Read more about the article You Need a Completed and Properly Prepared Will – Annapolis and Towson Estate Planning

You Need a Completed and Properly Prepared Will – Annapolis and Towson Estate Planning

The first two essential estate planning documents are the durable power of attorney for legal and financial matters, followed by a healthcare power of attorney. Next is the last will and testament.  However, unlike the first two, the last will is not used until after death, explains the recent article titled “Completing a will ensures wishes are clear to all” from The News-Enterprise.

A last will tells the court what you want to happen to your property and who you want to be in charge of distributing your property and settling your estate after you die. Don’t confuse your last will with a “living will,” a healthcare document used to convey your wishes for end-of-life decision making.

Jointly owned property or payable-on-death property with beneficiary designations generally pass to co-owners or beneficiaries outside of the last will. However, any property owned solely by the decedent with no beneficiary listed on the account must go through court in a probate proceeding.

The court then validates the last will and determines the rightful owner(s) of property after any bills and expenses are paid. Wishes stated in the last will guide the court in making its determination. A last will contains a lot of legal language which can become confusing. However, an estate planning attorney can explain it all.

There are three key roles in a last will: the testator, executor and beneficiary.

The testator is the person signing the last will. The executor is the person (or persons) the testator appoints to be responsible for opening and administering the probate case after death. Beneficiaries are the people who receive something from the estate.

Assets are distributed in several different ways. The testator may have made specific bequests in the last will to leave property or money to a person or a charity. The rest of the estate, called the residuary estate, is distributed among beneficiaries, divided either by fractional shares or percentages. The residuary estate may be left outright or in a testamentary trust. An outright distribution is given directly to a beneficiary, whereas a testamentary trust is held on behalf of the beneficiary and distributed over time.

Beneficiaries can become confusing. Primary beneficiaries—the individuals the testator wanted to receive part of the estate—are the first line of distribution. If the primary beneficiary is unable or unwilling to receive their inheritance, a contingent beneficiary is usually listed in the last will.

The contingent beneficiary is often listed as “per stirpes” or “pro rata” to other individuals. Per stirpes means the children of the deceased beneficiary receive that person’s share. A pro rata distribution means the deceased beneficiary’s share is divided between other beneficiaries in the last will.

Lastly, the “remote contingent” beneficiary receives the inheritance only if all of the primary and contingent beneficiaries have died. They can be extended family members, close friends, or charities.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: The News-Enterprise (Jan. 27, 2023) “Completing a will ensures wishes are clear to all”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Can I Plan My Estate to Avoid Leaving Residual Assets? – Annapolis and Towson Estate Planning

When looking into your estate plan, you see the term “residuary estate.” This is any part of your estate that has not been distributed to your heirs through a will. It is also called estate residue or residual estate. However, it simply means assets that are left over once your will has been read, the assets have been distributed to your heirs and any final expenses have been paid.

Proper estate planning can help you avoid leaving residual assets behind, says Yahoo Finance’s recent article entitled “Residuary Estate Definition and Example.” An experienced estate planning attorney can help you select a structure for your estate that accomplishes your objectives.

A will lets you state how you want your assets to be divided among your heirs when you pass away. However, it is possible that not all of your assets will make it into your will for some reason. Any assets that are not included in your will or distributed through a trust automatically becomes part of your residuary estate when you pass away.

Residual estates can be created without advance planning. For example, your heirs may be left to deal with a residuary estate if:

  • You neglected to include certain assets in your will;
  • You acquired new assets after drafting your will and failed to amend the document for the distribution of these assets; or
  • Someone you named in your will dies before you or is unable to receive their inheritance for some other reason.

Assets that are designed to have a named beneficiary but do not have one, can also be included in the residuary estate.

When a residuary estate exists, it can complicate the probate process for your family. Any unclaimed or otherwise overlooked assets would be distributed according to the state’s inheritance laws, after any estate taxes, outstanding debts or final expenses have been paid.

You should also know that it is possible to have a residuary beneficiary of a living trust. This person would receive any property or assets transferred to the trust that were not designated for specific beneficiaries. If you create a trust properly, there should be a provision for each beneficiary you want to be included and which assets they should receive. However, you could still run into issues if a named beneficiary dies, and you haven’t named anyone as a residuary beneficiary.

A residuary estate is something you may need to plan for when creating a will or trust. Fortunately, it is pretty easy to do so by including the proper wording in your will and trust documents. Ask an estate planning attorney to eliminate confusion and to plan your estate properly.

Reference: Yahoo Finance (Dec. 30, 2021) “Residuary Estate Definition and Example”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys