Wills, Trusts & Estate Planning
Frequently Asked Questions
Family Lawyers
Meriwether & Tharp:
Information brought to you by the Fiduciary Law
Section of the State Bar of Georgia.
Why You (Yes, You) Need a Will
Confusion and myths surround the estate planning
process. This pamphlet explains why all adults, regardless of wealth,
should have a properly drafted and executed will. A will is necessary
for ensuring that your estate is distributed among your loved ones and
charities as you wish. A will also can save money and time in
administering your estate once you are gone, which will lessen the
burden on your beneficiaries and maximize the legacy left to them.
Who Needs a Will?
What are the Reasons to Have a Will?
What Happens if You Die Without a Will?
How Can a Will Help Avoid or Reduce
Estate Taxes?
What are the Formal Requirements for a
Will?
What Property Does a Will Control?
May a Person Dispose of His or Her
Property in Any Way He or She Wishes by a Will?
Does a Will Increase Probate Expenses?
Should You Avoid Probate?
How Do You Avoid Probate?
How Much Does a Will Cost?
How Long is a Will Valid?
What Effect Does a Subsequent Marriage,
Divorce or Child Have on a Will?
Who Should Prepare a Will?
What is a Living Will?
Some Suggestions Concerning Wills
Summary
Who Needs a Will?
Every adult should have a will. Whether you have
few assets, many assets, minor children, no children, or specific
desires about who gets your property, you should have a will.
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What are the Reasons to Have a Will?
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With a will, you decide how your property will be
distributed. You may dispose of your property as you choose.
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A will may help you to lessen estate taxes
imposed at your death (see more about estate taxes below).
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In a will, parents can name whom they want to be
the guardian over their minor children.
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Your will can direct that your assets pass to
your beneficiaries by way of a trust instead of outright
distribution to the beneficiary. Trusts may assist in protecting
assets from the claims of creditors or unwise choices made by
beneficiaries. Trusts are a useful component in estate tax planning.
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With many people today in second marriages, a
will with appropriate trust provisions may be helpful in ensuring
that your assets ultimately pass to your children after being
available for support of your surviving spouse. Without a will
restricting those assets, the surviving spouse could be free to
leave a portion of those assets at his or her death to a new spouse
or to the spouse’s children from another relationship.
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A will lets you choose the individual, bank or
trust company to serve as executor of your estate. The executor will
manage and settle your estate according to the law and your desires
expressed in your will. Without a will, your beneficiaries would
have to petition the court for an administrator to serve, which can
be expensive and invite disagreement.
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A will lets you grant your executor full power to
sell your property and liquidate your assets without having to
petition the court for permission.
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A will enables you to eliminate unnecessary
expenses and court costs involved in the administration of an estate
without a will. For instance, bond premiums can be avoided by
stating that you desire that the executor serve without a bond.
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You can make gifts to charity through your
will
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What Happens if You Die Without a Will?
Dying without a will is referred to as dying
intestate. Dying intestate generally means that the laws of the state of
your residence will decide who receives what out of your estate. In
Georgia, your surviving spouse and children, if any, would share the
estate, subject to some limitations. Dying intestate creates additional
costs in probating your estate, plus you don’t get to decide who shares
in your estate or make provisions for family members with special needs.
Without a will, your minor children may be entitled to their full
inheritance upon turning age 18.
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How Can a Will Help Avoid or Reduce Estate Taxes?
If applicable, estate taxes can be severe. The
top rate for individuals dying in 2006 is 46 percent. However, keep in
mind that estate taxes apply to only a very small portion of the
population (according to some estimates, in 2000 only two percent of the
dying population in the United States paid estate taxes). If estate
taxes are a concern, a properly structured will can contain provisions
necessary to reduce estate taxes. One way a will does this is by taking
advantage of the maximum amount you can give to individuals other than
your spouse. Without a properly structured will, after your death,
relatively few options may be available to reduce estate taxes. Tax
consequences depend upon the individual case and you should discuss them
with your lawyer.
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What are the Formal Requirements for a Will?
A will is the legal declaration of a person's
intention for the disposition of his or her property after his or her
death. The laws of each state set forth the formal requirements for a
legal will. In Georgia:
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You, the maker of the will (called the testator),
must be at least 14 years old.
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You must be of sufficient mind and memory to
realize you are making a will disposing of your property.
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The will must be in writing.
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The will must be signed by the testator and
witnessed by at least two witnesses in the special manner provided
by law. These witnesses should not be persons who are designated to
take property under your will.
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The execution of the will must obey certain
technical formalities.
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What Property Does a Will Control?
A will only controls the property passing through the
testator’s probate estate. A testator’s probate estate consists of all
property owned by the person upon his or her passing that is not
otherwise controlled by contract or operation of law. Probate assets
include cars, personal property, real estate held individually and as
tenants in common and bank accounts in the name of a single spouse.
Many types of property, however, pass to beneficiaries
and others without regard to what the will provides. These assets may
form a significant portion of the estate. The following are some
examples of property that is not controlled by the will: (1) life
insurance with beneficiary designations, (2) retirement accounts with
beneficiary designations, (3) property owned as joint tenants with right
of survivorship, (4) brokerage accounts for which the decedent has made
a “payable on death” designation and (5) life estate interests.
For example, a testator may say in a will that she
wants all of her property to go to her husband. However, she has a life
insurance policy naming Aunt Peggy as the beneficiary. When the testator
dies, Aunt Peggy, not the husband, gets the life insurance proceeds.
An estate planning attorney will seek to
coordinate the disposition of these non-probate assets with the estate
plan so that the testator’s wishes are respected.
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May a Person Dispose of His or Her Property in Any Way He or She Wishes
by a Will?
A testator, by his or her will, may make any
disposition of his or her property not inconsistent with the laws or
contrary to the policy of the state of Georgia. A testator may bequeath
his or her entire estate to charities, strangers or in trust for beloved
pets, to the exclusion of his or her spouse and children. In such cases,
however, the disinherited spouse or children could seek to challenge the
will if appropriate grounds exist for a competency or undue influence
claim, or petition the court for a limited distribution to them
regardless of what the will provides.
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Does a Will Increase Probate Expenses?
For the reasons discussed above, a will can
lessen the costs of probate. Typically, court costs are limited to
filing and publication fees. Court costs are usually less than $500.
Court costs do not include compensation to the executor or amounts
charged by attorneys or accountants for the estate.
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Should You Avoid Probate?
Probate is the process of administering an
estate upon an individual’s death. It includes validating the decedent’s
will (or making the determination that he left behind no will),
appointing the person who is going to administer the estate, paying
claims of the estate and transferring the assets out to the
beneficiaries. In Georgia, we have the luxury of a modern probate code
and probate judges who really want to move the process along, so probate
is generally not a concern. In other jurisdictions, this may not be the
case.
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How do You Avoid Probate?
Despite the hype and the ads you may see warning
of the dangers of probate, most people are not well served by
complicated techniques and schemes designed to avoid probate. However,
in some situations, avoiding probate in one or more jurisdictions may be
desirable. For example, if you own real property in both Georgia and
Florida, you may want your heirs to avoid the cost and expense of
probating your estate in both states. One way of avoiding probate
involves putting property into a revocable living trust. Revocable
living trusts are described more fully in the Fiduciary Law Section's
pamphlet of the same name. Another way to avoid probate in a second
state might be to place the out-of-state realty in an entity such as a
limited liability company or limited partnership.
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How Much Does a Will Cost?
Lawyers usually charge either on an hourly basis
or by setting a flat fee up front. In either event, the lawyer should be
able to give you an estimate of likely charges before incurring
significant expense, which should avoid unpleasant surprises down the
road. Fees are based on either estimated or actual time spent by the
lawyer and his staff. Usually, the process includes an initial meeting
with the client, performing legal research, preparing recommendations as
to the documents required, drafting the documents, making any desired
revisions and witnessing and executing the will. The amount of time
needed to complete the process depends on the complexity of each
individual’s personal situation. Generally, the more complex the will,
the more expensive it will be.
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How Long is a Will Valid?
The mere passage of time has no effect on the validity
of the will. Of course, tax and other laws and circumstances may change,
which may render the will invalid or create unintended results. Wills
should generally be reviewed every two to three years, more frequently
if you have a major life change, such as marriage, divorce, the birth or
adoption of a child or a substantial increase in assets.
Legally, a will does not take effect until the
testator dies and the probate court approves the will. Prior to death, a
competent testator may at any time change, amend or revoke an existing
will. No notice to or approval of the beneficiaries is required. Change
is usually accomplished by signing a new will or executing an amendment
known as a “codicil.” A codicil is a separate document that expresses
the changes to the will and is executed with the same formalities as a
will.
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What Effect Does a Subsequent Marriage, Divorce or Child Have on a Will?
Marriage, divorce and the birth or adoption of a
child all may impact a will and its dispositive provisions. You should
have your will reviewed upon any of these events.
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Who Should Prepare a Will?
Drafting a will involves making decisions
requiring professional judgment which can be obtained only by years of
training, experience and study. Only a practicing lawyer can avoid the
innumerable pitfalls and advise the course best suited for each
situation. You should avoid using do-it-yourself kits or Internet
templates, as they may create many problems.
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What is a Living Will?
The state of Georgia recognizes the right of a
competent adult person to make a written directive, known as a living
will, instructing his physician to withhold or withdraw life-sustaining
procedures in the event of a terminal condition, coma and/or vegetative
state. There are certain specific limitations on the contents, execution
and witnessing of a living will. You should consult a lawyer if you wish
to have one prepared. You may also want to consult your lawyer about
signing a durable power of attorney for health care. Living wills and
durable powers of attorney for health care are more fully described in
the Fiduciary Law Section’s pamphlet of the same name.
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Some Suggestions Concerning Wills
A will signed and witnessed by two individuals in
another state will usually be valid in Georgia. However, if you have
moved here from another state, it is wise to have your will reviewed by
a Georgia lawyer in order to ensure that it is properly executed and
valid according to Georgia laws.
Self-prepared wills are also permitted provided they
are properly executed and comply with Georgia laws. Many times,
self-prepared wills contain ambiguous and confusing language causing
many problems during the probate process. Thus, you can save your
beneficiaries much grief and expense by consulting a lawyer to prepare
and properly execute your will.
Changes in legislation and case law constantly
modify the planning recommendations of a lawyer. You should review your
estate planning, tax and incapacity planning opportunities with a lawyer
whenever major life events occur and at least every two to three years.
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Summary
Wills are not only for the well-to-do, they are
important for all adults who are interested in ensuring that their
wishes are respected upon death, and that their estates pass to their
loved ones as quickly, as painlessly and as intact as possible. Wills
are a component of successful estate planning, which seeks to transfer
the individual’s estate as she would have desired, avoid unnecessary
costs and tears and minimize estate taxes.
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This article was prepared by the Fiduciary Law
Section of the State Bar of Georgia as a public service. It is not
intended to be a comprehensive statement of law. Its purpose is to
inform, not to advise on any specific legal problem. If you have
specific questions regarding any matter contained in this pamphlet, you
are encouraged to consult a lawyer. Any written advice contained in this
pamphlet, however distributed: a) is not intended or written to be used,
and it cannot be used, by any taxpayer for the purpose of avoiding
penalties that may be imposed on the taxpayer under the Internal Revenue
Code; and b) was not written for the purpose of promoting, marketing or
recommending any entity, investment plan or other transaction.
