Understanding Wills and Estate Planning

Summary

• A will explains how you want your estate handled after your death and can name an executor, beneficiaries and guardians for dependents.
• Your estate can include financial accounts, real estate, vehicles, personal property, business interests and debts.
• Different estate-planning documents serve different purposes, including simple wills, testamentary trusts and living wills.
• Without a will, state intestacy laws generally determine how probate assets are distributed.
• Because requirements vary by state and personal circumstances, consider having an attorney review your estate-planning documents.

A will can help make your wishes clear for the people and property that matter to you. You do not need significant wealth to benefit from one. A will can provide direction for distributing assets, settling your estate and caring for dependents after your death.

## What a Will Does

A last will and testament is a legal document that states how you want your estate managed and distributed after your death. It can identify the people or organizations that should receive your assets, name an executor to help carry out your instructions and address guardianship for dependents.

Putting those decisions in writing can give your family clearer direction during an already difficult time and may reduce uncertainty or disagreements about your wishes.

What Is Included in an Estate?

Your estate is the property, assets and debts you leave behind. Depending on what you own, it may include bank accounts, retirement and investment accounts, real estate, vehicles, jewelry, business interests and other possessions.

A will provides instructions for how property that is subject to the will should be handled. Some assets may transfer outside the will, including certain jointly owned property and accounts with designated beneficiaries.

Common Types of Wills and Related Documents

Estate planning can involve several types of documents. The right combination depends on your circumstances and the laws where you live.

Simple wills

A simple will is a common starting point for estate planning. It can:

- Explain how your estate should be distributed.

- Name an executor to manage the process.

- Identify beneficiaries who will inherit property.

- Name a guardian for dependents.

Joint wills

A joint will is one document created by two people, often spouses, that sets out their wishes for distributing property. Because estate-planning needs and state laws vary, consider legal guidance before deciding whether this structure fits your situation.

Testamentary trusts

A testamentary trust is created through a will and takes effect after death. It can provide instructions for how and when assets should be distributed. For example, a trust may direct that funds be used for education, a home purchase or distributed when a beneficiary reaches a specified age. A trustee manages the assets according to the instructions in the will.

Living wills

A living will addresses medical preferences while you are alive but unable to make certain decisions for yourself. It is different from a last will and testament, which addresses your estate after death. Estate planning may include both documents, along with other health care or power-of-attorney documents.

What Happens When a Will Goes Through Probate?

After a person dies, a valid will may go through probate, the court-supervised process used to validate the will, address debts and distribute remaining assets.

Requirements for a valid will and the probate process vary by state. Generally, the court reviews whether the will meets applicable legal requirements. The executor may inventory the estate, notify creditors, address eligible debts, bills and taxes, and distribute remaining property according to the will.

The length and complexity of probate can depend on factors such as the estate's size, debts, disputes and applicable state procedures.

What Happens If You Die Without a Will?

Dying without a valid will is known as dying intestate. When that happens, state intestacy laws determine how probate assets are distributed rather than instructions you selected in a will.

Those laws commonly prioritize certain family relationships, but the specific rules vary by state and family circumstances. Assets that transfer through joint ownership or a valid beneficiary designation may pass outside probate, while property owned solely in your name may need to go through the probate process.

What Is the Difference Between a Will and a Trust?

A will states how property subject to the will should be handled after your death and generally becomes part of the probate process. A trust is a legal arrangement in which assets are held and managed by a trustee for designated beneficiaries. Depending on how it is created and funded, a trust may operate during your lifetime and continue after your death, and certain trust assets may avoid probate.

What Does an Executor Do?

An executor is the person named to help carry out the instructions in a will. Responsibilities can include locating and filing the will, identifying estate assets, addressing debts and taxes, and distributing remaining property to beneficiaries.

Choose an executor carefully. The role can involve significant administrative and financial responsibilities.

How Can You Change a Will?

You can generally change your estate plan by creating a new will or, when appropriate, adding a codicil. A codicil is a legal amendment to an existing will and may be useful for limited changes. More substantial changes may call for replacing the existing will.

Whichever approach you take, make sure the updated documents meet the legal requirements that apply where you live.

Things to Consider When Creating or Updating a Will

Think carefully about who you want to name as beneficiaries, who should serve as executor and who should care for dependents if needed. Also consider what should happen if a beneficiary dies before you.

State law can affect inheritance rights, including the rights of spouses and children, and may limit certain conditions placed on an inheritance. Because these rules can differ, legal guidance can help you understand how your wishes interact with the law in your state.

You can find will templates and estate-planning tools online, but a qualified attorney can help confirm that your documents reflect your intentions and satisfy applicable legal requirements.

Keep Your Estate Plan Current

A will is not something you have to create once and never revisit. Changes in your family, property or priorities may give you a reason to review it. Keeping your documents current can help ensure your estate plan continues to reflect what matters to you.