What is a Last Will and Testament, and Why You Need One
What is a Last Will and Testament?
A Will, also known as a Last Will and Testament, is a legal document that states your intentions for the distribution of your assets and property after your death. The State of Michigan requires the person creating the last will and testament (the testator) to be at least 18 years of age. The Will must be in writing and signed by two competent witnesses. A valid Last Will and Testament allows you to nominate a person (a Personal Representative) to carry out your intentions, and also allows you to nominate a person who you want to become a Guardian and/or Conservator for you children should you die and your children are minors.
However, a Will is only one part of a comprehensive Estate Plan that should include a Durable Power of Attorney for Property and Financial Matters, a Patient Advocate Designation, sometimes referred to as a Durable Power of Attorney for Health Care, and depending on your circumstances, a Living Trust.
If you have savings, investments, personal property, real estate or dependents, you should have a Will. In the absence of a Will, assets will be distributed according to State of Michigan laws and the probate judge. Although if you die without a Will, your spouse, children, parents or other close relatives will typically become the beneficiaries of your estate, the specific way the probate court distributes your assets and property may not be the way you intended.
Types of Wills
There are various types of Wills, and the one you choose will depend on several factors, including how large or complicated your estate is, whether you have minor children or a separate Trust for your assets and property. The following are the primary types of Wills but are not inclusive of all Wills that may be recognized by Michigan law.
A Basic Will allows you to state your basic wishes, in a straightforward and uncomplicated manner, of who you want to be the beneficiaries of your assets and property upon your death. With a Basic Will, a person can usually accomplish all that you need to provide instructions about how you want your assets and property distributed. You can also nominate a Personal Representative (sometimes referred to as an Executor) who will be appointed by the probate court to ensure that your wishes are property carried out. In a Basic Last Will and Testament, you can also designate persons to be appointed as a Guardian and Conservator for your children if you die and they are still minors.
Testamentary Trust Wills
A Testamentary Trust Will includes provisions which will establish a Trust within a Will. Although similar to a Living Trust which is set up while you’re living, when a Testamentary Trust is used, the actual Trust doesn’t go into effect until after you pass. Testamentary Trusts are usually administered along with the Will through probate and are generally created for young children or young adults who may need help with managing large sums of money.
A testamentary trust is used to appoint a “Trustee” to manage the funds until the “beneficiary,” or person receiving the money, takes over. A typical expiration date for a child or young adult beneficiary to receive the remaining assets in the Testamentary Trust may be when beneficiary turns 25 years old, graduates from university, gets married or needs to purchase a home. It is important that the person who creates the Testamentary Trust chooses a Trustee who will act in the best interests of the beneficiary receiving the trust funds. It is also a good idea to have a backup for the person chosen to be the Trustee if, for any reason, the person chosen becomes unavailable or unable to take on the responsibilities of a Trustee.
Pour Over Wills
A Pour Over Will is a document that satisfies all the legal requirements of a Last Will and Testament but includes a provision within it that transfers assets and property to a Living Trust that has previously been established. A Pour Over Will is primarily used as a backup for your Living Trust, transferring forgotten or remaining property into the Trust. One of the main reasons a person creates a Living Trust is to avoid probate; however, a Pour Over Will does need to be probated. Usually, a person will fund their trust when it is established and also have a Pour Over Will just in case they left something out that they wanted to be transferred into the Trust.
What is Included in a Last Will and Testament?
While there are many different types of Wills, there are some provisions that are usually included in a Will and should be considered carefully.
- Personal Representative/ Executor: A Personal Representative, sometimes referred to as an Executor, is a person you nominate to be in charge of making sure your wishes expressed in the Will are followed. Your Personal Representative can be your spouse, another adult family member, a trusted and close friend, a lawyer or adult child. You can also appoint two persons to jointly serve as Personal Representative.
- Guardianship and Conservatorship: For parents, appointing a guardian and conservator for their child or children, if they pass and their children are still minors, is one of the most important reasons for creating a Will. There is certainly peace of mind that comes from knowing you’ve selected the best person possible to look after your children if you are no longer able to care for your children.
- Assets and Tangible Personal Property: A Will establishes where and how your assets and tangible personal property are distributed. It gives you the opportunity to specify who gets what from your estate. Assets include cash, bank and investment account holdings, stocks and bonds. Examples of tangible personal property includes personal items, jewelry, artwork, photos, tools, equipment, boats and vehicles.
- Real Property: Land and anything attached to land, whether commercial or residential, is be considered the real property that you own at the time of your passing.
- Funeral Representative and Burial Instructions: Michigan law now allows you to name a Funeral Representative in your Will with the authority to make decisions regarding the final arrangements for your remains and resting place after death. This might be an important part of your planning for after you pass away.
Differences Between a Will and a Living Trust
The major difference between a Will and a Living Trust is that a Trust takes effect as soon as it’s created and signed, but a Will takes effect after you pass away. Other differences include:
- Wills require probate administration in order to transfer items to designated beneficiaries, whereas Living Trusts can avoid this.
- Wills are public record while Trusts remain private.
- Wills only take effect after your passing but because a Trust is immediately effective, it can provide direction to appointed persons about how to administer the trust if you become incapacitated and unable to make decisions.
Steps for Creating a Last Will and Testament
There are some basic steps you want to take to ensure you’re covering everything you need, so your final wishes will be known and adhered to.
- Take inventory of your assets. Everything from your home to your bank and financial accounts and personal items.
- Choose your Beneficiaries. Decide which items you want to distribute to which people.
- Select a Personal Representative. Choose your person carefully and notify them of your intentions before you finalize your choice.
- Decide on who you will appoint as a guardian and conservator if you have children. This step is only necessary if you have minor children.
- Be specific. It's important to be specific about how your assets will be passed down so that your final wishes are carried out properly.
- Consult with an Attorney who understands the nuances and complexities of drafting a Will as well as Estate Planning.
- Put your Will in a safe place. A fireproof safe is a good option. A safe deposit box at a bank is another good option but arrangements should be made for an appointed person to have access to the safe deposit box upon your death.
- Make updates to your Will This should happen periodically as needed but recommended to do so every 3 to 5 years or after important changes in circumstances and major life events.
A Do it Yourself Will Is Not Worth the Risks
Many things can and sometimes do go wrong if a person takes the do it yourself (DIY) route for a Will or estate plan. The small amount of money saved doesn’t begin to make up for the eventual cost and potential outcomes. Doing something yourself is a laudable approach for many endeavors. But in estate planning, the results of the DIY approach can be devastating and irreversible.
If you’re considering using an online service to make your estate plan, talk with a local estate planning attorney before you make a final decision. If you already made an estate plan using an online service or forms, at the very least, you should review your documents with a local estate planning attorney.
Your Next Step: Schedule a Consultation with a Respected Ann Arbor Estate Planning Attorney
Ager Law Office helps individuals and families with Wills, Trusts and all aspects of estate planning. From our Ann Arbor office, we serve clients throughout Washtenaw County.
For additional information on our reasonable flat fees for Wills and other Estate Planning services, or about updating your existing Will, contact our experienced estate planning attorney, Bill Ager.