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Wills - Why Most Of Us (Especially Parents) Need Them

Wills are perhaps one of the oldest legal vehicles in our common law history: for almost a thousand years, Wills have been used to pass legal ownership of property (assets) from one person to another, often in familial situations of inheritance. Today, Wills remain one of the most effective legal instruments to protect your loved ones by ensuring that they receive the legacy you wish to leave to them.

In New York state, the laws that govern Will-making can be found in Article 3 of the state’s Consolidated Laws on estates. The following content sets out how Wills work in New York according to Article 3 requirements.

Why Wills Are Important – The Difficulties of Intestacy

Before I delve into how Wills operate and what they should contain, it’s important to revisit why they are necessary. When you pass on without a Will in New York state, you die “intestate”. This means that the Probate courts will have to decide who is to legally inherit your assets, so long as your total assets estate (real and personal property) total more than $30,000. “Estate” is the proper legal term for what you own.

When you die intestate, what you own does not automatically go to your loved ones or intended heirs, unless you have provided for this via other estate planning instruments such as Living Trusts or Beneficiary Designations. Instead, your intended heirs would require a court order to access your assets (by petitioning to what in New York state is referred to as the Surrogate’s Court). This can create a particularly stressful and painful situation for your loved ones if they are strapped for cash to pay immediate expenses, for example. It typically takes three to six months to get an intestate matter settled through the Surrogate Court, if not years if there are complications.

I’ve written about Intestacy before, and I highly recommend that you re-read the blog post. It’s the first crucial step in understanding why Wills – and other estate planning tools – are pivotal to ensuring your legacy passes on to those you want to benefit. After all, Intestacy essentially moves the power to decide who inherits from you ... to the Courts. As you will not be around to indicate your preferences during the Intestate process , it could well be that people (e.g. a relative you do not wish to leave assets to) land up inheriting per intestate rules, at the expense of those (e.g. your best friend who has been closer to you than a sibling) you intended to provide for.

IMPORTANT note to unmarried couples: intestacy laws in most states do not provide for a life partner who is not married to the decedent to inherit. Hence the heightened importance of making Wills if you’re an unmarried couple. Only spouses, children, and immediate family of the decedent can inherit in cases of intestacy, per strict distribution rules applied by the Surrogate’s (Probate) Court. If you are unmarried, you leave each other at risk of not inheriting, unless you’ve made legal provisions for doing so such as in a Will or other estate planning vehicles.

What Wills Can Do For You – Inheritance of Assets & Guardianship of Minor Children

A simple Will can effectively pass on your estate to those you intend to inherit from you, provided both its substance and form clearly set out your intentions. Typically, any personal possessions (e.g. valuable jewelry, car, heirlooms) and real estate (in the US, and in other US states and countries) can be part of your inheritable estate. When you create a Will, you should include a list of all your assets with it, including proof of ownership (e.g. title deeds, financial accounts, tax returns).

Remember that your assets are yours, and unless you pass on intestate, you can leave them to anyone you choose, whether in entirety or distributed among your chosen beneficiaries. You are not bound by law to leave them to your relatives or spouses, if you do not wish to. You can also make charitable organizations beneficiaries of parts of your estate as well (note: there are often significant tax advantages to both the charity and your family to this – consult your financial advisor and/or tax attorney who can guide you on how charitable legacies reduce the taxable base of your estate, thereby leaving more for your loved ones where estate tax rules allow for it).

When it comes to your children, it’s crucial to understand that minor children are not deemed by the law to have the capacity to hold assets in their own stead; if you pass on when they are still minors, their inheritance must be held in trust for them. The same applies to adult-aged children who lack the legal/adult capacity to inherit in their own stead, such as those with special needs. For these children, a special needs trust would be the best solution, but exercise care and seek legal advice as this is a complex area of trust law; mistakes can deprive your special needs child of valuable federal and state benefits they would otherwise be entitled to.

As a parent, your Will is where you state your preference in terms of Legal Guardian(s) for your young children. If you’re a single parent and have sole custody of your kids, appointing a Legal Guardian is especially important. Of course, if there is a surviving parent with joint custody rights, this issue of Guardianship does not arise, for obvious reasons.

Note that simply having a Guardianship Clause in your Will does not automatically and immediately convey legal and physical custody of your kids to their chosen Guardians. Your Will would merely be the starting point on which the Guardians can build their petition to the Surrogate’s Court (which also hears cases on Legal Guardianship of minor children).

That said, it’s almost always the case that the Court will sanction your choice of Guardians, provided their petition for Guardianship has been properly completed, and there are no competing petitions for Guardianship (hence the importance of your Will’s Guardianship clause that the Court will see as a paramount indicator as to who should be Guardians). The bottom line is this: communicating (whether in a letter or email or verbally) to the intended Guardian as to your wishes hold no legal water; you need to put your wishes in your Will.

No Will Required – Beneficiary Designations

Some people do not need wills because their assets consist entirely of financial assets that they can give to beneficiaries directly via simple designation. Almost all financial institution that hold assets for their clients require that you nominate beneficiaries when you fill out your forms for them to set up custody of your assets.

Which means that you don’t need to set up estate planning documents to ensure that your loved ones inherit your financial assets when you make such designations; they inherit automatically and do not require a court order obtained via the Probate process to access such assets from the financial institutions that hold them. Such assets are commonly known as “Non-Probate” assets. You can also read more about Naming Beneficiaries for Non-Probate assets on my website.

What Wills Do NOT Cover – Advanced Directives, POA, Joint Tenancy, Partnership Business

Wills, like most legal documents, are not exhaustive vehicles. There are limits as to what they can do when it comes to who inherits your legacy and how.

For one, Wills put your wishes into motion after you pass, not before. Which means that some of your wishes that can only be carried out while you are still alive cannot and should not be contained in your Will. For example, certain estate planning documents- Advanced Directives or Living Wills - operate to ensure your wishes as regards what healthcare and life-sustaining support you receive. Consequently, such wishes would not be included in your Will.

You may recall a recent article I wrote about Powers of Attorney. I refer to it because your Agent’s authority under the POA does not extend to your Will as regards your financial assets. These rules operate by virtue of law, and you don’t need to add further legal language to your Will to ensure these limitations on your Agent’s authority. Again, Powers of Attorney operate only when you’re still living, and therefore have no legal power when it comes to implementation of your Will. You can, of course, make your Agent (per your POA) the Executor of your estate (per your Will), but remember that these are completely separate legal documents, even as it's the same person acting in separate and distinct capacities.

There are some financial assets that also do not pass on via Will. These include real estate owned by you as a Joint Tenants your insurance death benefits, your investments and retirement proceeds, and your pension benefits. For the latter three in this group, beneficiary designations work best, as explained above.

When it comes to Joint Tenancies, I urge you to be careful. The cornerstone of real estate inheritance is the law of Joint Ownership, primarily as Joint Tenants. Joint Tenancy is another very old legal term, created to automatically devolve inheritance of a deceased person’s share of a piece of property to the other owner(s) of the property. In legal parlance, this is known as the “right of Survivorship”. When two people are Joint Tenants, they both own the real property equally at the same time, but ownership isn’t delineated into two distinct, specific halves. For this reason, Joint tenancy ownership can’t be Willed. The right of Survivorship means that by operation of law, the remaining joint tenants (survivors) get the decedent’s share of the asset. Wills do not override rights of Survivorship.

For example, if you and your sister own your parents’ home as Joint Tenants, but you and your spouse and kids live in them, your spouse and kids do not inherit the home; your share of the house passes on to your sister by virtue of how Joint Tenancy laws operate. You can’t Will your share to your spouse, unless there is legal documentation between your sister and yourself to that effect.

Of course, most spouses or life partners typically own their family home together as Joint Tenants, which is, for obvious reasons, an excellent safeguard. The law of Survivorship also applies to other property (such as joint bank accounts). When properly used, it can be a powerful way of ensuring automatic inheritance that avoids having to make a Will and go through Probate. Of course, title deeds to Joint Tenancies must indicate that they are such and contain the names of the Joint Tenants.

But what if you and your sister are Tenants in Common, another common real property legal concept? This changes the picture entirely. When property is held as Tenants in Common, each owner holds a distinct share that can be inherited by his/her heirs.

So let’s say you hold a three-quarter share of your parents’ home and your sister has a one-quarter share. You can leave your spouse your share via your Will, making her a Tenant in Common with your sister when you pass on. If your spouse wishes to obtain your sister’s share, she will have to pay her for that share, at an agreed price (usually based on market valuation). Can your sister sell her share to a stranger? Technically, yes, but she requires your spouse's agreement to do so. As regards Tenants-in-Common property, the Survivorship concept does not exist to ensure automatic inheritance; if you’re a Tenant-in-Common, make sure you provide for the inheritance of your share via your Will. If you leave it out, this particular asset will have to go through the Probate Courts as an "intestate" asset in order for your intended heirs to own it.

You also can’t include your ownership/share in an incorporated business or partnership in your Will. Often, incorporated businesses with more than one shareholder have their own internal legal agreements as to buy-outs of stock owned by the decedent. If you’re a sole proprietor, then such a scenario would not apply and you could Will your business interest to your intended beneficiaries. If you’re part of an LLC or partnership (both of which are legal structures with their own rules), the LLC’s or partnership’s agreements on succession planning will take precedence over your Will, rendering any clauses about your business interest largely ineffective.

New York Law - Essential Formalities, Oral Wills

For a Will to take effect in New York state, the person making her Will (aka the “testator”) has to be over 18 years old and of “sound mind and memory”. The law requires that the Testator has the mental capacity to understand the contents of the Will and its effect. She has to make her Will voluntarily, without pressure or undue influence from any other person. The actual document (typed or written) will also have to state that this is her last Will and Testament. Finally, it must be signed by her and two witnesses, all at the same time.

Are oral Wills valid in New York state? Yes, but only in limited circumstances. Typically, New York state – like most states in the USA – allow adults to make their Wills orally/verbally only when they are near-death in dire situations such as a serious/fatal injury. Which explains why oral Wills are largely admissible only for our men and women in military service. That said, oral Wills are notoriously difficult to get through Probate as so much of their validity depends on witnesses’ accounts of the decedent’s soundness of mind and the circumstances surrounding his/her demise.

Witnesses are essential to help verify – if there is controversy later – that the Will-maker was not under duress or incapable of independent and intentional decision-making. For this reason, it’s often a good idea to have “disinterested” witnesses i.e. adults who have nothing to gain from your Will’s contents. This means that your spouse and/ other heirs under your Will should not be witnesses as being witnesses could disqualify them from inheriting. Can your attorney be a signatory witness? Yes, she can. Also, I suggest that it’s always good to pick witnesses who are not considerably older than you are (so your parents or older relatives should preferably not be witnesses). Should your Will become contested, older witnesses may not be around to give testimony.

A Will does not have to be entered into any kind of official “registry” to be valid. It is, however, crucial that you provide copies to your trusted family members and/or friends, in addition to your spouse/life partner. Certainly, your estate planning attorney will have a copy, but it’s best to ensure that your intended heirs have access to the original copy of your Will, wherever you decide to store it.

Should the original Will be lost or upon your demise, your family will have to engage an attorney to file a petition to admit a copy of your Will to the Surrogate’s Court (the name for the Probate Court in NY), a process which it typically long-drawn and involved as they would have to provide explanations as to the unavailability of the original, and the legitimacy of the copy. In short, make sure an adult you trust (perhaps your Executor) has a copy of your Will, plus the contact information of your attorney and financial advisor.

Substance Over Form – Templates Can Be Tricky

So much about the law is about the interpretation of language i.e. the document’s substance. It’s not unusual for legal outcomes to turn on the wrongful use of particular words or even phraseology. Experienced estate planning attorneys don’t need to use pre-set forms because we’ve been drafting documents for years. For some of us who serves clients who did not make their Wills with us, our estate litigation experience has also exposed the pitfalls of a badly drafted Will.

You can certainly download several templates for Wills from the internet, but use it only if you are certain that the language contained therein truly reflects the legal decisions you make, and conform to statutory requirements (Article 3 referred to above). Often, lawyers include some degree of legalese (legal terms and language), and it’s important to understand that specific legal language is sometimes present for a good reason – they are necessary to convey your intentions, as prescribed by our statutes and the language of case law rulings. While I have nothing against making your own Will on your own, you do take a huge risk if the template your bought or downloaded from the Internet fails to contain language that provides for your intentions. Or worse, effectively counteracts your intentions.

The other thing to note is that if you make specific changes to your Will, but wish for the rest of the Will to remain intact, such written changes should be contained “Codicils”. Codicils do not supersede your Will. Should you make a new Will instead of using a Codicil? It depends. If it’s a change such as updating beneficiaries (e.g. when a beneficiary passes on) or adding smaller assets (e.g. jewelry that is valuable but not hugely expensive). a Codicil would be appropriate.

If, however, you’re rethinking the entire intent of your Will (e.g. changing who gets what), or add a Trust to your Will, or acquire a big asset (e.g. a business, real estate), then it may be wiser to override the existing Will by making a new one. In short, if your changes amount to a major overhaul of your Will in terms of beneficiaries and assets, and how they should be distributed, it’s best to make a new Will.

Wills Are A Must For Parents

There’s more to the intricacies of Wills, which I will write about at a later time. Depending on the testator’s intentions and the smallness of an estate, some Wills can even be very short, a mere few pages at most.

There is, however, no one-size-fits-all template. Much depends on your marital status, whether you have children, and assets to pass on. For parents who are married (or partnered), and who have minor children, Will-making is about being responsible – when you’re no longer around, it’s an excellent way to give your loved ones peace-of-mind, and ensure that your legacy goes to those you love and care for. For these parents, Will-making also bestows peace-of-mind to themselves, knowing that they have made necessary preparations for their family.

Stay strong, stay safe, and be good to one another.