The first major hurdle in writing a Will is procrastination. Just thinking about
death and dying makes some of us a little anxious. Once past that obstacle, there are six things that you should consider to be sure that your Will meets your needs.
1. Nonprobate Property: Remember your Will controls only property that is
subject to transfer through the Probate Court. Any property that you hold jointly with someone else may be “survivorship” property that passes automatically upon your death to the other owner or owners. You may own property that is “payable on death” to another person. Insurance proceeds, annuities and IRA’s usually go directly to the named beneficiary rather than passing through probate. Now is a good time to review all your assets to be sure that however they are transferred at your death, they pass according to your plan and wishes.
2. Specific Bequests: A specific bequest is the gift of a particular thing or a
particular amount of money. For example: “My wedding ring to my daughter, Katy,” or “$200 to my nephew, Felix.” When a specific bequest of an item is made, the law requires that item be appraised. It is then subject to inheritance tax at the appraised value. Depending on the value of the item, the appraiser’s fee and tax may not be justified. Many people prefer to give gifts of sentimental value during their lifetime to share in the recipient’s joy and appreciation.
You might wish to make a specific bequest of cash as a token to grandchildren
or a specific charity. In doing so, keep in mind that specific gifts are always paid first. Depending on how large or small your estate is at your time of death, your specific bequest may be far more or less proportionately than you intended. For example, suppose at the time you write your Will you have $500,000 in assets. You leave $10,000 to each of your ten grandchildren and the remaining $400,000 to be divided between your two children. Unfortunately, you fall ill and require nursing home care for the last years of your life. Your estate is reduced to $100,000. Your specific bequests are made first. This leaves nothing for your children whom you had intended to inherit the bulk of your estate.
3. Residual Gifts: After specific bequests are made, you need to decide who
gets everything else. Generally, if more than one person is to share the residuary, each person would receive an equal share or some percentage for each person would be named. (“to my children equally, share and share alike” or “forty percent to my Uncle Joe and ten percent to each of my six nieces and nephews”.) In dividing up your residuary be sure to consider what you want to happen if one of your beneficiaries dies before you. Would you want that person’s share to go to her children, to the other beneficiaries, or somewhere else entirely?
4. Taxes: Estate Taxes are no longer an issue for most people since the Ohio
Estate Tax was ended January 1, 2013. Those with assets over $5,000,000 may be subject to federal estate tax. Consider whether you want all the tax paid out of the probate estate or whether persons receiving non-probate assets should pay a
proportional part of the tax.
5. Minor Beneficiaries: If any of your beneficiaries could be under the age of 18, you may want to consider naming a trustee to hold the property until the child comes of age. The person you name may or may not be the child’s parent. You may choose to be quite explicit in your instructions to the trustee or simply choose someone you find trustworthy and leave the details to his discretion.
If your own children are young, you will want to name a guardian (and alternate
guardian) to care for and raise your children. Your doing so can avoid much family turmoil in deciding with whom your child will live. Be sure to choose someone who’s child raising ideas are similar to yours. Use care in choosing grandparents as guardians. While your 68 year old mother may seem the best choice to have your 5 year old, she may not be equipped at 78 to handle your 15 year old.
6. Fiduciaries: Your fiduciary is the person who will gather together all your
assets, pay your bills, then distribute the remainder of your estate as you direct in the Will. The person you choose should be trustworthy, organized and patient. Be sure to name an alternate fiduciary in case the person you name is unwilling or unable to handle your estate.
The law requires fiduciaries to post a “bond” (an insurance policy covering theft
or error) unless you say in your Will that you do not require one. This is primarily protection for your other beneficiaries. The size of the bond is determined by the amount of probate assets. The cost of the bond is paid out of the estate.
Your fiduciary is entitled to payment for the service he performs. The amount of
compensation is determined by the Court. Fiduciaries will generally choose a lawyer to assist with the estate.
As your life situation changes, your Will should be revised to suit your needs and
desires. It is generally a good idea to review your Will every five years to be sure it reflects your wishes. Think about these six considerations each time you make a Will. Your individual situation may raise additional issues and considerations that your attorney can address.