You have the power to control what shall happen to your property. To execute a formal will is a superior alternative to dying without one. A Last Will and Testament should describe what is to be done with all property that is controllable by the will. Some assets not subject to the control of a Will include property owned in joint tenancy with right of survivorship (spouses often hold bank accounts under this arrangement). Life insurance payable to any person other than the estate or executor cannot be directed by a Will. Assets held in a trust created during life and that continues to administer property will be controlled by the trust and not by a Will.
The “testator” is the person who has made a valid will. A person who dies leaving no will is “intestate.” A “pour over will” directs the transfer of assets to a trust created during your lifetime – known as an “inter vivos” or “living trust.” “Holographic wills” are completely handwritten, dated, and signed by the testator. Such Wills can be admitted to probate, but the process of proving the writing is in fact a person’s last will and testament can become difficult. It is better to sign a “formal will” that is typed, witnessed by two competent persons, and is preferrably supported by a “self-proving affidavit.” Such documents are presumed to meet all the requirements of the law and can be admitted by the court without having to chase down witnesses to prove the point.
Your Will is the place to accomplish several alternative objectives. Your Will should establish who shall receive benefits of your assets and the description of what they shall receive. Some of the usual objectives to be accomplished through a Will include these kinds of things:
- “Specific bequests“ – direct specifically-described property to specific persons.
- “Residuary” – all assets not otherwise specifically disposed by the will are the “residue.” Be certain to state what should happen with all assets not otherwise bequeathed. For example, if you should acquire some valuable asset after execution of a will but the item is not specifically bequeathed to a person, what would you want to happen with that asset?
- “Testamentary trusts” – your will can express all of the controls, requirements and provisions to create a trust after death. Testamentary trusts can even become the receptacle for assets that are not controlled by the Will. This is done by documents other than the will, and when the testamentary trusts is created under the Will the other documents direct property to be transferred to the trust.
- “Marital deduction” and “bypass” trusts – these terms come from techniques used to lawfully reduce federal tax. A bypass trusts can be created by a Will to receive the maximum available tax-free transfer. Different varieties of “bypass” and “marital deduction” trusts are used together to reduce loss through taxation. One reason to not leave all property to a surviving spouse is due to “bunching.” Bunching can occur when the entire value of a decedent‘ estate is left to a surviving spouse. When the surviving spouse dies the estate will represent the combined total value of both estates. It could unnecessarily result in owing federal tax. It is possible to reduce or sometimes eliminate all federal estate tax by making a tax-free transfer to persons other that the surviving spouse to avoid bunching.
- “Guardians” – specifically named to care for the person of your minor children or any person suffering physical or mental limitations. A “ward” is the person for whom a guardian is appointed by a court. Note that a Will frequently does not deliver any property to the guardian-of-the-person. Often, the property that is to be used to support the ward is held by a trustee and not by the guardian.
- Transfer property to persons who would otherwise not be entitled to receive anything as a matter of law. Loyal friends and employees; step-children not formally adopted; charitable organizations – as a matter of law none of them are entitled to receive your property. A Will can direct property to all such persons.
- It is possible to “disinherit” persons who would have been entitled to inherit is you died leaving no will.
- “Executor” – specifically name the person(s) who shall collect your estate, administer the assets in probate, and carry out the provisions of the Will. Most often a Will also names additional persons who shall do those things if the first person(s) cannot or will not serve as executor. Texas law permits you to direct that such a person shall be an “independent executor.” Such persons are not obligated to meet the more cumbersome and expensive rules that govern dependent administrations. Dependent administrations frequently require specific processes and procedures to obtain a court’s permission to do things like sell property. Such requirements are intended to provide serious protection to persons interested in a decedent’s estate. However, they can prove unnecessarily burdensome and costly. Therefore, a Will can direct that the executor shall be independent. It is also permitted to direct that the executor shall serve “without bond.” Unless such language is included an executor will be required to purchase a bond covering their actions during the administration of the estate. Many times, the expense is unnecessary.
A person must be capable of making their own Will. Nobody else can make a written Will for them. Minors cannot make a Will. “Incompetent” persons who are not aware of the natural objects of their affection or who are not capable of understanding the consequences of their actions cannot make a Will. When a Will is the product of coercion or the undue influence of others the law permits interested parties to challenge a document offered for admission to probate. This is known as a “will contest.“
Trusts offer important alternatives. When a will is admitted to probate, the executor is obligated by law to return a detailed “inventory” of property. It is a matter of public record when filed with the court. Full and detailed description of the assets, locations, values – everything is open for public inspection. To avoid making public disclosures see Trusts: Avoid Public Disclosure of Assets.
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