Legal: Estate Planning Pitfalls

The purpose of a Last Will and Testament, in large part, is to ensure that one’s heirs can take care of the estate as simply and inexpensively as possible, while also ensuring your assets go where you choose for them to go.  Most of the time, this is exactly what happens when you have a well thought out Will that is properly executed.  However, over the years, I have repeatedly viewed several items that have frequently appeared in Wills that may have seemed like a good idea at the time, but ended up making the estate very difficult to probate and distribute assets according to the deceased’s wishes. 

1. Bonds

I think the best way to think about a bond is to compare it to insurance.  Unless your Will waives the bond, the law requires the estate to be supported by a bond.  In other words, unless you have words in the Will that say something like “the executor shall not have to post any type of bond or security” then the default position is to require a bond. 

The bonding process requires the Probate Court to determine an estimated value of the estate, then issue an order for the executor to purchase a bond (again, think insurance policy) to cover the value of the estate to protect the beneficiaries.  Not only are bonds a nuisance to acquire, but they also cost money and can be significant depending on the size of the estate. 

Bottom Line: Include a waiver of bond in your Will. 

2. The $1 Bequest

I see the $1 bequest far too often.  This is usually a bequest (or gift) to a child for which there is no relationship, but there is a desire to leave something.  The problem with the $1 bequest is that it, like any other bequest, still needs to be distributed.  For example, in one probate that I handled, the beneficiary of a $1 bequest was deceased, which caused an extensive delay in finalizing the probate process. In order to comply with the statutory requirements, we had to complete numerous additional tasks (as required by the Probate Court) that compelled the client to spend additional money and delayed finalizing the probate, just to ensure that the heirs of the $1 bequest were properly notified of their potential claim to the $1.  If this sounds expensive and problematic – it is. 

Bottom Line: Nominal bequests are still bequests.  If you want to put in language excluding a person, just exclude them without a nominal bequest.

3. Illegal Requests

Although rare, there are times when you will see a bequest that violates the law.  For example, there may be restrictions on wiring funds overseas or to certain organizations or instructing the executor to take cash and give to a person without any record of the transfer.  If something is illegal in life, it is likely illegal after your death, and placing such items in your Will only complicates probate. 

Bottom Line: Ensure the legality of your bequests. 

4. Personal Wishes and Statements

Sometimes individuals want to leave a message to family and/or friends.  While this is certainly understandable, your Last Will and Testament is not the best place to do it.  The problem is that well wishes and personal statements can often sound like bequests, and may show intent to bequest if someone challenges the Will.  The Will is to transfer assets from your estate to beneficiaries; try to stay within that purpose. 

Bottom Line: Statements to family and friends should be separate documents – not contained within the Will.

5. Requests for Remains

There is nothing wrong with placing your wishes for your burial or cremation in your Will, but it should not be the only place that those wishes are placed.  The problem is that your Will may not be read or discovered until well after your funeral/memorial services. 

Bottom Line: Make your wishes known to individuals outside of just putting it in the Will and/or have a separate document detailing your cremation/burial instructions. 

6. Bequests to Pets

While we love our furry companions and feel as though they are family members, leaving money directly to an animal is forbidden.  The law does not recognize an animal’s right to own property and a bequest to an animal will fail.

Bottom Line: To leave a gift for the benefit of a pet, identify a trustee and/or caregiver and leave the money to them to care for your much-loved pet.

7. Special Needs Bequests

For families with special needs members, ensuring their care is of vital importance.  However, leaving money or other property in a Will to a person with special needs is often not the best option.  First, the beneficiary may not be in a good position to handle or manage the bequest and secondly, there may be repercussions in regards to the person’s ability to qualify for income related services (such as Medicaid).

Bottom Line: Speak to a qualified trust attorney about a special needs trust. 

8. Items Already Designated to a Beneficiary

There are often many assets that will not pass through your Will.  For example, when you purchase a life insurance policy, you typically designate a beneficiary to receive the proceeds upon your death. If you identify a different beneficiary of the life insurance proceeds in your Will, it will fail (instead going to who you designated in your policy).

Bottom Line: Be careful not to give the same asset to more than one person. 

In conclusion, keep in mind that a Last Will and Testament is primarily intended to ensure that your assets, that you have worked your entire life to acquire, are transferred to your loved ones  in the way that you want them to be distributed.  That being said, there are some bequests that are not allowed at all, and others that are just not a good idea in terms of practicality.   Have a qualified professional assist you in drafting your Last Will and Testament, and when possible, keep the bequests as simple as possible.  Not only does simplicity help ensure your Will is carried out to the letter, it also safeguards your heirs in limiting both time and expense for your loved ones in carrying out your final wishes.