You Can’t Take it With You

Last time we discussed the various types of Wills. Let’s discuss in greater detail what they contain and why they are so important.

Let’s start with the disposition of assets.

The old adage is true. You simply can’t take it with you. That means you have to choose to whom to leave “it.” “It,” means everything you own at death including your personal possessions and your monetary wealth. Some of these assets may have sentimental value to you and you may wish them to go to specific people who would appreciate them.

For example, you might want your daughter to have your wedding ring. You might want your son to inherit your baseball card collection. You may have a piece of art that your best friend has always admired. Either way, leaving these possessions to these people would likely have meaning to both you and them. These types of gifts are known as specific bequests. Specific bequests can also be sums of money which can be made to people or even to charitable organizations that you would like to support.

In some states specific bequests don’t have to be named in your Will. You can simply leave a set of instructions sometimes known as a “private property memorandum” which is a list of the specific assets you would like to leave to specific persons or organizations. In other states, private property memoranda are not enforceable and are merely viewed as your request that your wishes be followed. In such states it would be important to include your specific bequests in your will to be certain the gifts are actually received by the intended recipients.

The balance of what you own at the time of your death after taking into account your specific bequests is known as your Residuary Estate. In drafting your Will you must determine how to divide your Residuary Estate and amongst whom.

It is important to recall that we will be remembered not only by what we do in life; we will also be remembered by our Wills and what we did with our assets at death. It is this reason why, as an estate planner, I always make a few recommendations to my clients.

First, I always recommend leaving a charitable bequest. Pick your favorite charity or charities and leave a legacy. And while doing so be remembered as a charitable and giving person who with their dying breath made the world a better place.

Second, don’t try ruling from the grave. I am sometimes asked by clients to leave assets to specific people only if they live their lives in a certain way. For example, some people wish to leave assets to their children only if they marry within their faith or race. Others wish to leave to them only if they achieve certain life goals such as secondary or tertiary education degrees. Again, remember that you will remembered by these bequests. If you are tempted to make these types of bequests ask yourself if you will be remembered for having strong convictions or simply for being a controlling and domineering person.

Third, and lastly, think carefully about whether you really want to dispossess someone and cut them out of your will. Sometimes my clients are so angry or upset with someone who would ordinarily inherit them that they choose to teach them a lesson and exact some revenge by cutting them out of their will. While I certainly recommend healing broken relationships, if that is not possible and you truly want to dispossess someone I recommend including a special provision in your Will called an “in terrorem” clause, otherwise known as a “no contest” clause.

It is likely that if you leave a close family member out of your will that they will challenge your will when it is probated after your death. Even if they are ultimately unsuccessful, your estate will be depleted by virtue of all the legal fees it will expend in defending your decision to dispossess that person.

One possible way to prevent this is by drafting a no-contest clause which works like this.

Rather than completely dispossessing this person of all your assets you leave them something of value, albeit less than they would have gotten if you had not dispossessed them. The no-contest clause then says to that person, if you challenge my will unsuccessfully you will not only lose your case, you will lose the gift I am leaving you and you will walk away with nothing. This gives the person incentive to walk away with something rather than risk everything by challenging your will.

These clauses are only enforceable in certain jurisdictions so make sure to discuss them with your qualified and experienced estate planner.

We invite you to contact us to learn more about estate planning and the services we offer.