Before You Sign Your Will: Mistakes That Can Cost Your Family

By Joey Snyder, a Woods Fuller Associate

A last will and testament is a vital legal document to have in place before you die. It allows you to decide where your property will go, and lets you appoint a personal representative, also known as an executor, who will carry out the wishes stated in your will. It also allows you to appoint a guardian and conservator for your children.

A last will and testament is a foundational estate planning document. Aside from having no will or estate plan at all, the following are common mistakes to avoid:

Naming Co-Personal Representatives

It is generally best to name one personal representative and one or more alternate personal representatives. Although some people name some or all their children as co-personal representatives out of a sense of fairness, this often creates problems because decisions require everyone’s agreement. For example, if the estate includes a house, disagreements can occur over whether it should be sold or stay in the family, what price is appropriate, or whether repairs or improvements should be made before listing it. Even small disagreements can escalate into conflict.

If you want to name more than one personal representative, use an odd number so decisions can be made by majority vote. This can help avoid a deadlock that may occur with an even number of executors, but it will not fix every disagreement. Using the house example again, with three co-personal representatives, even if two of the three agree to sell the house, all three could have different opinions on the house’s appropriate sale price.

Although generally well-intentioned, naming multiple co-personal representatives often creates more problems than it solves.

Naming the Wrong Personal Representative

If you decide to name a single personal representative, choose someone suited for the role. People often default to the eldest child out of fairness or a desire to avoid hurt feelings. While understandable, that approach is not recommended. The nomination should be based on the person’s ability to handle the responsibilities, not birth order.

Administering an estate may involve gathering assets, paying debts, tracking accounts, making distributions under the will, working with institutions to transfer accounts or other property, handling probate, and completing many other tasks. Select someone, whether a child or not, who can competently manage those duties.

Believing that Having a Will Avoids Probate

Having a will does not avoid probate. Probate is the legal process of administering a person’s estate, whether they have a will or not. Unless the property is subject to a beneficiary designation or transfer on death designation, if you have property titled in your name, probate will almost always be necessary.

You can reduce the amount of your estate that will need to go through probate by using beneficiary designation or transfer on death designation.  For example, retirement plans and life insurance policies are typically governed by beneficiary forms.  Additionally, South Dakota allows Transfer on Death deeds for real property, which is basically a beneficiary designation for your real estate, and financial institutions have their own beneficiary designation forms that allow accounts at those institutions to pass outside of probate. Setting up these transfers in advance will save your loved ones both time and money.

It is also important to review and update your beneficiary designations whenever you review and update your will. Beneficiary designations generally control who receives those assets even if the will says something different. This can lead to unintended consequences, especially after major life events such as marriage, divorce, or the birth of a child. For example, a divorce does not automatically revoke a beneficiary designation on a 401(k) plan, so it is important to review them to make sure they still reflect your wishes.

Not addressing items with sentimental value.

Commonly, a will might distribute property equally among a person’s children. While this may give each child the same overall value of property, it does not necessarily give any child the ability to claim a specific item.

You may expect your children to figure it out, and they might. But relationships can change after a death, especially when you are no longer there to help resolve disagreements.

Disputes commonly arise over items with sentimental value. If you know or suspect someone wants a specific item, or if you want that person to receive it, include it in your will. You can also refer to a statement of tangible personal property, which is simply a separate list identifying specific items and who should receive them. If your will refers to that list, it will be given legal effect so long as your personal representative can find it. This gives you another way to make sure specific items go to specific people.

Not considering whether the gift you leave someone will actually help them at the time of your passing.

It may not be obvious at first, but outright gifts can create problems for the recipient. An 18-year-old is a legal adult, but that doesn’t mean they are ready to receive an inheritance. An outright inheritance may also affect a college-aged beneficiary’s financial aid eligibility. For beneficiaries in midlife, consider risks such as divorce, creditors, substance abuse, or gambling addictions. In those situations, an inheritance intended to help a loved one could end up hurting them or benefiting someone else. For older or disabled beneficiaries, consider whether they have the capacity to manage the gift and whether the gift could affect eligibility for Medicaid or other needs-based assistance.

Not leaving instructions about where to find your will

Make sure your loved ones know where to find your signed estate planning documents. If you don’t, your family members may believe a will or estate plan exists but do not know who prepared it or where to find it. Store your originals in a safe place, tell one or more people you trust where they are kept, and consider giving that person your attorney’s contact information so they know whom to call when needed.  Avoid storing your original documents in a safe deposit box or other place that other people may have trouble accessing.

Not working with someone who understands estate planning

When it comes to making a will (and any estate planning document), you should work with an experienced estate planner. Estate plan documents need to be drafted correctly, so hiring an attorney who does estate planning “on the side” can be a gamble. Estate planning can be complicated and can involve issues that are often easy to miss. Working with a dedicated estate planning attorney saves you time, money, and stress by getting things right the first time, rather than leaving your family with a burdensome mess to clean up down the road.

If you you’re ready to prepare or update your will, give Woods Fuller a call. We can help you think through your options, avoid these common mistakes, and put a plan in place that reflects your wishes and gives your loved ones clearer direction when the time comes.