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How Important is Your Will?

Most people work long and hard to create an estate which will provide financial security after one's death. Yet these same people often become so involved in their day-to-day plans and activities that they either neglect to make a will or fail to keep their will up to date.

What a Will Does

A will helps preserve family financial security in a variety of ways. Most importantly, a will specifies the persons who are to receive the property and the amount of property to be given to each person. If a person dies without a will, the property is distributed under a formula established by state law. In some cases, this formula provides insufficient distributions to the surviving spouse and may cause unintended distributions to certain relatives. In certain circumstances, a surviving spouse may receive only half the property of the spouse who dies without a will.

A will can produce considerable savings in taxes, legal fees, and estate administration expenses. For example, most wills contain a "power of sale" clause which authorizes the executor to sell property and make distributions to heirs without obtaining court approval. Without such a power, the executor will have to obtain court approval before selling any real property. For estates over $650,000, special will provisions can save thousands of dollars in taxes by making optimal use of the federal estate tax marital deduction and unified credit. A will can waive the requirement for the executor to post a surety bond, which can save the estate several hundred additional dollars.

Wills also enable persons to: (1) appoint an executor of their choice; (2) appoint a guardian for any minor children; (3) make special gifts to friends and favorite charities; and (4) establish trusts for children who require special care and treatment.

When there has been a divorce or death of a spouse followed by remarriage, a carefully drafted will can assure that children are not cut out of an inheritance from their natural parents.

Many people believe joint ownership of property by spouses eliminates the need for a will. This is not true. Only property held in "joint tenancy with right of survivorship" passes outright to the surviving spouse without a will. Property owned in "tenancy in common" passes under one's will or, if there is no will, according to state law. Even when spouses own property in joint tenancy, a will is needed to distribute the property when the surviving spouse dies.

Important to Update Wills

During a person's life, a variety of events may cause a will to become outdated, such as: marriage, birth of a child, adoption of a child, change of residence, acquisition of real property in another state, starting a business, significant shrinkage in value of securities, divorce, a child's reaching majority, marriage of a child, retirement, and changes in tax and estate laws.

A will is not final until it takes effect at death. Therefore, it should be reviewed every three years or any time one of these events occurs. Minor changes can be made by adding a "codicil" to the will; more involved changes may require writing a new will.

What is Required?

In most states, the person making the will must be of legal age and of sound mind, the will must be written, and the signing of the will must be witnessed by at least two qualified persons. These are usually the only legal requirements for a valid will.

While it is possible to draft your own will, everyone should consult an attorney for assistance in drafting a will and other estate planning documents. Your attorney can help you avoid numerous pitfalls in preparing the will, help you select the course best suited to your individual situation, and advise you about other related matters such as living wills, trusts, and durable powers of attorney.

Taking the time to make a will and keep it up-to-date provides assurance that your estate will be distributed as you wish and that you have protected your family's financial security.

The Living Will

The living will is a written statement of an adult person's wishes concerning use of life-sustaining procedures to prolong his or her life. The law applies only to a "qualified patient," which means a person who has signed a living will and is in a terminal condition. This is a condition which is incurable or irreversible and, without life-sustaining procedures, will result in death in a relatively short time. The existence of a terminal condition must be confirmed by a physician other than the attending physician.

In the living will, the person states a desire that life-sustaining procedures not be administered to prolong life if he or she is in a terminal condition. The living will directs the attending physician to withhold or withdraw procedures that merely prolong the dying process and are not necessary to the person's comfort and freedom from pain. It must be in writing and notarized.

In most situations, of course, the attending physician will be the one who makes the ultimate decision. The law releases physicians from civil and criminal liability for complying with the living will. If a physician is not willing to comply, the law requires the physician to take all reasonable steps to transfer the patient to another physician. This may not always be possible or practical.

Even if a person has not signed a living will, the law allows the decision to withdraw life-sustaining procedures to be made by certain other persons, in the following order: a designated attorney-in-fact under a durable power of attorney; the legal guardian of the patient; the patient's spouse; the patient's adult child or a majority of adult children who are reasonably available; the patient's parent or parents -- even an adult sibling.

The living will is obviously a personal decision. Some people decide not to sign one, for a variety of reasons. We always recommend that clients consider it when reviewing and updating their wills and other estate planning documents.