Page 5 - Estate Planning 101 - 201312

Q&A PREPARING A WILL

What is a Last Will and Testament? A Last Will and Testament “Will” is a document that describes how the testator (the
individual making the Will) wants assets distributed after their death. By making a Will,
the testator can decide who will receive their assets, how much they will receive, and
when they receive it. A Will allows the testator to choose their personal representative/
executor and appoint a guardian for any minor children. A Will has no effect during
the testator's lifetime. Only upon death does a Will become effective. Additionally, Wills
do NOT transfer property upon death. Any real property where the owner or owners
have passed away must go through probate to transfer the title to the named personal
representative/executor.
Does a Will avoid Probate? It depends on the asset! If it is real property, the answer is NO. When a couple owns
property (either outright or mortgaged) as Joint Tenants and one of the spouses passes
away, then the surviving spouse will have complete and immediate ownership of the
property without probate. This is called “Joint Tenancy with Full Rights of
Survivorship”. When the surviving spouse passes away or if the couple passes away at
the same time, the property must go through probate before it can be distributed...even
if they have a Will! Remember, a Will takes effect after death. Obviously, after both
spouses pass away, they cannot sign the deed over to the personal representative/
executor. And if they cannot sign the deed, probate is required because it is the only
way to transfer the title after death.

The following assets are not subject to probate as long as the named beneficiary is alive,
over the age of eighteen (18) and competent: bank accounts, brokerage accounts, life
insurance policies and retirement accounts (Pensions, 401(k), IRA (Individual
Retirement Accounts), Annuities, etc.). However, many assets such as real property,
stocks, and accounts with improper or incomplete beneficiary designations may be
subject to probate.
Who will be in charge of distributing The personal representative, also known as an “executor”, handles the business affairs
my assets? and distribution of the estate after the testator’s death. The personal representative is
usually a trusted friend or family member. A personal representative locates the Will
after the testator’s death; publishes notice in the newspaper to inform potential heirs
and creditors about the probate hearing; files an inventory and appraisal of the
property; manages the property during the probate process; pays any creditors, taxes,
and fees; distributes the assets to the devisees; and prepares a final accounting. Before
selecting a personal representative, the responsibilities need to be discussed with the
individual or couple to see if they are willing and able to perform these duties. It is also
a good idea to name an alternate personal representative if, for any reason, the first
choice cannot serve.

Can I control where my assets go? In a Will, the devisees are the people and/or organizations to which the assets are left.
Most people have a pretty good idea of who their direct devisees will be. Devisees may
be children, grandchildren, other family members, friends, charities, organizations, etc.
Couples in second, or subsequent marriages may face more complicated decisions if
there are children from a prior marriage.
Who will care for my Minor Children? Parents with children under the age of eighteen (18) have two estate planning concerns.
The first is providing for the custody of their children should both of them die at the
same time. The second concern is nominating a conservator to supervise and manage
any assets the child would inherit. The same person may fulfill both roles, or one
individual may be named as the children's guardian and another as financial manager
or conservator. The individual or couple that is selected cannot serve as legal guardian
or conservator until approved by the court. It is always a good idea to name alternate
guardians and conservators for minor children in case the first choice is unable to serve.

Providing care and support for children with a disability is also very important. Parents
must choose a personal guardian to be responsible for the disabled child. Additionally,
the parents must choose a financial manager to supervise any money or property they
leave for the care of the disabled child for as long as the child lives.

ESTATE PLANNING 101