August is National “Make-A-Will” Month
With summertime in full-swing, it is easy to get lost in the beautiful Maine weather and neglect some of the more uncomfortable topics, such as planning for your demise. Nevertheless, this important planning process is not something that should be overlooked. Thankfully, you now have the perfect excuse to address that looming feeling that you are leaving something unfinished!
August is National Make-A-Will Month. The Last Will and Testament is synonymous with estate planning and often times it may be the only estate planning document that individuals put into place. Although there are many components of a comprehensive estate planning, at the very least having a Will allows your wishes to be known and provides the framework for your beneficiaries to receive your assets. If you already have a will in place, this is also the perfect time to have it reviewed. Estate planning documents should be “living documents”, meaning they should grow and change with you. As your life progresses, so should your will and other planning documents.
The will is a powerful tool, and it is one that is often under-utilized. As an estate planning vehicle, it allows it’s drafter to create certain powers and privileges that may not otherwise be available through alternative tools. As discussed in a prior article, passing away without a will in place will cause your estate to pass according to our state intestacy laws. These laws may or may not accomplish what your particular situation calls for, and often times it is a good idea to write your own plan for the distribution of your wealth, rather than relying on the state defaults. By having a will in place, you get to specify the WHO, the WHAT, the WHEN, and the HOW of your wealth. Who receives the assets, what they receive, when they receive them, and just how those assets pass to the beneficiary.
Most wills, as well as the state probate code, pass assets along in what is called an “outright” distribution. If assets pass outright, that means the assets flow from the decedent into the hands of the beneficiary directly. By making an outright distribution, you are placing the assets fully in the control of the beneficiary. This means that they can utilize those assets however they see fit - they can spend the money, they can sell the property, the could give it away - it’s up to them. Most of the time, this is a good thing, and often what we desire for our beneficiaries. However, there are situations in which we may not want the beneficiary to have full control and decision-making authority over the assets.
Your will can limit the access and control that a beneficiary has over the assets. Your will can contain specific rules and instructions on how an assets might pass to a beneficiary. Often times these rules provide the beneficiary with certain benefits and protections, without sacrificing the ability to fully utilize the funds. There are several circumstances when you may wish to restrict your beneficiary. The obvious example is in the case of a spendthrift - a beneficiary who simply cannot be trusted with the assets for one reason or another. This could be a result of many things, including gambling, addiction, poor impulse control, or simply bad investment choices. By restricting a beneficiary’s control over the assets, you can protect them from themselves.
You may also elect to put protections in place in the case of minor beneficiaries. Often times the most likely minor beneficiary are grandchildren, grandnieces or grandnephews. Sometimes these beneficiaries are first in line, other times they are named as contingent beneficiaries, after children, nieces, and nephews. Either way, if there is a possibility for a minor to inherit funds, then there are a few considerations you need to take into account in your will. The first consideration is whether the minors are your own children. If you have minor children and pass away, then those children are likely going to participate in the guardianship process to have a new legal guardian appointed. The guardian (and conservator) is going to make financial, legal, medical, religious, educational, and life style decisions for your minor. If the minor has a legal parent still alive, then guardianship court can be avoided. If not, then it is very important that you nominate who you would like to serve as the guardian of that child. By designating somebody in your will, you have the power to persuade the courts to choose your person, rather than anybody else who might petition to become the guardian. Another consideration is whether you feel the minor will be responsible enough to manage their own assets, once they reach eighteen years of age. Although eighteen is the default (and in some cases twenty-one) under Maine Law, your will can mandate an older age at which the minor beneficiaries have control over the assets.
Another limitation that should be considered is not so much a limitation on the beneficiary, but rather a limitation on their creditors. Your will can be drafted to provide protections from unfortunate future situations that may happen in a beneficiary’s lifetime. Divorcing spouses, car accidents, medical debts, failed businesses, lawsuits, and more. These are things that our beneficiaries do not always plan for, but the reality is that they still happen. The wealth you pass along can be protected from unfortunate futures, provided your will includes those protections.
A simple will can be drawn up without the aid of an attorney. Section §2-502 of our state probate code outlines the legal requirements to create a will. The will must be 1) In writing, 2) signed and 3) witnessed by two individuals. However, just because you can create your own will, does not necessarily mean you should. There are a lot of legal nuances and as discussed above, legal benefits, to having a knowledgeable attorney prepare your will. Failing to understand the entire structure of probate system and how wills play a role in that can lead to unintended consequences. Take this August as a opportunity to address the holes in your legal planning, and find the time to sit down with a professional to discuss your goals and options.
If you are interested in learning more about wills and what they can do for you, schedule a time with one of our attorneys by navigating to our contact page and scheduling an initial meeting at a time that fits your schedule.
