Is the Will Dead?
The last will and testament is a legal concept that has truly stood the test of time. The super ambitious and cut throat (literally) aristocrats of ancient Rome utilized wills to pass their fortune and legacy to their heirs, so that they may have the foundation to gain even more power and influence. In fact, Julius Caesar, famously willed his son, Emperor Octavius, the necessary tools to fund and facilitate his rise to power. The will was also used in ancient times (much like today) to direct the disposition of assets held by soldiers before an impending battle. Nowadays, the will is still widely utilized to preserve assets and legacies for the next generation.
Wills have only slightly evolved from the time of ancient Rome. Even though industrious attorneys can insert complex estate plans into a will, the basis of the document, the manner by which it is executed, and the way in which the wishes of the testator are fulfilled have changed very little over time.
Although wills have not much evolved, the laws governing disposition of assets upon death have. Through crafty use of trusts, deeds, and payable upon death/transferrable on death accounts, an individual can pass most or all of their assets to the next generation without a will. As a result of the creation of these creative methods, more and more individuals are being advised to pass their property by other means than their last will and testament.
Benefits of Avoiding Probate
There are benefits to passing property outside of a will. One of these benefits is the avoidance of probate. Probate is the legal method by which the testator’s wishes contained in the will are fulfilled. Probate involves utilizing the courts and it requires that a personal representative (executor) be appointed to manage the estate. This can be a lengthy process and can be impeded by litigious individuals who wish to contest the will. This process can also be expensive and involve attorney’s fees and executor’s fees that take money from the estate. Besides the expense, the executor must contribute considerable time and effort in handling the estate.
Further, a will, without more, does not afford much flexibility. You may want to direct your assets to be devised at a certain time, manner, or upon the happening of some event. A will alone is not a useful method to fulfill the strategic wishes of the testator.
Lastly, a will is a public document that is filed with the court after the death of the testator. Thus, the words and statements contained in the will are potentially available for all to see.
The Case to Keep Wills Alive
So, if a will is antiquated, inflexible, time consuming, public, and potentially unnecessary, then should you even create one? The answer, as it so often is in this area of the law, is it depends. Wills certainly still have value and utility depending on your particular case. In deciding whether you should have a will you should consider the following:
I. The size of your estate: a will can make the process of passing along your estate very simple if you have a small estate or if you leave everything to your spouse. In North Carolina, if you have a small estate (typically under $30,000 and with no real property) your executor can file to collect your assets by affidavit, which is essentially an expedited probate process. North Carolina also allows a surviving spouse to petition the court for another form of expedited probate called summary administration if they are the sole beneficiary.
II. Affordability: your assets and wishes may not necessitate a complex and expensive estate plan. Wills typically cost less than other estate planning methods. If you have a small estate and have predetermined your intended beneficiaries, it may be in your best interest to simply have a will drafted rather than a potentially costly trust package that will essentially do the same thing.
III. Whether you need a backup document: as I briefly mentioned, there are a few ways to avoid probate (we will call it the “assignment process”). To name a few, you can assign a beneficiary to an account (if available), you can utilize life estate or joint tenant with rights of survivorship deeds, and you can utilize trusts. If your goal is to avoid probate so that your heirs receive property immediately upon your death, you can pretty much do so by assigning beneficiaries to accounts and doing deed work. However, the property left over—with no assigned beneficiary—either must be passed through a will or through trust, if you want to avoid it passing through intestate succession. As mentioned above, a trust can be expensive and unnecessary, especially if the assets left behind after the assignment process are few, of small or sentimental value, or are simply personal household property. In that case, there is no use in drafting an expensive or complicated document.
IV. Whether you have the need for a trust during your lifetime: trusts are very useful vehicles, especially for those who have very specific desires of where and when they would like their property to pass. A trust allows the living or deceased grantor to have their hand on the wheel, directing the disposition of assets. You may desire to keep one hand outside the grave, controlling your wishes; however, you may not have any use for a trust during your lifetime. In this case, it may be more feasible to draft a will containing a trust effective upon death. A testamentary or pour-over trust can be created by a will, whereby some or all of your assets will pour-over from the will and into a trust upon your death. This allows the decedent to potentially structure their devises to benefit their heirs for multiple generations.
There are significant benefits to avoiding probate and there are many ways to do so. However, there is a reason why the last will and testament is still being used today. The ancient concept of the will has yet to die because there is still a need for it, whether it be for the reasons mentioned above or for the mere fact that you wish to emulate a Roman emperor.
Whatever you decide, will or no will, you should take the time to develop a plan of how you would like to pass along your assets. You want to leave behind a legacy that will benefit the ones you love and cherish. And, you do not want your loved ones to be burdened by the both the tragedy of your passing and the legal complexity of having no plan in place.
Brenton S. Begley, JD, LLM Taxation
Attorney with McIntyre Elder Law