The Will is the most basic and common estate plan document. I will discuss two situations: (1) having no Will, and (2) having a Will.

In both cases, at death, the title to a person’s Probate Asset is transferred to the survivors under the Probate Court’s supervision. The court directs the settlement of the estate, including payment of debts and disposition of the probate property. Probate property includes everything to which title does not automatically pass by operation of law. Examples of non-probate property include various trusts, property held as a joint tenant, joint bank accounts, and life insurance. One might think that joint ownership of property is the way to get around probate. In many cases there is a severe tax penalty down the road. From an estate planning perspective, separate ownership of assets is preferred.

Where there is no Will, the court appoints an Administrator to transfer assets according to the formula that the government has determined as representing the typical decedent’s wishes. As an example, for decedents domiciled in Massachusetts and leaving behind a spouse and children, the court divides the property equally between the surviving spouse and the children. This may not be to the liking of the decedent. Where the child is a minor below 18 years of age, the court appoints a Guardian, who is supervised by the court at considerable expense to the survivors’ estate.

The Will guides the disposition of one’s probate assets at death. The Will is also probated, which means the court has to approve the Will. Where real property is located out of state, it is probated in that state and the law of that state governs. The Will must have been executed according to certain strict formalities; otherwise it is a worthless piece of paper. The Will, typically, names an Executor who performs acts similar to the Administrator. For minors, the Will typically appoints a Guardian, or a Trustee for the trust to be formed under the Will, both of whom are supervised by the court for all financial decisions. The more the court gets involved, the greater is the expense to the estate, and the smaller is the amount available to those who are left behind.

The problem with probate is that one’s assets may be tied up in court for months, and sometimes even years. For rapidly depreciating assets, such as securities in a volatile market, that may be a problem because they cannot be disposed off until the Will is probated. Death taxes are due 9 months after death, and that may pose a problem too. As was discussed in the last column, the two objectives of modern estate planning are avoiding probate and minimizing estate taxes. The Will does not avoid probate. Its utility in saving taxes is also relatively modest. But it achieves one very important result. It puts assets in the hands of people whom you wish to see in control.

(This material is presented for informational and educational purposes only. The materials presented must not be construed as legal opinion or a substitute for one from a practicing attorney.)

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