How Important is a Will, Really?

How Important is a Will, Really? The simple answer to that question is . . . wait for it . . . “It depends.” Most people own assets of some kind when they die. The assets might include real estate (home, land, timeshare, etc.), financial accounts (bank, investment, and retirement accounts), life insurance, savings bonds, autos, boats, toys, and personal effects or “stuff” (clothes, furniture, jewelry, tools, etc.). The assets will all transfer to someone after the owner dies. The question, then, is who gets which assets and how do they get them?

Some of the assets may transfer to surviving joint owner(s) and some may transfer to named beneficiaries. Those transfers will happen automatically with the appropriate paperwork. Some assets, however, may not have a surviving joint owner or beneficiary. The assets in this category will not transfer automatically and must go through the probate process to determine who receives them. This is where a Will comes into play.

What happens with a Will?

A Will (or Last Will and Testament) is a personal instruction manual for probate. It expresses the intentions and desires of the Will maker. Its primary function is to direct who gets what assets passing through probate. It is important to understand that a Will only applies to the assets passing through probate. It does not control any assets passing by joint ownership or by beneficiary designation. For example, if a Will directs all life insurance be given to a charity, but the life insurance form has a cousin named as beneficiary – the cousin gets the insurance proceeds.

A Will also appoints a trusted person to be the Personal Representative (PR). The PR manages the probate process, which includes collecting assets, handling the deceased person’s debts and taxes, and distributing the probate assets to the people or charities named in the Will.

A Will may be used to disinherit individuals who would naturally inherit from the deceased person, such as a child, parent, or sibling. Alternatively, it may include individuals or charities who would not naturally inherit from the deceased person. A Will may also protect vulnerable heirs, such as minor or disabled children, by naming guardians and conservators for the children.

What happens without a Will?
If there is no Will, there is no personal instruction manual. Michigan law, not the deceased person, determines who will receive the probate assets and the persons eligible to be PR. There will be no distribution to favorite charities, no excluding undesirable next-of-kind, nor will unrelated individuals be included. Also, the default laws sometimes trigger family feuds because the process and results are not as well defined as with a Will.

For example, assume a person has no spouse but has five surviving children. Without a Will, those children all have equal priority to be PR of the probate estate. The children might disagree over who should be in charge. A Will, however, would designate which child the parent wanted to be PR of the probate estate. That clarity provided in a Will might defuse the situation and prevent an argument altogether.

Do you need a Will?

So, do you need a will? Again, it depends. If none of the assets you leave behind go through probate, then a Will is not needed. Similarly, if you want your probate assets to go to your spouse and children, or parents (if you do not have a spouse or children), or siblings (if none of the others) and you do not care who is in charge of the probate estate, then it will not be necessary to have a Will. On the other hand, a Will is crucial if:

• you want certain assets to go to certain people;
• you want to include a charity;
• you want to treat your children unequally;
• you care who is in charge of the probate process; or
• you want to protect a vulnerable loved one.

An example may help put all this in perspective. Imagine a woman named Sally. Sally is unmarried and has no children. Her parents are deceased, but she does have several living siblings who are estranged from her and to whom she does not want to leave anything. Instead, Sally has a partner with whom she has cohabited with for 20 years and to whom she desires to leave most of her assets upon her death. Sally would also like to support a charity with some of her assets. Now imagine Sally passes away owning a house, two cars, several bank accounts, and a brokerage account. Each asset is in her name alone and there are no named beneficiaries.

In this scenario, all of Sally’s assets will pass through probate. If Sally dies without a Will, everything she owned at her death will distribute to her siblings equally. Why? This is because Sally’s siblings are her nearest blood relatives. In the absence of a Will the default probate laws distribute her probated assets to her nearest blood relatives; therefore, her partner and charity will receive nothing. Moreover, her partner will not be involved in the probate process at all, only her siblings.

If Sally dies with a Will, however, she will be able to change that undesirable result. With a Will, Sally may designate her partner to be the PR of her estate. She will give an amount of money, or percentage of her estate, to a charity and the rest to her partner. Sally will accomplish her goals and will exclude her siblings from managing her estate and from receiving any of her assets.

In conclusion, there are many reasons to have a Last Will and Testament. It is the essential legal document by which you decide how your probate estate is handled and to whom your assets are distributed. Without a Will, your estate may pass to individuals not of your choosing.

If you would like to explore whether you need a Will, or if you would like to learn about how to avoid probate altogether, call CMDA to schedule an appointment with one of our estate planning attorneys. As a bonus, if you mention this article when you call, you will be eligible for a free consultation.

Norman E. “Gene” Richards is a partner in our Livonia office where he focuses his practice on estate planning and elder law. He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs. He may be reached at (734) 261-2400 or nrichards@cmda-law.com.