What Wills Can And Cannot Do

A will is a legal declaration of what a person wants done with his/her property or estate at the time of death. Wills allow one to:

• Name a personal representative to serve as executor of their estate.
• Pass property in a manner other than that provided by state statute.
• Set out terms of a trust in which the trustee can manage assets on behalf of the beneficiaries for many years after one's death.
• Appoint guardians for minor children and the estate of each child.

Wills alone, however, cannot be used to avoid probate, change beneficiary designations, or transfer title to property held in joint tenancy with right of survivorship.

What Is Probate and Can It Be Avoided?

Probate is a state court process used to make an orderly distribution and transfer of property from the decedent to a group of beneficiaries. Probate costs include attorney fees, executor commission, and court costs.

When properly implemented, will substitutes bypass probate. Will substitutes include various techniques that transfer some or all of your property without the use of a will. Examples of will substitutes include survivorship, contracts such as beneficiary designations, and living trusts.

Remember, however, that avoiding probate does not mean you will avoid estate taxes.

The Importance of Living Wills

A legal document that informs doctors that one does not wish to be kept on a life-support system if terminally ill.

It is important that this document state that the person named to handle one's financial affairs should dispense funds in accordance with the decisions made by the person appointed to manage one's health care. Without such a chain of command, critical disputes can emerge while one is incapacitated. (i.e. The person with health care powers wants to hire a 24-hour nurse, but the financial person refuses to pay for it.)

Living wills usually define only narrow circumstances when a family can act. A healthcare proxy is more flexible.