Will preparation, a step-by-step guide

Will preparation is an important factor in drafting a good will.

It includes gathering all the important documents related to your estate, reviewing family relationships, choosing the executor, listing gifts and preference for estate distribution, executing the will, storing the will, and updating or amending it in cases of important life events.

1. Gather all important documents (assets, debts, digital)

Will preparation includes gathering all important documents related to the estate. This includes documents related to your assets and debts. First, list down all your assets, such as bank accounts, certificates of deposit and money market accounts, money market funds, life insurance, real property, IRAs, 401Ks or 403Bs, stocks, bonds, mutual funds, ETFs, REITs, and annuities, to name a few.

Some of these assets transfer specifically to a designated beneficiary and do not need to go through probate. Make sure your beneficiaries are updated, and you name contingent beneficiaries who can receive the proceeds, in case your primary beneficiary has predeceased or is unable to receive the asset. Some people forget to take out their spouse’s name as beneficiary after divorce, and this could lead to litigation, because state law and federal law have differing rules on the effect of divorce on beneficiaries in insurance policies. In New York, there is an automatic revocation of beneficiary designation of an ex-spouse, in cases of divorce, unless a governing instrument (such as a divorce decree or other settlement agreement) states otherwise.

For those assets that go through probate, you’ll need to figure out whether you would like to convert them to non-probate assets or just leave them as is, and let them pass through will. Identify whether you would like the probate assets to be specifically left to a designated beneficiary in the will or whether they form part of the remainder of the estate and you will just designate certain people to receive the remainder estate in percentages.

Don’t forget to list your digital assets in will preparation. Some people forget this, but in this day and age, access to digital assets are extremely important. This will make life easier for your executor. What are digital assets? These include your names and passwords for your online bank accounts, stock accounts, websites, computer login details, emails, and social media accounts, to name a few. Do not make them part of the will, but instead, have the list ready together with all your important documents, so that your executor or closest family member can have easy access to it upon your death.

In summary, gather documents related to your assets, such as titles, pass books, check books, certificates of deposit, insurance policies, annuities, stock certificates, and the like. Also gather documents related to your debts, such as mortgage agreements, promissory notes, and guaranty or surety agreements. List down digital assets and login details for these assets. Store all these documents in a safe place, and inform your executor or closest family member where and how it can be retrieved upon your passing. These documents will give you a clear idea of the value of your estate.

2. Review family relationships

Will preparation includes reviewing family relationships. Although some families are relatively straightforward where it is the first marriage for both spouses with no children outside the marriage, there are some blended families where it is the second or third marriage for the spouses with children outside the marriage. In this case, it is always recommended to seek the advice of a lawyer in drafting a will due to some nuances that may be involved in the computation of the estate.

For example, in New York, under Estates, Powers, and Trusts Law § 5-1.1A, a spouse has the right to elect to receive at least $50,000 or if the net estate is less than $50,000, 1/3 of the net estate, or 1/3 of the net estate, whichever is greater, regardless of how much you leave your spouse in the will. When the spouse receives this and the spouse had children before the marriage to the deceased spouse, those children get the deceased spouse’s property when the spouse dies. If you have prior children before the marriage and would like to protect their inheritance, one should get the assistance of a lawyer to see the options available in protecting the inheritance of their children.

If you have children who are minors, you can appoint a guardian for them in the will. Otherwise, in order for them to receive property as minors, the closest family member needs to file a petition for guardianship (which could slow down the process of transferring property to your children).

In will preparation, aside from reviewing family relationships, one should gather family documents such as birth certificates (not only of your children, but your grandchildren, or if you don’t have a spouse or children, your parents and siblings), marriage certificates, divorce decrees, and the like.

3. Choose the executor

Choosing the executor for the will is a major decision one must make in will preparation. One can choose to get a corporate executor or a family member.

When choosing a corporate executor, bear in mind that these parties charge high or additional fees for their services. Bank and trust companies can charge exorbitant rates of commission to serve as an executor. Attorneys and accountants will charge additional fees for their own services. For example, an attorney will charge an additional fee to probate the will, or an accountant will charge an additional fee to file the estate tax return. Attorneys and accountants are governed by rules on their professional conduct, and for this reason, there is less risk of self-dealing.

When choosing a family member, it is wise to choose someone who is responsible and can get things done, is organized, can effectively communicate with beneficiaries, and in good financial standing. This minimizes the risk of the executor-family member engaging in self-dealing or conflict-of-interest conduct that will be prejudicial to the beneficiaries.

It also wise to nominate a much younger successor executor, in case the first nominated executor predeceases or is unable to perform the task (maybe due to old age, such as a spouse in an advanced age who already needs assistance in performing even daily activities and would not be able to handle executor responsibilities).

Speak to your nominated executors to make sure they understand the responsibility and will accept the position. Choosing the right executor in will preparation is the first step towards successful implementation of your will’s provisions.

4. List specific gifts

Now that you have your assets and debts listed and have reviewed your family relationships, the next step in will preparation is determining who receives what gifts. Remember that debts have to be paid first before these gifts are distributed.

Would you like certain people to receive certain items, such as cars, jewelry, family heirlooms, silver, art, or a sum of money? Who will receive the remainder of the estate, and how would you like them distributed? If your children predecease you, would you like their children to inherit their parent’s share? If you are in a second marriage, do you want only your children to get your estate, or your spouse to get your remainder estate, or your spouse to get lifetime use, and thereafter, transfer such property to your children, or give them to your children and the children of your spouse? State laws vary differently regarding the spouse’s share, so it is best to seek counsel from a lawyer regarding your options. However, it is also important to completely discuss these options with your spouse to ensure that you both agree regarding the distribution of your estate so you can prevent any will contest in the future.

5. Execute the will

Executing the will is the most important part in will preparation. Without proper execution, your will can be denied probate and you will be considered to have died without a will (intestate). Your assets will be distributed in accordance with state intestacy laws. All the steps you took for will preparation can all be for naught if you do not properly execute your will.

Some people rely on DIY wills or templates they see from the internet or some DIY online services that provide drafting of a will for a minor fee. However, even if you draft a will on your own or with the help of some unknown online service who isn’t a lawyer and is probably just a paralegal, one still needs help in ensuring that the execution of the will strictly complies with state formalities. In New York, the will has to be signed at the end by the testator or by a person in the presence and under the direction of the testator, witnessed by two competent witnesses and attested that the testator’s signature was affixed or acknowledged in their presence, and that the testator declared to each of the attesting witnesses that the instrument to which his signature has been affixed is his will.

Under New York jurisprudence, the execution of a will under the supervision of an attorney gives rise to the presumption that the will was executed properly. In will preparation, it is very important that there is no doubt about the proper execution of the will. Any execution of the will that is not made under the supervision of an attorney can immediately give rise to a will contest. Avoid this by getting the services of a lawyer in writing and executing your will.

6. Store the will

Now that you have successfully executed your will, make sure to store it in a safe place. Inform your executor and closest family member where the will has been stored so they know where retrieve it upon your death. The original will has to be presented to the court. Even if your lawyer has a copy of the will, the absence of the original executed will may give rise to the presumption that your will has been revoked by physical destruction. Avoid any will contest by ensuring your executor knows where to find your original will.

7. Update or amend your will upon important life events

In case a new child has been born, or you have divorced from your spouse, or any other important life event has occurred after the execution of the will, it is wise to review your will periodically to ensure it reflects your current wishes. In New York, EPTL § 5-1.4 automatically revokes a designation of an ex-spouse as beneficiary, unless a contrary agreement or governing instrument provides otherwise. Some lawyers can make minor revisions to your executed will for a minimal fee.

If you are interested in will preparation and would like to know more about wills or estate planning in New York, we at the Law Offices of Albert Goodwin are here for you. You can call us at 212-233-1233 or email at [email protected].