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May 01, 2012

Do I Really Need a Will?

Richard L. Sayre, CELA

There are many good reasons to create a last will and testament (will) prior to death. First, it allows you to specify who will inherit your estate. In the absence of a will (or a trust or other arrangement to pass your assets at death), a state law sets forth designations as to who will receive your assets. If you are married, live in a community property state and the bulk of your estate is comprised of community property, your spouse will inherit most or all of your estate. If you have a significant amount of separate property you wish to convey to others, the distribution to your spouse may trump some of your wishes in the absence of a will. If you live in a separate property state and die without a will, the laws of that state will distribute your estate, often to persons who you may not even know or have intended to receive it.

With proper planning, a married couple in 2012 can currently pass up to ten million dollars in assets to their beneficiaries free of federal estate tax. This requires the inclusion of a special tax saving trust inside your will, which will take effect on the death of the first to die spouse. States often impose a state estate tax on a smaller estate, and the amount you can pass free of federal estate tax is due to change in 2013, so you should check with your attorney to be certain that the plan you have in place takes full advantage of all possible ways to minimize estate tax. Donations to charitable organizations can also be included in a distribution plan for your assets.

If you and your spouse die and your children are under the age of 18, the probate court will appoint a guardian to manage these assets until they reach majority, and will normally appoint the person you select. The guardian and attorney will be paid out of the funds you intended for your children until such time as they reach age 18. When the children reach majority, they will receive their full share of the estate. If you think back upon your level of maturity at age 18, you may agree that inheriting a large sum of money at that point in time might not have been the best incentive to continued stability. There is an option, which is a relatively simple trust for your children.

With a properly drafted will, you may create a trust held for the benefit of the children. You may designate a guardian to manage health and personal care, but also name a bank, relative, or close friend as trustee, and direct that the trust be paid out in increments at whatever age you feel appropriate. Our firm often uses a trust, which pays income at age 21, and a percentage of the principal at ages 25 and 30. In our experience, at age 21, children are likely to be in college and will have need for some income from the trust. At age 25, we recommend distribution of some portion of the principal of the trust, as children at that age are likely to be getting married or having children of their own, and could use some additional funds. Finally, we disburse the remainder of the trust when the children reach age 30, believing that, at age 30, they might know what to do with the money. You can set up these trusts in any fashion you wish, to disburse at any ages. Importantly, in addition to set distributions, the trust can be designed to permit the trustee to withdraw principal prior to the distribution intervals for the child’s medical, educational, or maintenance needs. Trustees can also be empowered with various levels of authority to handle the assets.

Wills can also include specific provisions to permit assets to be set aside for your disabled spouse or other beneficiaries with special needs and disabilities. By making these arrangements, your disabled beneficiary may receive supplemental services not available under state and federal programs from the trust, while still protecting their ability to maintain eligibility for benefits under critical public benefit programs. This is not only important to protect a disabled spouse, but also for parents with disabled children and grandparents whose estate is set to be distributed to a child who has a disabled child. If the parent of a disabled child dies prior to the death of the grandparent, many estate plans will pass the share of the deceased child to that child’s children, and so directly to the disabled grandchild. This could cause the disabled grandchild to lose needed medical, housing and income benefits.

To determine what arrangements are best for you and your specific circumstances, always seek the advice of competent legal counsel who are experienced in estate and disability planning.


Richard L. Sayre, CELA

About the Author: Richard L. Sayre, CELA, is a member of the National Academy of Elder Law Attorneys. This information is provided as a public service and is not intended as legal advice. Such advice should be obtained from a qualified elder law attorney. To find one in your area, visit and select "Find An Attorney."