What Type of Will Do You Have? Review of a Simple Will

As part of my day job I review a lot, and I mean a lot of Wills.  Most Last Wills and Testaments are structured the same way; all assets are left to the surviving spouse and upon the second death to the children, outright.  This type of structure is usually referred to as a Simple Will or an “I Love You Will.”

Simple Will only refers to the flow of assets, a Simple Will doesn’t mean you can just scribble it down on a napkin and hope it is accepted by the Court.  Many States don’t allow hand written Wills to be allowed for probate.

I will go through this post without even mentioning the estate tax which compounds the problems presented below. So even if you aren’t in that top echelon which will have to pay those taxes, you still may want to consider an upgrade.

Why a Simple Will Works in Most Cases

A Simple Will works in most cases because it is natural, that is it follows most people’s testamentary intent.  There is something comforting about providing everything for the surviving spouse, and then if there is anything leftover your children should enjoy it outright.  This is generally the type of Will you see pushed by attorneys who have no idea what they are doing in this arena or by online will providers.

I am not a huge fan of simple wills because there are a few relatively easy upgrades which can be made that fit most situations.

Simple Will “Upgrades”

There are situations which require a more advanced Last Will and Testament.  Some can be built into every will some should only be used in appropriate situations.  Regardless every reader who is able to contemplate death should understand these provisions/trusts.

Do you Trust your Children?

Most States provide for Spendthrift protection, so assets held in a trust are not eligible to satisfy a judgment for creditors.   When your inheritance is given outright and it hits that child’s bank account at 18 or 21 (depends on your State) that is it…control is gone, and that child can go grab some cristal and pour it on their favorite stripper.

Do you Like your Child’s Spouse?

Let us get real for a second, half of all marriages end in divorce, and depending on the State you live in marital property is chopped in half upon divorce.  However, in most States property held in Trust is not considered marital property for equitable distribution.

Do you have or is it Possible One of your Eventual Heirs May have Special Needs?

This is one of those trusts that should be built into every single Will.  Planning for a Child with Special Needs is a complicated and sensitive topic, however, it must be addressed.  If a child was receiving government benefits and you left him or her assets, outright, it is likely you would be doing them a disservice.  If you left anything above low five digits they would lose most government services.

There is a relatively simple fix through the use of a Third Party Special Needs Trust.

Are You on Your Second Marriage?

Once you leave assets to that Surviving Spouse, outright, he or she is free to leave it however and to whomever they want.  My law school professor used to say this was the “pool boy dilemma.”

Luckily, our boys in congress were afraid of the pool boy dilemma also.  They came up with a Qualified Terminable Interest Property Trust (commonly referred to as a QTIP).  A QTIP essentially allows you to leave your property to a trust which must pay your spouse income but upon his or her death you control where those assets go from beyond the grave.

A must in every second marriage. It prevents a surviving spouse from disinheriting the predeceased spouse’s children.

Are you Leaving Behind Fido?

Many states allow for Pet Trusts to provide a bucket of cash for whoever is lucky enough to also get your pet.

Is a Simple Will Wrong? Absolutely not.  I really believe everyone needs a Will so something is better than nothing.  Oh and just because you have a revocable living trust doesn’t mean these upgrades are built in.

When is the last time you reviewed your Last Will and Testament? Have I inspired you to do so?