Thinking about my Will

Many people ask me, time and time again ‘What needs to be in a Will’.  Other people ask me ‘What you should never put in your Will?’  These are two very important questions and the answers may surprise you.

A Will, also called a Last Will or a Last Will and Testament is a document, which allows a deceased person to transfer the assets of the deceased person, to their  rightful heirs or beneficiaries.  The most important safeguard of a Will is that the document, by itself, has no authority.  The Will must be presented to the Probate Court after the person dies, and the Probate Court has to approve of the Will.  The Probate Court is the court which specializes in cases dealing with people who have died.  In addition to approving of the Will, the Probate Court will also appoint a person to oversee the administration of the Will. In Arizona, that person is called a Personal Representative.  Another name for Personal Representative is the Executor. 

Once a Will is approved and a Personal Representative is appointed, the job of the Personal Representative is to carry out the wishes of the deceased person, which have been written down in the Will. Every state in the United States has different rules, but generally there are many similarities.

So, if the question is ‘What you should put in your Will?’ generally, the Will must say the following things:

  1. That this Will only works after death.
  2. That the deceased person was capable of creating a Will and the deceased person was not forced to sign the Will against his or her wishes.
  3. The name of the person signing the Will and the place the person lived at that time.
  4. The name of the person who will serve as Personal Representative.
  5. Exactly how bills and expenses are to be paid.
  6. The name or name of the person(s) who will inherit the property after death.
  7. It must include an attestation clause, which is a special clause which says that the person signing the Will, the witnesses and the notary all state that the Will was prepared and signed correctly.

That is a lot of information to remember.  But it is just as important to know ‘What you should never put in your Will’. 

Let’s think about this question.  It is important because you need to remember that the only distributions to beneficiaries which come out of a Will need to come out of Probate Court.  Probate, even an informal probate can be very, very complicated and very, very expensive.  So, if you don’t want to go through probate, you need to have another way to transfer assets to your loved ones after your death.  The Will is the key to the Probate Court.  Other ways to transfer assets to your loved ones, will be able to avoid probate. 

So, let’s see.  If your Will states that your house goes to your friend John, that means in order for the house to go to John your loved ones need to go through the Probate Court to transfer the house to John.  There are much better ways to do this.  The easiest way to transfer assets at death is through a Trust.  The Trust will be able to transfer the house to John upon your death without going through Probate Court.  You can also transfer the property by operation of law, by joint tenancy with rights of survivorship.  If you and John own the house by joint tenancy with rights of survivorship, when you die, the house will belong to John.  No probate needed.

Another thing you should never put in your Will is debt forgiveness.  Let’s say John owes you $5,000.  John has been a good friend, and you need the money while you are alive, but not after you are gone.  So, you want to forgive the debt, which means after you die, John no longer has to pay you.  If you say in your Will, that you forgive the debt to John, the good part is that John does not have to pay the bill.  But, in order to make the forgiveness legal, your loved ones need to go through Probate Court to forgive the debt.  Your loved ones may not want to go through the time and expense of Probate, because Probate can cost way more than $5,000.  But also, if you forgive a debt in your Will, it may not be a great benefit to the person who owes you money.  When you say I forgive John’s debt of $5,000, the IRS can say John just received taxable income in the exact amount of $5,000.   This amount will add to his income on his income tax return.  So instead of being a benefit, it may also be a big burden to John.

I know that this is a lot of information to digest.  The most important thing to remember is that the best way to give assets to your loved ones may not be through a Will, or through the probate process at all.  Have you done any of these things with your Will?  Do you need some help? Just leave us a question if you have one and we will be happy to help you.