A will is a fundamental estate planning document that distributes assets and provides instruction for certain other affairs after an individual’s passing. Beyond merely asset distribution, a will also enables a guardian to be appointed for your minor children, make provisions for pets, establish a plan for your digital legacy, and nominate an executor to manage your estate. At Skufca Law, we understand the importance of having a well-crafted will to ensure your estate is handled according to your desires. In our last blog, Wills & Trust: Choosing the Right Estate Planning Tool for You, we discussed the difference between wills and trusts. Now we will explore the essential components and considerations for your will.
What is Asset Distribution
While not the only function, asset distribution is a primary element of any will. Generally, the will’s creator, formally called the testator, will distribute his or her assets by making both specific and general gifts of their property.
Specific Gifts in Asset Distribution
Specific gifts generally include sentimental items, specific monetary gifts, real estate, or other assets. In this part of the will, the testator will clearly designate intended recipients for specific items. For example, a testator might leave a pair of earrings to her best friend since she always compliments her on those earrings.
It is important to have a plan for the specific gift in the event that the intended recipient predeceases the testator. In the scenario above, for example, if the testator’s best friend predeceases her, then the earrings should be added to the rest of the testator’s assets to be distributed generally with the rest of her possessions.
General Distribution: Per Stirpes v. Per Capita
Once your specific gifts are set apart, you will distribute the rest of your possessions generally. Usually, the will provision will say something along the lines of:
I give all of my tangible and intangible property to my spouse. If my spouse predeceases me, I give the same to my children in equal shares.
Notably, you will give your possessions in equal shares by one of two distribution methods: either per stirpes or per capita.
When it comes to distributing your general possessions, it is important to understand the difference between the per stirpes or per capita designation. Per stirpes means that assets are divided among each line of descendants, meaning each branch of the family receiving an equal share. Per capita distribution divides assets equally only among living beneficiaries, regardless of their relationship to you. Choosing the appropriate distribution method depends on your family structure and your wishes for asset allocation. To further clarify this complex concept, consider the follow examples:
Scenario 1: Per Stirpes
You have three children, A, B, and C. If child A passes away before you do, a per stirpes distribution establishes their share of your estate will pass to their descendants, your grandchildren. This ensures that A’s children receive A’s portion of the inheritance. This method maintains equal representation among the branches of your family tree.
Scenario 2: Per Capita
In the same scenario, if child A predeceases you, under per capita distribution, A’s share would be redistributed equally among the surviving children (B and C). This method divides the inheritance equally among all beneficiaries and would disinherit your grandchildren from child A if Child A predeceases you.
Selecting the appropriate distribution method depends on your family dynamics and your preferences for asset allocation.
Selecting an Executor and Successor Executor
Choosing an executor is a critical decision in creating a will. The executor is responsible for managing your estate, paying debts, distributing assets, and handling any legal or financial matters. It is essential to select someone you trust, and who is also competent to fulfill these responsibilities. Your spouse or your child, can be your executor if he or she is living. Naming a successor executor is also important in case your primary executor is unable or unwilling to fulfill these duties when the time comes.
Guardianship Considerations: Care for Your Children and Pets
If you have minor children, your will is an appropriate place to designate a guardian who will assume responsibility for their care in the event of your passing (provided their other parent has predeceased you). Selecting a guardian is a significant decision, and careful consideration of the individual’s parenting capabilities, values, and willingness to take on the role is paramount. You may consider other factors like minimizing occasions for the child’s displacement or transition from more than one guardian until they reach the age of majority at eighteen—you may love and trust your aging parents or grandparents, but they may not be the ideal guardians for your 5-year-old.
Additionally, consider providing guidance in your will about your children’s education, values, and any specific wishes you have for them. In some cases, you may want to establish a testamentary trust within your will. This trust, which expands upon the will, comes into effect upon your passing and allows for the management and distribution of assets to beneficiaries, often with specific conditions or over a period of time. Testamentary trusts can be useful for protecting assets, providing for minor children, or ensuring that an inheritance is managed responsibly.
Often overlooked, you may make provisions for your beloved pets which may be your property from an ownership perspective but practically speaking the cat or dog belonging to one or more of your children. Though not as intricate a decision as selecting a guardian for your children, you will still want to select someone who is willing and able to care for your pet and discuss this selection with them. You may want to keep the child and pet together, but this may not be possible. In such a scenario, you may want to consider leaving the pet with someone where the child can still visit with them.
Thoughtful and thorough discussions with potential guardians are essential to ensure they are willing to accept these vital responsibilities, and that they will align with your wishes for your child’s upbringing.
Further Important Considerations when Creating a Will
Apart from the key elements mentioned above, there are several other important considerations when creating a will. These include addressing digital assets, planning for taxes, and updating your will as life circumstances change. Regularly reviewing and updating your will is essential to ensure it remains accurate and aligned with your wishes.
At Skufca Law, our attorneys are here to guide you through the process, helping you make informed decisions and ensuring that your wishes are carried out precisely as you intend. Estate planning with Skufca Law is a lifelong relationship, where our attorneys are here to help you update your plans through all stages of your life. Establish peace of mind and contact us or call us at (704) 376-3030 today to set up your free 15-minute wills and trust consultation.
Coming up next: Stay tuned for our next blog in our Estate Planning Series: Understanding Trusts, where we will dive deeper into what is a Trust and when and why you may want to consider creating one along with your will.