The Laws That You Should Prepare For
Your last will and testament may be the most powerful document that will allow you to have control over who gets what in your estate even you’re no longer physically present. However, it is still subject to various rules and regulations. There are limitations on what your will can and can’t do depending on the laws that apply in your state. This is why it’s important to work with an attorney who will be able to word your will properly so that your wishes (not that of your state) will get followed.
Laws about wills vary from state-to-state but here are the more common ones that you need to be aware of so you can better craft your will:
One of the most common laws that can have a huge impact on how your assets get distributed to your heirs is the abatement statutes. This comes into play when your will states that your beneficiaries should get this much but your estate is not worth such upon your death. This kind of situation is quite common as stocks plummet in price, businesses fold, and costs for medical care, and other emergencies reduce the total value of an estate. When you die without changing your will to accommodate these changes, the laws of abatement in your state kick in.
In simplest terms, an abatement statute lessens or reduces your estate so that everyone is paid equally. Let’s take an example: When you wrote your will, your estate was worth $300,000 and you stipulated that your three children would receive $100,000 each. However, when you died, the worth of your estate was diminished to only $170,000. The abatement laws in your state will determine the order of payment. In many cases, your debts will have to be settled first and any leftover amount will be distributed among your heirs.
To minimize the effect of abatement on your estate, it is best to talk with your attorney about the specific details in your state. You can also word your will in such a manner that you determine the order of how your assets will abate. Also, you can still make sure that your loved ones will still be able to get an equal share in your estate after the debts and estate taxes are paid down by stating the shares in percentages, not in actual dollar amounts.
Ademption statutes come into play when assets that you stipulated in your will that your heirs will receive are no longer part of your estate. For example, if in your will, you stated that your eldest daughter would receive your antique plate collection. But when you underwent surgery, you sold it to pay for your medical bills then that item is not part of your estate and technically, not yours to give. Such property is called “adeemed property” and cannot be divided.
In the event that you included adeemed property in your will then the particular ademption statute in your state will apply. It will determine whether your beneficiary will still get anything or none at all. Ademption also applies if some property in your will ends up missing in your estate.
To ensure that the ademption statutes won’t mess up your will, you should make a careful inventory of your estate before making your will and review it periodically to ensure that your assets are actually still yours to distribute. You may also make use make use of backup property to ensure that ademption statutes will not leave your beneficiaries without a share in your estate. This can be in the form of a cash equivalent which is the same as the value of the adeemed property. But ask your lawyer first so that you know what the pros and cons of such an action is.
What happens if a beneficiary named in your will dies before you do? Who will receive the portion of your estate that you intended for him or her? If your state has an antilapse statute then it will determine who will receive the assets you had originally intended for your deceased beneficiary.
If you don’t want antilapse statutes to govern how you want your estate to be distributed, you should prepare for such a possibility by naming a contingent beneficiary. This person will receive the assets that you have allocated for your other beneficiaries in case they die before you do.
While you get married without thinking of getting divorced, the truth of the matter is that half of marriages in the United States do not have a “happily ever after” ring to it. States acknowledge this and have put rules in place in case something happens to you before you were able to make changes in your will after your divorce.
In many states, your spouse does not have a claim to your estate after a divorce even if you were not able to reflect the new changes in your will. But what if you still want your spouse to receive something in your estate even if you had gone your separate ways? Then you have to specify that in your will—this is the reason why you should update your will whenever a major event like divorce occurs. Keep in mind that you are treading on very technical and legal ground here so you should seek the advice of your lawyer when you make these changes.
Simultaneous Death Statutes
If you and your spouse die at the same time and the order of your death cannot be established then states usually apply the provisions of the Uniform Simultaneous Death Act. Here, it is assumed that you both survived each other and your estate is divided according to the provisions in your will. This will prevent your estate from going to probate two times (one for you and another one for your spouse) and consequently being subject to double taxation.
You can further protect your estate from such a costly event by putting a survival clause in your will. This becomes particularly important when you and your spouse do not die simultaneously but die a few hours or days from each other. For instance, if both you and your spouse were involved in a car accident and your spouse died on the spot but you were still rushed to the hospital and survived for a few days before passing away, the will of your deceased spouse will get transferred to you first, subjecting it to death taxes. Then, when you die, another probate process happens and another set of taxes are going to be levied on your estate. To prevent such incidents, you can put a survival clause which stipulates that your beneficiaries must survive for a certain time period after you die (say 30, 60, or 90 days) before they can receive their share of your estate.
Laws That Are There To Stay
While you (or more correctly, your lawyer) can do something about the language of your will to amplify or diminish the various statutes that might affect the share you give to your beneficiaries, there are laws that you won’t be able to do something about. If you are unaware of these, you might end up creating an invalid will.
In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), anything acquired while you are married is considered to belong to both you and your spouse. Thus, if you die in a community property state, 50 percent of what you own will be left to your spouse whether you like it or not. The only exception is any gift that was given to you alone and property you already owned before you got married (although you will have to prove such during the probate process).
Common Law States
In the other states that do not operate on community property ownership, spousal elective shares which vary from state-to-state are used to determine how much share each spouse will have in their common property. This means that how much he or she can claim is defined by the laws that apply in your state. You can certainly give more to your spouse than what your state’s spousal elective shares require and he or she can choose to accept it. However, if you choose to give less, your spouse can still opt to get the higher amount specified by law. So if you’re thinking of leaving as little as possible to your spouse, think again. The protections in place in common law states are specifically put to guard against partners with such devious intentions in mind.
A few states give protection to your home and the land around it through the Homestead Law. If it is applicable in your state, make sure that you ask your attorney how to incorporate it into your will so that your spouse and your children under 18 years old have a roof over their heads even after you die. Also, if you believe that you might die with a sizable debt in your hands and you want to protect your home from being sold to pay for it (and kicking out your family in the process), you should ask your attorney about homestead exemption statutes so that this can be stipulated as well.
Family Allowance Statutes
If you are the primary breadwinner in the family, your spouse and kids might have a difficult time making ends meet during the lengthy probate process. Ask your attorney about the family allowance statutes that apply in your state and how much family allowance they can expect to receive based on the size of your estate so that you will be able to make the necessary arrangements that will not unduly compromise your loved one’s finances when you go.
Pretermitted Heir Statutes
In case you die before you were able to include your newborn kid or new spouse into your will, does this mean that they do not get anything? Not necessarily. Spouses and children who are not included in your will to have a share in your estate are called pretermitted or omitted beneficiaries. In most states, pretermitted heir statutes dictate what assets will be given to them. If you want to ensure that your loved ones receive what you intend for them to receive, you should always review your will and amend the provisions to suit your current status.