Estate Planning involves a combination of various legal instruments, such as Wills, Trusts, Powers of Attorney, and Living Wills, as well as Lifetime Transfers, Gifts, and Beneficiary Designations.
Most people are familiar with a Will and understand its general purpose. At its simplest, your Will is a legal document that says what to do with all your property when you pass. For an attorney, a Will is a fundamental estate planning tool and often serves as the centerpiece of a well-crafted overall plan. The importance of a Will should not be overlooked, and it should not be presumed that a Will is necessary only for the wealthy with massive fortunes. Whether you own your own home, have minor children, or have simply worked hard your whole life, it is worthwhile for you to have a Will. The security and certainty that comes with having a Will can grant you peace-of-mind, provide for your family, and preserve your legacy.
General Uses of a Will
A Will can be a very powerful instrument and has several uses that can significantly impact not only who inherits what, but also how it is inherited, how debts are paid, how taxes are allotted for, who is in charge of your estate, and the powers your executor(s) possess.
Again, the most well-known use for a will is to distribute your property after you pass. This is typically thought of as who receives what (Johnny receives Blackacre, Mary receives a certain family heirloom, etc.) after your death. Wills can distribute:
(1) real estate such as your home, beach house, or office building
(2) tangible personal property like automobiles, antiques, collectibles, furniture, or jewelry, and
(3) intangible personal property as in stocks, bonds, and ownership interests in a family business.
It is important to note that a Will DOES NOT cover all types of property. For instance, real property owned with a “right of survivorship”, life insurance proceeds, and retirement accounts with named beneficiaries are types of property that pass by operation of law and not via a Will.
In addition to the transfer of assets, a Will has several other significant uses. Often the most important is the naming of a guardian for minor children. Coupled with the naming of a guardian is the establishment of a trust for the protection and preservation of assets for the benefit of the child. Pets should also be provided for in a Will by naming a new owner and providing money to be used for the care of the pet.
Beyond protecting your children and the distribution of assets, a Will can be used to name an executor for your estate. The executor manages your estate, making sure the property is distributed, all debts and taxes are paid, claims received, and all state and federal requirements met. Further, a will can grant or limit the powers of the executor and can designate the source of the estate from which taxes will be paid.
Types of Wills
Self-Proving Will – This is the type of Will most people are familiar with. It is executed according to specific formalities (on paper, signed, witnessed, with affidavits) and is often prepared by an attorney, and is tends to be the easiest to admit to probate.
Holographic Will – This Will is a document drafted without the formalities of the Self-Proving Will. It is in the handwriting of the testator and while it can be a valid Will in Pennsylvania, it can be more difficult to have admitted to probate than a Self-Proving Will.
Oral Will – In Pennsylvania, all Wills must be in writing. Thus, an Oral Will is not a valid Will.
Living Will – A Living Will does not address the disposition of assets after death. Instead, a Living Will addresses medical care and life support should you become incapacitated. Often a Living Will is part of an overall Estate Plan.
Requirements for Making a Will
In Pennsylvania, in order to make a Will the testator (the person executing the Will) must:
(1) be of 18 years of age or more; and
(2) be of sound mind, otherwise known as having testamentary capacity.
In order to have testamentary capacity, the testator must have intelligent knowledge of the property he/she possesses, the people who are the natural objects of his/her bounty, and what are his/her desires for the property. Testamentary capacity is required only at the time of executing the Will.
Wills, under most circumstances, must be signed by the testator at the END of the Will. Although not necessary in Pennsylvania, it is beneficial to have the Will signed in the presence of two competent witnesses, as two attesting witnesses will be required for the Will to be admitted to probate. Additional requirements are necessary for the Will to be made Self-Proving.
Michael J. Girardi
Estate Administration is a process that involves a wide range of duties on behalf of the Executor or Administrator. These responsibilities include collecting, valuing, and protecting the estate’s assets, making payments to creditors and receiving collections from debtors, the payment of various taxes, and the distribution of the assets to the heirs and beneficiaries of the estate.
To learn more about Estate Administration, check out the resources below, or contact us to schedule a free consultation.