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The Mechanics of a Will

A complete estate plan should include a will, which is a legal document that disperses your property upon death. If you die without one (intestate), the state will distribute your assets and property via state law and quite possibly at odds with your wishes.  Having a will allows you to appoint a legal representative or executor to carry out your bequests and name a guardian for your children. There is no doubting the importance of having a will; however, there are some limitations you should be aware of.

Although a will can be the primary mechanism to transfer property on death, it does not cover all property situations. Some classes of property you are unable to distribute through a will are:

  • Property held in trust – A trust will have named beneficiaries who will receive the trust’s property according to the trust terms and not based on what is in your will (unless specifically stated in the trust).
  • Pay on death accounts – Informally known as PODs, the original account owner names a beneficiary(s) to whom the assets in the account pass automatically upon the owner’s death.
  • Life Insurance – Life insurance benefits pass to your named beneficiary(s) in the life insurance policy and are not affected by your will.
  • Retirement plans – In a similar manner to life insurance, money in an IRA or 401(k) passes to the named beneficiary(s). According to federal law, a surviving spouse is generally the automatic beneficiary of a 401(k); however, there are some exceptions. An IRA permits you to name a beneficiary(s).
  • Investments in transfer on death accounts – Some accounts holding stocks and bonds will transfer on death to the named beneficiary(s). Like POD accounts, transfer on death accounts bypass probate and go directly to the beneficiary(s).

A will does not allow you to avoid probate. Under most circumstances, a will must go through the probate process in order to allow beneficiaries to inherit property. It can take months to get through probate, and it involves expenses like an attorney, executor, and court fees. Also, under most circumstances, your will and everything associated with it (property you own, who your beneficiaries are, etc.) become part of the public record that anyone can access.

Keep funeral instructions outside of your will. The reality is your funeral may have already taken place before someone finds and reads your will, which can take days, even weeks. If your funeral or memorial service is important to you, the best way to help your family is to pre-plan, making arrangements with a funeral home. You can leave written instructions with the family as to your plans.

Your pets cannot inherit through your will. An animal is legally unable to inherit money or property from you. If you want your pets to be cared for after you die, leave money to a person willing to take care of your animals. The person you select can inherit your pets since a pet is considered property. You can also set up a pet trust or a pet protection agreement, either of which provides for your pet’s care.

Provisions for a child on government benefits are best in a trust. It is best to create a special needs trust to provide for a child with special needs or a child who is receiving government benefits. The trust can hold money for your child’s care without affecting those benefits.

There are ways to circumvent the limitations of a will by creating trusts, setting up pay-on-death accounts, and ensuring a beneficiary is named on all accounts that permit them. Your will is an important component of a comprehensive estate plan, but it can’t do everything.

We would be happy to discuss the pros and cons of having a will and other options available to you as part of your overall estate plan. Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help with your long-term care needs.

Understanding the Succession (Probate) Process

In Louisiana a succession (sometimes called “probate”) is the legal process for authenticating a deceased person’s will, reviewing their assets, paying their outstanding debts and taxes, and distributing what remains to their inheritors. After an asset-holder dies, the court will appoint a valid will’s executor to administer the probate process. In the absence of a will, the court may appoint an estate administrator to handle probate. Probate or succession law varies by state, but there are steps in the process that are common.

First, an executor is appointed and is normally the person named in the will. It is the executor’s responsibility to initiate the probate process. An executor can be a family member, a financial advisor, or any person the testator deemed capable of administering their estate. The executor files the will with the probate court, which initiates the probate process. A court officially appoints the executor as named in the will, giving the executor legal authority to act on the testator’s behalf.

The executor’s function is to locate and oversee all of the estate’s assets and to determine each asset’s value. The majority of the deceased’s assets are subject to the probate court, where the deceased lived at the time of their death. Real estate is an exception, and probate may extend to any county where the real estate is located.

The executor will pay any taxes and debts owed by the deceased from the estate. Creditors are given a limited time to make claims against the estate for any money owed to them. If the executor rejects the claim, the creditor may take them to court, where a probate judge will determine the debt’s validity. The executor is responsible for filing the deceased’s final, personal income tax returns. The executor’s last task, via court authorization, is to distribute what remains of the estate to the beneficiaries.

Some form of a succession is generally required to transfer title any asset or account. However, if there is no will, depending on the size of the estate, a court proceeding may be unnecessary and allow the heirs to transfer the title using a specially worded affidavit.

If a person dies without a will, they are said to have died intestate. An estate can also be deemed intestate if the will presented to the court is found to be invalid. The decedent’s assets of an intestate estate follow a similar probate process, beginning with the appointment of an administrator  if necessary. An administrator functions like an executor, receiving all legal claims against the estate, paying outstanding debts, and the decedent’s taxes.

Administrators must also seek out legal heirs, including surviving spouses, parents, and children. The probate court will determine the distribution of the estate among its legal heirs. In the absence of any family or other heirs, remaining assets go to the state.

The more complex or contested an estate is, the longer the succession can take to finalize. The longer the process, the higher the cost.  Although there are exceptions that can be made, the list of the estate’s assets is generally a matter of public record, so if you want to keep your estate private, it is best to pursue other estate planning options such as a trust.

As estate planning attorneys, we can help you determine what planning tools are best for you. Contact us to schedule time for a private conversation to further determine how we can help. Please contact our Ruston, LA office by calling us at (318) 255-1760 or schedule an appointment to discuss how we can help.