. Although children legally become adults at age 18 (in terms of owning property and making contracts), I suggest that parents not let their children have all of their inheritance at age 18.
Name your Executor:
The executor of a will is given the responsibility and authority to gather up and distribute the assets. In many cases the executor will sell assets and distribute the cash proceeds. While the executor works with an attorney and submits various accountings to the probate court for approval, the executor actually has the real world power to steal assets. Of course, the executor will undoubtedly get caught, but that won't help if the stolen assets have been spent. In addition, the executor needs good business judgment and needs to be on the scene of the assets in many cases to do the job properly. With a will you can name an executor you trust to use good business judgment, to be honest, and to minimize conflict among heirs.
WHAT HAPPENS IF I DIE WITHOUT A WILL,
OR A TRUST, OR A WILL SUBSTITUTE?
If you have property with a title such as real estate or financial accounts and there is no will or trust or will substitute, there will be a proceeding in the probate court to distribute your property. This proceeding will have a court appointed executor (administrator) who could be either a family member or a stranger appointed by the court.
The property will be distributed according to state statutes called the laws of intestate (no will) succession. The laws are the state legislature's best guess as to how most people would want their property distributed.