Farm Estate and Succession Planning
This blog focuses on making complex and difficult topics in estate and business planning understandable and applicable to the reader.
Last Will and Testament - General Overview
Sep 10, 2011
A last will and testament (“will”) is a legal declaration that a person creates in life to determine the transfer of his or her property at death. This document also names a personal representative responsible for making sure this transfer takes place. This “transfer” is accomplished through a public court proceeding known as probate. A will is amendable and/or revocable at any time the person making the will has the mental capacity to do so. It is often considered the most common way to accomplish estate planning goals and objectives. The benefits of a will are the fact that you can use a variety of tools to pass your assets to your heirs in a way you want. It is also a very efficient way for a person to plan, during your life.
The arguable negative consequences of a will involve its requirement of probate at death. Probate is the process of by which the executor gathers all the property of someone who died, pays all just debts and taxes, and distributes the balance to the people designated in the will. Probate can be time consuming, especially if little planning is done prior to death. It is also a “public” proceeding, because it is a court proceeding.
Some people think having a will avoids probate. This is not the case. A will is used in probate to determine who receives what property, who is appointed guardian to any minor children and who will be responsible for carrying out the wishes contained in the will.
Sometimes people want to avoid probate. In these instances, other estate-planning devices may be used. Joint tenancies, pay-on-death accounts and transfer-on-death accounts are commonly used. Another commonly used method is known as a revocable living trust. My next post will discuss the revocable living trust as a tool.
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