Exactly What Is A Will?

An early ENGLISH LAW that provided that all individuals who owned land were permitted to leave or devise two-thirds of their property to anyone by written will and testament, effective upon their death

The Statute of Wills (32 Hen. 8, c. 1 - enacted in 1540) was an Act of the Parliament of England. It made it possible, for the first time in English history, for landholders to determine who would inherit their land upon their death by permitting bequest by will. Prior to the enactment of this statute, land could be passed by descent only if and when the landholder had competent living relatives who survived him, it was subject to the harsh rules of primogeniture. When a landholder died without any living relatives, his land would escheat to the Crown. The statute was something of a political compromise between Henry VIII and English landowners, who were growing increasingly frustrated with primogeniture and royal control of land.

The Statute of Wills created a number of requirements for the form of a will, many of which, as of 2010, survive in common law jurisdictions such as The United States, and, for the purposes of this statement, Michigan inclusively as well. Specifically, most jurisdictions still require that a will must be in writing, signed by the testator (the person making the will) and witnessed by at least two other persons. The testator (a woman was called "testatrix") needs to know the object of the bounty being given and whom it is being given to. The testator has to be of sound mind when he or she makes the will and not under duress, threat or coercion.

If a person fails to make a valid will and has no legal heirs at all, the money, property and other possessions will go to the State. If a person fails to make a will, or if there is a defect in the will which makes it legally not possible to follow the stated wishes so contained, the bounty will pass by "intestate succession," to legally entitled individuals predicated on which level is closest to the deceased. This will be explained later.

What exactly is a Will?

A will is a written document which tells how a person’s property should be disposed of after death. In today’s modern world, individual assets or properties are complex, insurance policies, profit sharing programs and pension plans are just a few examples of property an individual might own.

It is a legal declaration of a person’s intention concerning what shall be done following his death, as to the concerning what shall be done following his death, as to the disposition of his property and the administration of his estate. Three characteristics of Will set it apart from other forms of property transfer. For one thing, a Will is revocable during life - you can change your mind half-a-dozen or more times. Secondly, a Will is inoperative until death - that is, its provisions don’t take effect until that time. And last, it applies to the situation which exists at death - as to the extent of your property holdings and beneficiaries.

Who needs a Will?

Any state resident 18 years of age or older, and of sound mind, should have a Will. If you own a car, have interest in a home, keep cash in a savings or checking account, own furniture or have any possessions whatsoever, you need a Will. In fact, people with small estates often need a plan to provide for their loved ones after death even more then people with greater holdings. Generally, this is true because the financial needs of such families are greater.

Why you need a valid Will?

It is important that everyone has a valid Will, whether man or woman, married or unmarried, of significant wealth or modest means. Husbands and wives who hold property jointly should be aware that it is imperative that each should have a valid Will.

Advantages of a Will

Having a Will has the following advantages:

It permits you to determine to whom, how and when your property will be distributed. It permits you to decide who will be the guardian of your children. It permits you to decide who will manage your estate by appointing a personal representative. It can help you reduce estate administration costs. It can help you save costly estate and income taxes. It can help you to make charitable gifts to those organizations you would like to support.

The key drawback of the fixed statutory plan for distributing property under the laws of intestacy is that such a division makes no allowances for the differing circumstances and needs of the individual members of your family.

With a Will, you can provide for the special financial security of a dependant, disabled child. Trusts contained in the Will afford considerable flexibility; where minor children are involved, cumbersome and costly guardianship proceeds may be avoided.

As one commentator has stated: “The man with Will can determine not only who his beneficiaries will be, but how and when they will receive this inheritance.” The Will, in effect, can be “custom made” to fit the requirements of the individual beneficiaries.

With a Will, you can also remember those who the omits. In most states, if you die survived by a wife and children, your property will be divided among them; others, such as surviving or brothers and sisters receive nothing. By means of appropriate clauses in your Will, you can make provision for an aging parent, a favorite niece or nephew, or a loyal employee. Deserving charities need not be forgotten.

With a Will, you can take a full advantage of the substantial savings afforded by the marital deduction and additional Federal estate tax savings by creating trusts. You can also assure an equitable distribution of the death tax burden by setting forth specific directions for the payment of these obligations.

The administer (appointed where there is no Will) must be governed by the narrow confines of statutory provisions. With an executor in the picture, considerably more flexibility can be obtained by your granting elastic and discretionary powers - authority to deal with circumstances unique to your estate. On the other hand, the administrator cannot act with any similar degree of freedom; his authority is limited by law. He must secure the consent of the probate court for more often than the executor to whom specific powers have been given and who can, as a result, act more promptly, economically and efficiently.

What happens if you don’t have a Will?

If you don’t have a Will, each of the 50 states has written an all-purpose, blanket Will for you.

This type of Will, based on each state’s respective laws, is drawn up or the “average” person and is being quite rigid and inflexible. The state’s laws may, in fact, be quite different from your particular wishes.

If you die in testate, it simply means that you have left no valid Will governing the disposition of your assets after death. But this statement isn’t precisely correct because, if you didn't’t execute a Will, the state you’ve called home will “make the Will” that you neglected to make.

The following examples of the kinds of problems that can result from not having a Will.

A husband, who had always intended to have his Will drawn up, died without one. He wanted his wife to have the bulk of his estate so she could take care of herself and their two children. Unfortunately, the laws of that state permitted his wife to receive no more than one-third of his estate with the balance of his property going to their children.

Consider the case of a man who did not receive a Will, whose widow had to ask the court to appoint her as legal guardian for her own daughter. Every year, she had to file detailed reports and even get approval from the court for certain expenditures for her daughter.

There also have been cases of unknown undeserving relatives legally asking for, and receiving, part of a person’s estate.

The courts sometimes have determined that surviving children should live with their closest blood relative rather than with those whom the parents would have designated as guardians.

Not having a valid Will then, may cause many additional and burdensome problems that could have been avoided.

What is the law of intestacy?

If you die without leaving a Will, you die “intestate” Each state has a formula for distributing property when there is no Will. In Michigan, the law of Intestacy states that if you die without leaving a will, a probate court appoints an administrator for your estate. Your family may submit its personal choice for the administrator, but the final decision rests with the court.

How is property distributed under the law of intestacy?

This law sets down the guidelines for distributing property. For example, when the family of the deceased includes a spouse and more than one child, the spouse usually receives one-third of the property and two-thirds goes to the children. If there is a spouse and one child, the property is divided 50-50. This procedure can have its limitations in certain cases. For instance, a widow who has two married, adult children may need more than one-third of the estate to live in comfort. If a Will doesn't’t point this out then the establishment rules are still followed.

What happens if I rely on the law of Intestacy?

A court-appointed administrator, under the law of Intestacy, does not have the same legal powers as a personally names administrator. If you rely on the law of Intestacy it will no doubt take more time - and therefore cost more - to distribute your property.

Does joint ownership eliminate the need for a Will?

No.  Joint ownership or “joint tenancy” means two persons own property together; if one dies, the property normally goes to the other person. But suppose the deceased had wanted the property divided differently. If no Will was left, then his wishes may not be carried out.

What happens to your financial assets when you die?

If you leave a valid Will, they’re distributed according to your wishes. By leaving a Will, you are exercising your right to determine who should or should not receive your property. If you leave no Will, the court uses a formula set forth in the “Law of Intestacy.”

What is a Testamentary Trust in a Will?

Within a Will you can leave property in trust for a wide variety of purposes, such as: to provide a specific standard of living for your family, to provide a life income for your spouse, child, or other relative, to educate a minor child, to take care of unexpected future financial emergencies, to give a child his/her inheritance in installments, to provide for a favorite charity, these reasons among many more.

The establishment of a trust in a Will can also reduce and sometimes eliminate costly estate taxes.

The role of estate administration

The basic purposes of estate administration are to collect the decedent’s assets, pay all lawful claims and distribute the balance to the beneficiaries.  To illustrate, the representatives must assemble and examine decedent’s records to learn the nature and whereabouts of all assets and facts regarding liabilities; obtain inventories and value all real estate, household and personal effects and other assets for tax purposes; set up and maintain books and records to reflect all security and cash transactions; investigate all claims to determine their validity; arrange for necessary accounting; analyze and evaluate business interests or stocks of closely-held corporations; and file returns and pay federal and state death tax promptly to avoid penalties. The above is just a small sampling of an estate representative’s many jobs. Without a Will, these important responsibilities may well fall upon an individual ill-equipped to deal with them. But a key advantage of a Will is in appointing a qualified executor who can initiate smooth and efficient estate administration.

Choosing an Personal Representative

Another factor calling for revision in a Will is the situation where the executor names can no longer serve with the efficiency originally expected, either due to illness or disability, or for some other reason.  Or, perhaps, the named fiduciary has dies, calling for the appointment of another representative.

All too often, a good deal of care is given to all provisions of a Will except one of the most important - naming a Personal Representative. As we have seen, the duties of the executor are generally far more detailed and complicated then generally realized.  Inexperience in matters of estate settlement and distribution may lead to errors of judgment costly to your beneficiaries.

The importance of periodic review

Many individuals have taken that all - important first step - they have executed a Will. But some are under the mistaken impression that a Will is “forever” - that it can be “filed and forgotten.” However, this is far from the truth; changing circumstances necessitate a reevaluation of the Will’s provisions, and possible revision in line with your objectives.

As noted earlier, a Will is revocable during your life.  You can change your mind by executing a codicil or a new Will. Revision and updating may also be a good idea in a number of circumstances.  For example:

There may have been substantial changes in value of your assets.  There may have been deaths, births or marriages which affect the Will’s provisions.

The laws among the states vary.  If you become a resident of a State different from that in which the Will was drawn, a review is a good idea.

You may have embarked upon a new business venture. Here, again, a review is recommended.
           
Changes in federal or state tax law may materially affect the value of the Will’s dispositive provisions or the plan of distribution.

Information you will need:

To whom, how, and when your property should be distributed.

Selection of your Personal Representative -the person who will direct and manage the settlement of your estate.

Who you want to be the guardian of your children, subject of course to your spouse’s rights.

Whether you want an individual or bank or trust company to manage and invest your estate.
           
Whether you want a trust established for your spouse, children, or others.

What is a Trust?

At trust is a way of avoiding probate because what ever is inside the trust has already been disposed of.. there is new ownership other, usually, than the one who disposed of it. Normally, like a corporation, it is a taxable entity but not always. Generally there are two types: the Testamentary Trust which begins when the Testator dies, and the Intervivos Trust which can be made and activated anytime, and of this type there are generally two types.. the revocable and the nonrenewable, and they are distinctively different in terms of control and taxation. This last type generally is not spoken of in terms of the Last Will and Testament.

What is a "Living Will?"

A living will is a misnomer.. it is not a will at all. In fact, in the landscape of laws, Wills and "Living Wills" are on opposite ends. A "Living Will" is actually a fiduciary document, and as such it is subject to the law of agency. A Will becomes viable when a person dies, and a "Living Will" ends when a person dies, just as an agency relationship does. A "Living Will" is actually a "durable power of attorney." It is an extremely important document but must not be confused with a Will.

A Durable Power of Attorney should be written at the time of the drafting of the Will. It covers not only the normal power of attorney matters of who has the right to do my banking, pay my bills, etc., but also covers your wishes as to what should happen if my brain, not just my health in general, ceases to function with no chance of my recovering yet I am still kept alive. Here a Patient Advocate is appointed in advance by you which give him or her.. or a group of people.. the say as to what will be withheld so as to allow you to die in dignity according to the wishes that you specified while you were cognizant. This document needs more than two witnesses. It needs to be notorized.

If you would like to schedule an appointment for the purposes of writing a Will, or a "living will" (durable power of attorney), or having a testamentary trust included for the safety of your minor children, please give us a call. The initial consultation is always free of charge.         

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