A last will and testament is an important document giving evidence to an individual’s intentions regarding the passing of property upon death. Failure to create a will can have unintended consequences whereby property inadvertently passes to unintended beneficiaries.
When it comes to a married couple making a will, they have the option of creating one joint will that covers both of them, or making two separate wills that cover them individually. However, there is a major caveat when it comes to a joint will for a married couple that oftentimes causes more harm than good.
A joint will is a will drafted for two individuals, usually a husband and wife. Unfortunately, joint wills typically cause problems. A joint will is probated for the first person to die and then stays in effect until the second dies. However, circumstances often change after the death of the first spouse. One example is if the second spouse remarries. A joint will may cause problems for a couple, if one dies unexpectedly at a young age.
Some couples think that they can have one joint will together, but this is not a sound approach. Even if the majority of the information in your wills is nearly identical, you still need to each have your own. Read on to see why this is so important.
Different Times of Death
The chances are quite high that you will not pass away at the same time. If you have a joint will when one of you passes away, it can be much more difficult to work through executing the will for just the other party. In addition, once one person passes away, the other person needs to create their own will anyway so making a joint will today is really only delaying the process and making it more complicated.
Another problem is if your spouse passes away, you may run into complications when making your own will. This is because the wishes of your spouse in the previous will may still be binding. Keep in mind that you may live a very long time after the death of a spouse, and your life situation can change dramatically. You don’t want to be locked into a will that no longer makes sense.
Children from Previous Spouses
Many couples today are not on their first marriage and they often have children from previous relationships. Each having your own wills can make it much easier for everyone involved when it is time to pass on assets to these children.
May Not Hold Up in Court
Joint wills often carry much less weight if they are challenged in the courts. In fact, some states don’t even recognize them, so if you end up moving to another state, a joint will may become invalid. Even in states that do permit a joint will, they are challenged much more often, which may result in your final wishes not being honored. At the very least, it will result in a lengthy (and costly) court battle that is fought among your loved ones.
A Joint Will is Locked After One Spouse Dies
When one spouse does die first, if there is a joint will, it becomes “locked in.” This is because the will is a legal document identifying the wishes of two parties. If one of the parties dies, their wishes can no longer change and they can’t give consent to updating the will. While there are certain legal ways around this in some situations, it is quite difficult and can be an unreasonable burden to put on the surviving spouse.
Couples with Blended Households May Have Different Needs
Today more than ever, married couples are on their second (or more) marriage, often with children from prior relationships. While blended families can certainly be a happy and beautiful thing, they can create legal complications for joint wills. In many cases, the spouses may have separate assets that they want passed to their biological children. The easiest way to do this is to have a separate will that identifies what should be done with those specific assets.
Potential for Privacy Issues
When someone dies, their will often must go through the probate process. This is a public process, which means the will become available to anyone who wants to see it. If it is a joint will, that can present some serious privacy concerns for the surviving spouse. Having separate wills, on the other hand, limits what information will be disclosed through probate to only that which is in the deceased’s will.
Kinds of WILLs
Wills must meet certain standards to be valid. The person making the will, known as the testator, must be at least 18 years old and of sound mind. The testator must appoint an executor, provide for the distribution of his property after death, and sign and date the will in the presence of witnesses. Within these and certain other limitations, however, you can draft a number of different types of wills.
A simple will distributes property from the estate of a testator whose finances are uncomplicated. A simple will should be printed instead of handwritten and should include the testator’s name, address and marital status; statements indicating which assets are to go to which beneficiaries; a section appointing an executor for the estate and a guardian for the testator’s minor children if the other parent is dead; and places for the testator and two or three witnesses (depending on which state you live in) to print and sign their names. The will should include the date the will was signed, rather than the date it was written.
Testamentary Trust Wills
A testamentary trust will is a will that puts at least some of your property into a trust. A trust distributes your assets to a beneficiary but is administered by a third person who controls when and how the property is distributed to the trust beneficiary.
A joint will is created by two testators who leave their property to each other — in other words, the testator who dies first gets everything. In addition, it specifies how the estate will be distributed when the second testator dies. A joint will cannot be revoked without the consent of both testators, meaning that it is irrevocable as soon as one of the testators dies.
Unlike other types of wills, a living will does not distribute property after the death of the testator. Instead, it gives instructions on what type of medical treatment you wish to receive if you become too ill to communicate.
Kinds of Trusts
A trust can be created during a person’s lifetime and survive the person’s death. A trust can also be created by a will and formed after death. Once assets are put into the trust they belong to the trust itself, not the trustee, and remain subject to the rules and instructions of the trust contract.
While there are a number of different types of trusts, the basic types are revocable and irrevocable.
Revocable trusts are created during the lifetime of the trust maker and can be altered, changed, modified or revoked entirely. Often called a living trust, these are trusts in which the trust maker transfers the title of a property to a trust, serves as the initial trustee, and has the ability to remove the property from the trust during his or her lifetime. Revocable trusts are extremely helpful in avoiding probate. If ownership of assets is transferred to a revocable trust during the lifetime of the trust maker so that it is owned by the trust at the time of the trust maker’s death, the assets will not be subject to probate.
An irrevocable trust is one which cannot be altered, changed, modified or revoked after its creation. Once a property is transferred to an irrevocable trust, no one, including the trust maker, can take the property out of the trust. It is possible to purchase survivorship life insurance, the benefits of which can be held by an irrevocable trust. This type of survivorship life insurance can be used for estate tax planning purposes in large estates, however, survivorship life insurance held in an irrevocable trust can have serious negative consequences.
Charitable trusts are trusts which benefit a particular charity or the public in general. Typically charitable trusts are established as part of an estate plan to lower or avoid imposition of estate and gift tax.
A constructive trust is an implied trust. An implied trust is established by a court and is determined from certain facts and circumstances. The court may decide that, even though there was never a formal declaration of a trust, there was an intention on the part of the property owner that the property be used for a particular purpose or go to a particular person.
Dilzer Consultants Pvt Ltd