Despite the fact that 60% of Americans don’t have a basic will, they are very useful documents!  In addition to dictating where your property is to go when you die, and nominating an executor to handle your estate, the will is where parents of minor children nominate guardians to care for their children. 

Some attorneys prefer to have wills witnessed by three persons just in case, but it’s not necessary. If one of the witnesses turns out to be an ‘interested’ witness (in other words, stands to benefit from the will), the will is still valid, but the witness will be presumed to have obtained his bequest by duress or oppression, and will be prevented from inheriting unless he can rebut that presumption, or unless there are two other non-interested witnesses.

California also accepts ‘holographic wills,’ documents that are not witnessed, but where the signature and all substantive provisions are in the testator’s handwriting. However, courts are suspicious of these holographic wills and subject them to strict scrutiny.  When it comes to wills, I suggest you hire an attorney to draft you a simple will, or use an online service. If you use an online service, PLEASE have a lawyer look at the will afterwards to make sure you completed it correctly!

1. Minor Children

Parents of minor children want to make sure that responsible parties are prepared to step in and raise their children if they cannot. They will want to appoint a Guardian of the Person and a Guardian of the Estate, who may or may not be the same persons.

2. Incapacity

Clients want to make sure that if they are temporarily or permanently incapacitated, a person they trust is nominated to handle their health care and property decisions. At the same time, the client can give instructions, such as end-of-life guidelines or property desires.

3. Distributions

Clients want to make sure that their assets go to certain persons on their death. The creation of a will, or a will and trust, is necessary to accomplish this goal. There are four types of beneficiaries; specific/direct; contingent; alternative; and, residuary.

4. Probate

Clients want their estates to avoid probate, which will eat away at their beneficiaries estate and cause significant delay in the transfer of assets. The only way to do this is to place all assets in probate avoiding devices, such as life insurance, pay-on-death accounts, and living trusts.

5. Estate Taxes

As of 1/1/2011, all estates over $1M will be taxed at 55% on transfer to non-spousal beneficiares. Clients who are married can easily save $550,000 on said transfer with the creation of a trust! Other strategies, such as inter-vivos transfers, can also significantly reduce taxation.

Let’s take a typical example: Donna and Ken (not their real names!).

Donna and Ken are both approximately 30 years of age. They have been married for four years, and are pregnant with their first child (this is second trimester planning). They own a home that’s currently underwater but expect to have equity soon as the market rebounds. All told, their combined estate has approximately $250,000 in total assets, not including life insurance.

Their primary concern, especially as the pregnancy progresses, is nominating a guardian of the person and a guardian of the estate, for their child.

I have four possible plans to offer this couple, depending on their current financial liquidity and their concerns for their child.

First, I could provide them with Simple Wills containing guardianship provisions. They leave everything to their spouse, or to their children equally at age 18 if their spouse pre-deceases them.

Second, I could provide them with the Simple Wills along with incapacity documents (advance health care directive and durable prower of attorney for property management).

Third, I could provide them with a testamentary trust: They leave everything to their spouse outright, but if their spouse predeceases them to a testamentary trust (either a pot trust or a separate share trust) until their youngest child becomes 25. This plan comes with the AHCD and DPA for no extra charge.

Fourth, I could provide a complete estate plan, including a revocable living trust, incapacity documents, funding the trust with their personal residence, etc.

Based on their ability to pay (plans range from $300 for the simple will through $2,000 for the complete estate plan for a couple under $5M) and their willingness to involve themselves in trust funding, my clients will be served to varying degrees with any of these plans.