Last Wills and Testaments

It is easy to say “I’m going to leave everything to my kids”, and in fact, so long as there are no unforeseen events, this is exactly what would happen. The problem is that life unravels in ways that we do not often expect. For example, we often fail to consider what would happen if we died with one of our primary beneficiaries in a car crash or other accident; or what would happen if a beneficiary predeceased us after we had become disabled and unable to change our will or trust plans; or we fail to consider that one of our beneficiaries may be disabled and receiving a needs-based form of government assistance with which a direct inheritance would interfere.

The most common form of testamentary document is a Last Will and Testament. Most people think of a last will and testament in terms of the ability to choose one's primary and contingent beneficiaries and avoid application of the intestacy law. While this is certainly an important aspect of a last will and testament, a well crafted last will and testament should address other important issues. These issues include, but are not limited to: (1) providing for minor beneficiaries (who shall have custody and should there be a trust to prevent them from receiving their entire inheritance upon attaining the age of eighteen); (2) establishing a protective trust for adult children in order to protect their inheritances against the future claims of potential creditors (or even to protect the beneficiaries from themselves!).

One misconception we hear all too frequently is the idea that your will controls all of your assets at your death. It does not. Your last will and testament only controls that which is in your name alone and does not (and by law cannot) control the disposition of anything you own along with someone else in the form of joint tenants with rights of survivorship, tenancy by the entirety, or as to which you have specifically created a transfer upon death (TOD), payable upon death (also referred to as 'POD', 'ITF' or 'In Trust For') or similar beneficiary designation. In other words, your last will and testament cannot control the disposition of a certificate of deposit that you have made payable upon death to a particular individual, even though you are now disinheriting that individual in your last will and testament. You must exercise great care with respect to beneficiary designations or payable upon death directions which you have left at brokerage firms, banks, mutual funds, life insurance, annuities, the company you retired from, or other asset holders. Many of our clients select a per stirpes distribution under their wills and yet a 'TOD', 'POD', 'ITF', 'In Trust For', or similar designation will only permit a per capita distribution. You then have to decide whether you want to contradict the intentions as expressed in your last will and testament, or alternatively, leave these designations off of your accounts entirely so that a per stirpes distribution which you may have designated in your last will and testament will control. Likewise, assets bearing any of these designations cannot be controlled by the dispositive provisions of a trust.

 

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