Creation of a will is an important step to ensuring correct succession of possessions after death. Here are some important elements you need to know.
What’s a Will?
We hear about them sometimes in the media but usually only when someone famous dies, didn’t prepare one, and now the family is trying to figure out what to do. Think of Prince, as a good example. Because he didn’t have a Will, his estate ($154 million) will be distributed to three of his siblings, and a publishing house that bought the rights of three other heirs.
But to get to that conclusion, the courts had to hear hundreds of claims from potentially interested parties asserting they were related to Prince in one way or another and deserved a piece of the estate. It all could have been avoided if Prince had had a Will.
So, what are they and why would we need one?
A Will, also called a Last Will and Testament, is a legal document that directs where and to whom your property and possessions should be given upon your death. Think of a Will as a map or a good book of directions, and you are choosing the people you trust to be in charge of reading the map and following the directions you wrote in the map. If all works well, the end result is that the trusted person gave everything to the people you wanted by following your instructions.
Planning for our deaths is an important aspect of earning money and accumulating property during our lifetimes; our “stuff” doesn’t just disappear when we die. We need somewhere for it to go, and the Will allows you to control that process.
What Can a Will Do?
Wills are versatile tools. First, a Will has no legal consequence until the person whose property it administers dies (we call that person the “testator”). Before that date, the Will can be amended, revoked, or altered in any way by a competent testator. Second, Wills can account for, and should account for, all types of property – real property, bank accounts, retirement accounts, business interests, just to give a few examples. Wills can also be drafted in a way that allows the testator to best utilize certain tax rules and exemptions, or to possibly mitigate estate taxes.
Having a Will also means that our state’s intestate code will not apply when a person dies. Maine’s intestacy laws exist to tell us what we do with property when a person dies without a Will (meaning they “died intestate”), and who in that person’s life has a right to receive any of the probate property. The Maine Probate Code sets out these intestate rules as a default, so these rules will apply unless there is a Will to supersede them.
Under Maine’s intestacy laws, if an intestate deceased person had a surviving spouse, the surviving spouse has a priority to receive certain property in the intestate estate. But, the surviving spouse may not have sole priority to receive all of the probate property. Our surviving spouse might have to share the probate property if the deceased also had children. And that may not be what our deceased person really wanted.
The process of administering the estate, executing the wishes our deceased testator put in his Will, is called “probating” or “going through probate” and the courts that control this process is the probate court. This process is also governed by the Maine Probate Code.
Probate Administration in Maine can be simple. In most cases, it does not have to be avoided. If the probate matter is filed with the court and there are no challenges, the process is called “informal”. An informal probate administration is left to its own by the court to be administered by the Personal Representative, takes about a year to complete, and can be a smooth process. The goal of probate is to vest authority in the Personal Representative you named in your Will so that they can administer the estate and distribute the assets according to the Will’s instructions. If a person dies intestate, the Personal Representative would be governed by the intestate code instead, but the responsibilities are the same.
But, probate is a public process. Once the Will is filed with the court, the Will becomes a public record and can be searched online by anyone. If you want to keep your estate private, or if you have property in multiple states, avoiding probate might be an important factor for you. In those cases, you may want to learn about alternatives to a Will when discussing your planning options with an estate planning attorney.
The property that is administered through a Will, or “passes through” a Will, is called the probate estate. To explain what assets belong in our probate estates, it is easier to explain what assets do not belong; the probate estate is everything else. There are two main categories of assets that do not fall under probate assets: (i) assets with rights of survivorship, and (ii) assets that name on-death beneficiaries.
Assets with Rights of Survivorship
You may already own assets with rights of survivorship and not realize it. Assets with rights of survivorship are owned with another person, usually in joint tenancy. The most commonly owned joint assets are bank accounts and real property. Assets with rights of survivorship do not pass through our Wills because the person with whom we share ownership has the same right to own that property that we do, so if we die first, the property becomes solely our co-owners. If you are married and you bought a house with your spouse, there is a very good chance you own that house as joint owners.
Assets with On-Death Beneficiaries
The most common assets with on-death beneficiaries are life insurance policies and retirement accounts. These are assets on which you have created an instruction with the investment or insurance company to pay the account balance to one or more people when you die. Because the asset is already to be paid out to someone else, the asset will not become part of your probate estate. They can also be called pay-on-death or transfer-on-death accounts. And Maine law also provides for a real estate transfer that can be made on death using a transfer-on-death deed.
It is possible these assets can make their way into the probate estate if a beneficiary is not named, so check your beneficiaries!
Whether your situation is simple or complex, a Will can be drafted to capture your wishes and ensure that your assets pass to the people and entities you intend. Call our estate planning department to schedule an opportunity to meet with you about preparing your estate plan.
To learn more about planning with a Will or other related topics, visit our Estate Planning resources hub.