Part 2: Rocket Lawyer Documents

Complete Will

This section of the Estate Planning Companion provides information on each of the documents available in Rocket Lawyer.

Each document listed in this section includes:

• An Overview: Provides a brief description of the document, reasons to create or update the document, and a list of information you’ll need before you begin the document.
• A Document Interview: Identifies possible interview questions you may be asked with specific legal information for each question.
• Signing Instructions: Summarizes important information on who must sign the document, who can be a witness to the particular document, and if the document needs to be notarized.

Complete Will

A Will is a document in which you (the "Willmaker") state who will receive your property (the "Beneficiaries") and who will carry out your wishes (the "Executor").

This Will is appropriate for a variety of individual needs. However other wills offered by this program are streamlined to save you time by excluding portions not applying to you.

After your death, your estate assets will be used to pay any debts or expenses you have. The remaining assets will then be distributed according to the Will.

Note: This Will is NOT appropriate for individuals or couples whose estates (including life insurance proceeds and retirement plans) exceed the federal estate tax applicable exclusion amount of $2,000,000 for 2007 (increasing to $3,500,000 in 2009).

Reasons to Create

• Designate the persons or organizations that will receive your property after your death.
• Own property to be distributed after your death.
• Designate the person or organization who will carry out the terms of the Will.
• Designate who will have the responsibility for the minor children if the other parent is unable to serve as the natural guardian.

Before You Begin

Information you may need:

• Name and address of the person who is creating the Will.
• Names and addresses of the Beneficiaries, the persons and/or organizations who will receive the property.
• Name and address of the Executor, the person or organization who will carry out the terms of the Will.
• If the person creating the Will has children, the names and addresses of the children.
• If the person creating the Will has minor children, the name and address of the person who will have the responsibility for the minor children, if the other parent is unable to serve as the natural guardian.
• If a trust will be created for the benefit of minor children, the name and address of the person or organization who will have the responsibility for managing the trust assets.
• A list of "bequests," that is specific gifts, that will be distributed first, and the names and addresses of the persons and/or organizations who will receive them.
• Information regarding the value of your estate, including the value of all assets plus life insurance proceeds.

Reasons to Update

• A change in marital status.
• The birth or adoption of children. A new will with provisions for minor children should be created.
• A move to another state.
• A significant change in financial status.
• A significant change in tax laws.
• The death of a beneficiary. For example, your spouse or your child.
• A desire to add or change beneficiaries.
• The death or incapacity of a named executor, guardian, or trustee.

DOCUMENT INTERVIEW

Who is this Will being created for?

A Will is a document under which a Willmaker states his or her intentions regarding the persons or organizations ("Beneficiaries") who will receive the Willmaker's property, and the person or organization ("Executor") who will carry out the Willmaker's wishes.

This Will is appropriate for a wide variety of individuals. It contains provisions for people who are married or single and will allow you to provide for your children, if any, of any age.

If the Willmaker's estate is expected to be larger than the federal estate tax applicable exclusion amount ($2,000,000 for 2007 and increasing to $1,000,000 per year), it may be desirable to use more complex estate planning techniques that are not provided by this program. For such cases, this Will can be used to prepare for an office conference with a lawyer who can assist you with the preparation of a more complex will.

Note: A separate will should be created for each person. Even for married couples, a "joint will" (not offered by this program) is not recommended.

If you are married, will your spouse be included as a beneficiary in this Will?

Spouses

Many states "protect" spouses with laws that permit a spouse to receive a portion of the estate even though the Will does not provide that required amount for the spouse. In fact, if you own real estate in a state other than where you live, the laws of both states are important because the laws of the state where the real estate is located governs the rights of the spouse to that property.

If your intent is to "disinherit" your spouse, you should consult with a lawyer regarding the legal rights of your spouse to receive property from your estate, despite the provisions of your Will.

An agreement between you and your spouse, signed prior to your marriage, may permit you to exclude your spouse from the Will.

Do you want to specify who died first, if you and your spouse die at the same time?

Specifying Who Died First

If you are presumed to have died first, your spouse's estate will receive any bequests given to your spouse in your Will. These bequests will then pass to your spouse's beneficiaries under your spouse's Will.

If, instead, your spouse is presumed to have died first, any bequest given to your spouse in your Will instead will pass to other, contingent beneficiaries of your Will. Each spouse can state that the other is presumed to have died first.

Do you wish to state in the Will that you are not married?

Not Married Statement

Including a sentence in your Will that you are not married makes it clear that you do not have a spouse. You may think that it will be obvious to your survivors that you did not have a spouse. However, if you do not have close relatives, and/or if you were married at one time (perhaps a long time ago), your survivors may not be sure whether or not you have a spouse.

If you don't include the sentence, your survivors may not know whether the failure to mention your marital status means you had no spouse or that you had a spouse but just didn't mention it. In most states, a surviving spouse has rights and must be notified about your Will even though the spouse may not be entitled to receive any inheritance.

If you have children, how many of your children will be included as beneficiaries in this Will?

Naming Beneficiaries

Most individuals select those closest to them as the beneficiaries of their estates. Usually this means that spouses and children will be provided for first. After their needs have been met, or if the person who is making the Will (the "Willmaker") has no spouse or children, attention is usually turned to grandchildren and other relatives, or perhaps, friends, and in some cases, charities.

1. A spouse is often the primary beneficiary, and in many cases receives the entire estate, particularly if the Willmaker has no children, or if all of the Willmaker's children are also the spouse's children.
2. After considering the needs of a spouse, children are the next most likely beneficiaries. Often the entire estate is distributed to the spouse with an expectation that the spouse will provide for the children. However, this may not be appropriate if the spouse is not the parent of the Willmaker's children. If the Willmaker has minor children, special planning through the use of a minor children's trust may be needed to preserve and manage the share of the estate for the children.
3. Although many individuals include only a spouse and/or children as beneficiaries, in other circumstances, beneficiaries may include other family members, friends, or charities.
   • Other Family Members: It may be desirable to provide for siblings or elderly parents. In other cases, nieces and nephews may be appropriate choices.
   • Friends: Friends may be more important to you than family members, and certainly are appropriate beneficiary choices.
   • Charities: Charitable organizations provide important services, and many depend on gifts from estates as an important funding source. Leaving a bequest to one or more appropriate charities can help provide important services and benefits to your community and/or promote values that are important to you. Tax laws encourage charitable gifting, and as a result, significant income tax and estate tax savings can be achieved through charitable gifting.

Will you provide for any future children of yours in this Will?

Including Future Children

In order to automatically include future children in the class of beneficiaries under the Will, it is advisable to include a provision to that effect. This includes children born to, or adopted by, you. By including future children, you can avoid having to prepare a new Will upon the birth or adoption of additional children.

Are any of your children intentionally excluded as beneficiaries of the Will?

Disinheriting Children

Unlike state laws that prohibit you from disinheriting a spouse, there is no requirement that you provide for your children in your Will. However, your intentions should be clearly stated in your Will to avoid Will challenges by disappointed, disinherited children.

Is anyone else intentionally excluded as a beneficiary in the Will?

Disinheriting People

Disinheriting means to deprive another person (an heir or spouse) of property that would have been distributed to that person under the laws of intestacy (dying without a valid Will).

It is the general practice for a person to provide for distributions to his or her family, particularly his or her spouse (if married) and children (if any), or in the case of a deceased child, such child's children (if any). Such persons are said to be "the natural objects of the Willmaker's bounty."

If such persons exist but are not included in the Will, a question may arise as to whether you as the Willmaker simply made a mistake. Further, such excluded persons may

attempt to challenge the Will on this very basis, that is, that you simply made an error in excluding them from the Will.

If you intend to exclude someone that might expect to be included in the Will, it is advisable to include a statement in the Will that makes it clear that the omission was intentional. Although this type of exclusion generally applies only to individuals, this provision can also be used to list organizations that will be excluded. 

Will Beneficiaries of your Will be required to survive you by thirty days in order to receive any distributions?

Thirty-Day Survival Requirement

This program allows you to include language which requires that your beneficiaries survive you by at least thirty days in order to receive a bequest. (This provision is different from the "simultaneous death" provisions regarding your spouse. The thirty-day survival requirement, if included, will apply to all beneficiaries OTHER than your spouse if the spousal simultaneous death provision is included.)

The thirty-day survival requirement provision is sometimes included because if the beneficiary dies within thirty days after you, you might prefer that the bequest pass to a person that you choose, rather than to someone chosen by the deceased beneficiary in his or her Will.

For example, in Tom's Will, he gives his motorcycle to his friend, Jack. Jack also has a Will in which he gives everything to his son, Jack Jr. Assume that Tom dies, and then Jack dies less than thirty days later. Without the thirty-day survival clause in Tom's Will, the motorcycle will pass from Tom to Jack and on to Jack Jr., whom Tom has not met and cares little about. Instead, Tom should include the thirty-day survival clause in which case the motorcycle will pass to an alternate beneficiary of his choosing, or perhaps be distributed as part of the residuary of his estate.

In fact, even if the Beneficiary's beneficiaries are acceptable to the Willmaker (assuming the Willmaker knows or cares who they are), by including this survival requirement, the Willmaker can avoid having the distribution pass through the Beneficiary's estate, with possible death taxes assessed in that estate, before reaching the ultimate recipient.

Do you want to make specific bequests?

Specific Bequests

The Will distributes assets in two ways: specific bequests and the residuary estate. Specific bequests, which are optional, may include cash (or other intangible personal property), tangible personal property, or real property.

If specific bequests are made in the Will, they will be paid before the residuary estate is distributed. If no specific bequests are made, the beneficiaries of the residuary estate will receive the entire estate.

A specific bequest is a gift (bequest) of cash, a specific item, or a category of items to a named person or organization. For example, a wedding ring, $1,000, an antique, a car, or all of your remaining tangible personal property.

Some persons have specific items that they want to give to a specific person (or organization). For example, a mother may want to make sure that her jewelry goes to her daughter, or grandparents may decide that they would like to give $1,000 to each of their five grandchildren.

Specific bequests are usually made at the beginning of the Will, followed by other provisions that provide for the distribution of the other assets of the estate.

Under what circumstances will the specific bequests be made?

Specifying Conditions for Specific Bequests

You do not know whether you will survive your spouse and/or your children. However, you can make specific bequests contingent on who is surviving at the time of your death.

For example, you may wish to give $5,000 to a favorite charity even if your spouse and children are living. You may wish to give your personal effects and household furnishings to your adult children, but only if your spouse is not living. You may wish to give your coin collection (which your spouse never cared for) to a friend, but only if your children are not living. And finally, you may wish to give a large cash bequest to your alma mater college, but only if neither your spouse nor your children are living.

Note: The circumstance chosen will apply to all specific bequests.

What kind of specific bequests will be given?

Categories of Specific Bequests

Specific bequests can include (a) intangible personal property, (b) tangible personal property, or (c) real property. The following are examples of these categories of specific bequests:

1. A. Intangible personal property.
   • An amount of cash
   • An entire bank account
   • Stocks, bonds or an entire brokerage account
   • A patent or copyright
   • Contract rights, such as the right to receive payments from a third party under a promissory note or an annuity
   • Business interests in a privately held corporation or partnershi
2. B. Tangible personal property.
   • Jewelry
   • Heirlooms
   • Antiques
   • Vehicles
   • A boat, snowmobile, motorcycle, or airplane
   • Clothing and personal effects
   • A household item OR all household furnishing
3. C. Real property.
   • House or condominium
   • Cabin or vacation home
   • Bare Lot
   • Farm lan

Using Specific Bequests

If a Willmaker leaves a surviving spouse and/or "at-home" children, the Willmaker will usually want those family members to experience the least possible amount of disruption to their day-to-day lifestyle. Therefore, even if your entire estate will go to someone other than your immediate family, you will typically want your immediate family to receive your vehicle(s), clothing and personal effects, and household furnishings. This can be accomplished by leaving "all of my remaining tangible personal property" to the spouse or children.

It is important to consider your beneficiary priorities in preparing your Will. An example can illustrate what unintended circumstances can do to frustrate your plan. Assume that John Smith estimates his estate to be worth $100,000. He writes his Will to include a specific bequest of $10,000 to his brother, whom he cares about, and gives his entire residuary estate to his wife, whom he cares even more about. But before he dies, he incurs substantial medical expenses which deplete his estate down to $20,000. After paying another $5,000 in debts and expenses, there is only $15,000 left to distribute. Specific bequests are paid first, so his brother receives $10,000. This leaves only $5,000 as his "residuary estate" to be distributed to his wife.

Who will receive your remaining tangible personal property?

Remaining Tangible Personal Property

This Will provides a section for specific bequests. After you first make the desired number of specific bequests of any type of property, you can leave "all my remaining tangible personal property" (after debts, expenses and preceding specific bequests) to your spouse, children, or another beneficiary.

It is not required that you include specific bequests, but if you do so, the Will then excludes any specific bequests of tangible personal property from later provisions that distribute your (remaining) tangible personal property.

Bequests are generally given in the order in which they appear in the Will. For example, if you make a specific bequest of a "1957 Chevy" to "Uncle Stan," the language of the Will automatically excludes the "1957 Chevy" from your later provision that distributes the (remaining) tangible personal property to "Aunt Angela." This language is necessary because the "1957 Chevy" would otherwise be distributed as a specific bequest to one person and as part of the tangible personal property category to a different beneficiary.

If the terms of the Will provide that the tangible personal property will be distributed to more than one beneficiary, the Executor is responsible for determining how the property should be divided. In most cases, the Executor will carry out this task by carefully considering the wishes of the beneficiaries who will be receiving the property.

Who will receive the residuary estate?

Depending on your circumstances, beneficiaries of your estate may include your spouse, children, heirs-at-law, and other beneficiaries.

The Will distributes assets in two ways: specific bequests and the residuary estate. If specific bequests are made in the Will, they will be paid before the residuary estate is distributed. If no specific bequests are made, the beneficiaries of the residuary estate will receive the entire estate.

The residuary estate includes your assets that remain after paying debts and expenses and making distributions of specific bequests. In most estates the residuary estate includes most of the assets. If the optional specific bequests provision is not included, the residuary estate includes all of your remaining assets.

Components of Your Estate

Your estate is composed of your assets at the time of your death. Your assets may include the following:

• Joint Property
• Personal Property
• Life Insurance, Retirement and Annuities

Most states permit an individual to own property with another individual in a manner known as "joint with rights of survivorship." In such a case, when the first joint owner dies, the property passes to the second joint owner, even if the first owner attempted to give the property, through his or her Will, to a third person.

In many cases this never becomes a problem because the joint property is owned between spouses, and the Wills of the spouses provide that the property owned by the spouses should be given to the survivor of them. In those situations, there is no conflict between the ownership of the joint property and the provisions of the Wills.

On the other hand, if an individual owns property with another person "joint with rights of survivorship" and wants the property to pass to a third person under the Will, a lawyer should be consulted.

Personal Property

Personal property is either tangible or intangible.

Tangible personal property includes jewelry, furniture, cars, and other items that have a physical essence. Intangible personal property includes cash accounts, stocks, bonds, and other similar assets that are nonphysical.

A coin is tangible personal property, while 25 cents in a checking account is intangible personal property.

Life Insurance/Annuity/Pension Plan Designations

Life insurance, annuity, and pension plan agreements (and similar agreements) permit an individual to name those who will receive the proceeds of such agreements either as primary or alternate beneficiaries.

Your Will does NOT determine the beneficiary (recipient) of the proceeds of any of these agreements. Rather, the designations filed with the insurance company control the distribution of the proceeds of these agreements. Similarly, IRA accounts allow the owner to designate a beneficiary who will receive the proceeds of the account upon the death of the owner of the account.

Thus, after any drafting of a Will, you should review the agreements to make sure that the beneficiary designations of such agreements correspond to your wishes as set forth in the Will.

Distributing the Residuary Estate

This program allows you to distribute your residuary estate by selecting from a variety of alternatives. You can opt to distribute your residuary assets to your spouse or children.

You also have the options to distribute your residuary estate to:

• a beneficiary who may be a person (or a charity) other than your spouse or child, or
• several beneficiaries in shares stated as percentages.

This latter option would allow you to give 97% of your residuary estate to your children and 3% to a favorite charity.

Who will receive the residuary estate if the named Beneficiary does not survive you?

Alternate Beneficiaries

This document provides multiple opportunities to designate "alternate" beneficiaries, beneficiaries who will receive distributions of assets if the first choice does not survive you.

In most cases, you will have the opportunity to provide for several layers of alternate beneficiaries. However, if you do not want to use the many options, this program provides you with an easy out--choose a primary beneficiary, and then select the "heirs" option to provide that your heirs (and/or your spouse's heirs) will be the alternate beneficiaries. If the "heirs" option is selected, no further choices are necessary.

Whose heirs will receive the residuary estate?

If you are married and have designated heirs-at-law to receive a share of the residuary estate or if you have selected that a Children’s Trust be distributed and you have no surviving descendants, you will need to specify whose heirs will receive the residuary estate.

Heirs-at-law are persons who would be entitled to the assets of your estate if you died without leaving a valid Will. The laws of each state define who are the heirs of persons who die as residents of that state. Although state laws vary somewhat, in general, your heirs are those persons who are most closely related to you by blood or adoption.

For example, the priority in most states is that your heirs are only your children, if you have children, with grandchildren or other descendants taking the share of a child who dies before you do. Only if you have no descendants will the definition of an heir be expanded to include your parents (either one), then your siblings (if any) with nieces and nephews (possibly other descendants of your siblings) taking the share of a deceased sibling. If your parents and all of their descendants are deceased, the circle is expanded to include your grandparents and all of their descendants. If no relatives at all can be found, your estate then "escheats" to your state of residence -- generally, a rare occurrence.

A spouse is usually not an heir, but keep in mind that there are other kinds of state laws that protect spouses. If you are married and select the "heirs-at-law" provision, only your heirs will benefit unless you also specifically choose to benefit your spouse's heirs by allocating a percentage of your estate for your spouse's heirs under the "heirs-at-law" option.

Will a Children’s Trust receive part of the residuary estate?

Providing a Trust for Children

The Will offers a unique planning opportunity for parents with minor children. For example, assume you leave your remaining residuary estate to your spouse, if your spouse survives you. If your spouse does not survive you this program allows you to provide for a trust for your minor children.

You can provide that all of the remaining assets of the Trust will be retained by the Trustee for the benefit of your children, or you can provide that a percentage of the remaining assets of the Trust will go to a named beneficiary, with the remainder for the Children's Trust.

Providing a trust for children can be appropriate if you:

• have no children but intend to have children in the future,
• have minor children, or
• have children who are no longer minors, but who have not yet reached an age at which it is appropriate for them to receive a large distribution of your assets.

Protection for Beneficiaries

The Will document includes a provision for the protection of the Beneficiaries of the Trust, if a Children's Trust is created. The purpose of this provision is to prevent the Beneficiaries from impoverishing themselves by "selling" or "assigning" their interests in the trust to third parties.

For example, a 19 year old child might be tempted to "sell" or "trade" all or a portion of his or her interest in a trust for an expensive sports car. This provision does not prevent the 19 year old from making a deal with the car dealer, but it does prevent the car dealer from enforcing the deal against the Trust.

Sometimes these provisions are known as "spendthrift" provisions.

If you have chosen a Children’s Trust, how and when should the trust distributions be made?

Distributing the Children's Trust

The Children's Trust provides money for the health, education, maintenance, and support of your children until the youngest child reaches an "adult" age. Presumably, this is the same way that you would have provided for your children if you had survived: supporting all of them out of a common "pot" of assets according to each child's individual needs until the youngest one becomes independent. Often age 25 years is used because it offers the children an opportunity to attend college and "settle down" before receiving their trust shares outright.

When the youngest child reaches the specified "adult" age, the trust is divided into equal shares for the children and either:

• immediately distributed, or
• distributed in several installments.

For example, assume that Dave Willmaker and his spouse Rosie have three children: Joel, age 6; Jay, age 4; and Justin, age 2. Under the first option, the trust would be maintained until Justin reaches age 25 years (or some other specified adult age). The trust would then be divided equally among Joel (now age 29), Jay (now age 27), and Justin (age 25). The goal is to preserve the trust assets until the youngest child attains "maturity".

Under the second option, Dave Willmaker might specify that the final distribution should be made in three installments at ages 25 years, 28 years, and 31 years. Now when Justin attains age 25 years the trust is divided into three equal shares, one for each child. Joel receives two-thirds of his share (1/3 because he has attained age 25 years and 1/3 because he has attained age 28 years), and Jay and Justin will each receive one-third of their respective shares. All three will receive their remaining shares as they attain the appropriate ages.

Finally, if at your death, your children are already beyond the age established for their final distribution, the assets will be distributed outright to them, and the trust will be avoided as it is unnecessary. The trust for children also includes provisions to provide for the possibility that the children will not be living at the time of final distribution of the trust assets. 

Who will carry out the terms of the Children’s Trust?

Choosing a Trustee

A trustee is the person or organization named in a trust who has the responsibility of carrying out the terms of the trust, including managing the trust's assets and making distributions to the beneficiaries.

The trustee should be dependable and capable of handling financial matters. A business background may be helpful, but is not required. Many banks have trust operations that provide trustee services, but of course, the bank will charge for its services.

A sole trustee serves alone. Alternatively, you can nominate two or more persons (or institutions) to serve together as co-trustees. Decisions of co-trustees need to be unanimous, and therefore, the co-trustees need to be able to work together.

A good choice in many situations is to have an individual and a bank serve together as co-trustees. One co-trustee can be a family member who is close to the children and knows their needs, perhaps an aunt or uncle of the children. The other co-trustee can be a bank trust department with a better background for handling investments, preparing tax returns, and providing accountings.

When selecting a trustee for the children's trust it is recommended that you NOT choose one of the children even if that child is of adult age, because doing so can lead to conflicts among the children regarding distributions.

Will the Trustee(s) serve with or without bond?

Bonding

You may wish to require a bond on your Executor or Trustee. A bond is similar to an insurance policy in that it covers against losses from misappropriation of assets by the Executor or Trustee.

You may wish to check with a lawyer regarding the usual practice in your state and the risks of not requiring a bond. Because an Executor or Trustee might occasionally misappropriate assets--either through theft or error--most states require that they obtain a bond before they are given authority to act as an Executor or Trustee, UNLESS you state in your Will that no bond is required.

Note: These bonds are also known as Fiduciary bonds. A fiduciary is a person or organization who is given the authority and responsibility over assets which are not owned by that fiduciary. For example, an Executor carries out the terms of a will and a Trustee carries out the terms of a trust.

Waiving Bonds

Most people decide to waive (not require) a bond because:

1. the Executor or Trustee chosen is trusted, and
2. because bonds:
   • are expensive,
   • are usually not necessary if a bank is the Executor or Trustee because most banks are already bonded, and
   • require greater court involvement in some states because the court must ensure that the bond is handled properly

Who will carry out the terms of the Trust if the Trustee is unable to?

Alternate Trustee

It is recommended that you name an alternate trustee who will serve if your first choice is unavailable or unwilling to serve. If your first choice cannot serve and you fail to select an alternate, your survivors and the court system will be left to make the decision for you.

You may name an alternate trustee to serve alone or alternate co-trustees to serve together.

Who will serve as successor Trustee and how many days’ written notice must the Trustee give before resigning?

Successor Trustee

A successor trustee should be named to provide for the possibility that a trustee will resign or otherwise become unable to serve as trustee after having initially served for some period of time.

The resigning trustee should provide at least 60 days advance notice, and perhaps 90 days, so that the beneficiaries have some time to select a new trustee (if there are no further nominations in the Will). The beneficiaries will want to select a successor trustee prior to the end of the notice period so that the successor trustee is ready to step in when the current trustee's resignation becomes effective. Therefore, the beneficiaries should be given perhaps 45 to 60 days to select a successor trustee.

Will the Trustee be required to provide an accounting to the Beneficiaries?

Trustee Accounting

An accounting is a report by the trustee that shows the values of the trust assets as of a specific date (usually the last day of a month). The accounting also shows the income and expenses of the trust for a specific period of time. For example, an "annual" accounting for 2007 would show the values of the trust assets on December 31, 2007, and the income and expenses of the trust for the 12 month period ending on December 31, 2007.

The accounting is needed so that income tax returns, if required (and they usually are), can be filed. The accounting also serves the very important purpose of allowing the beneficiaries the opportunity to review the performance of the trustee. For example, beneficiaries may want to offer comments to the trustee on the rate of return earned by the assets.

An accounting should be required at least annually, but it is preferable from the beneficiaries' perspective to receive reports monthly, or perhaps quarterly. Bank trustees are well suited to provide reports more frequently, but individual trustees (especially ones not receiving compensation) are usually not as able to provide monthly or quarterly reports.

Will the Trustee be authorized to hold Trust asset shares or portions as a single fund?

Holding Assets as a Single Fund

If the Trust is being maintained for the benefit of more than one beneficiary, each of which is entitled to a specific share of the Trust, the Trustee will have to keep careful records of each beneficiary's share. Each such share typically earns income and pays its proportionate share of the Trust expenses.

The optional power to hold trust assets as a single fund allows the Trustee to maintain a single fund for joint investment and management purposes of the entire Trust, without the need for physical segregation of each beneficiary's share.

For example, one brokerage account and one bank account could be used by the Trust instead of multiple accounts, one such account for each beneficiary. Instead of establishing multiple accounts with brokers and banks, it is the Trustee who keeps a careful accounting of the trust shares. The Trustee allocates to each beneficiary's share a proportionate share of the trust's total income and expenses, and subtracts from each beneficiary's share the payments and distributions made to that beneficiary.

Allowing the Trustee to hold assets as a single fund often reduces the expense of operating the Trust.

Will the Trustee be authorized to make loans to the beneficiaries of the Children’s Trust?

Making Loans to Beneficiaries

Occasionally, the Trustee may consider it appropriate to make loans of Trust assets to a beneficiary. For example, the beneficiary may be ready to purchase a home or a business and could greatly benefit from a Trust distribution, but is not scheduled to receive such a distribution from the Trust for another year or two.

By including this optional power, the Trustee has the flexibility to advance funds, in unusual circumstances, to a beneficiary before that beneficiary would otherwise receive those funds.

The advance would be in the form of a loan which the beneficiary is obligated to repay with interest. However, the Trustee may allow the beneficiary to repay the loan using money that the beneficiary would otherwise receive from the Trust.

Will the Trustee be entitled to receive compensation?

Compensation for Executors and Trustees

If a bank's trust department or other institution is selected as the Executor or Trustee, it is usually understood that they will charge a fee for their services. However, if a family member or friend is chosen, there may be some dispute whether you intended for that individual to receive compensation for his or her services.

This optional power clarifies your intent by stating that the Executor and Trustee are entitled to reasonable compensation for their services, and are entitled to reimbursement for out-of-pocket expenses incurred in the performance of their duties as Executor or Trustee.

Will the Trustee be authorized to make payments to a person or organization for the benefit of a beneficiary?

Distributing Assets to Benefit a Beneficiary

The language of a Trust typically provides for payments and distributions of trust assets "to," or "for the benefit of," a beneficiary. However, it is often useful to clarify your intent that the Trustee and Executor are authorized to make payments directly to others who are providing something of value to the beneficiary.

The most common example is that the Trustee or Executor can make a payment directly to a college to cover a child's tuition. By including specific authority in the Trust for the Trustee and Executor to make such payments to others, they are better protected against claims that required payments to a beneficiary were never received by that beneficiary.

Do you want to name a Guardian for your minor children?

Choosing a Guardian

A guardian is the person nominated in a Will to have custody of the minor children, if a parent is not available. The guardian has control over the "person" (verses "property") of the minor children, providing for their PHYSICAL care, health, education, and welfare.

In contrast, if a trustee is appointed to carry out the terms of a trust established for the children, that person or organization provides for the children's FINANCIAL needs, managing the assets held in the trust and making payments to the guardian to be used for the children's care and/or making payments directly to the children. The same person(s) can serve as both guardian and trustee.

Naming a Guardian

Naming a person as guardian in a Will is merely a nomination, not the actual appointment. Only the court can appoint a guardian. As expected, the court usually accepts the nomination specified in the Will, but it is possible that interested family members or others may challenge the appointment, in which case the court will listen to both sides before making a decision whether to appoint the person nominated in the Will or a person suggested by others.

The court will appoint the person nominated in the Will unless it finds compelling reasons not to do so. The court is concerned only with the best interests of the children.

Who will be named to have custody of your minor children?

Sole/Co-Guardians

A sole guardian serves alone. Alternatively, you can nominate two or more persons to serve together as co-guardians. Decisions of co-guardians need to be unanimous and the co-guardians need to work together. Therefore, co-guardians are usually nominated only when the co-guardians are married to each other or when the co-guardians live together and each has an important relationship to the child(ren) (for example, two sisters who live together).

If you are inclined to name a married couple as co-guardians, consider the stability of the marriage and whether you would want both to serve if they were separated or divorced. You may prefer to name just one of the couple as your sole guardian. For example, if you are considering selecting your sister and her husband as co-guardians, maybe you want to choose just your sister as sole guardian.

Who will serve as Guardian if your first choice is unable to serve?

Alternate Guardians

It is recommended that you name an alternate guardian who will serve if your first choice is unavailable or unwilling to serve. Your choice of guardian is very important. If your first choice cannot serve and you fail to select an alternate, your survivors and the court system will be left to make the decision for you.

You may name an Alternate to serve alone or name alternate co-guardians to serve together.

What will the person or organization responsible for carrying out the terms of the Will be called?

Executor

An "Executor" or "Personal Representative" is the person or organization named in a Will who has the responsibility of carrying out the terms of the Will. Those responsibilities are to collect your assets, pay the debts and expenses of the estate, and distribute the remaining assets to the beneficiaries.

Some states use the term "Personal Representative," rather than "Executor," but generally, either term is acceptable. If you have no preference, use the term "Executor."

Who will carry out the terms of the Will?

Sole/Co-Executors

A sole Executor serves alone. Alternatively, you can nominate any number of persons and/or organizations to serve together as Co-Executors. All actions taken by Co-Executors must be unanimous. Therefore, difficulties and/or delays are sometimes encountered if:

• the Co-Executors reside some distance away from each other and documents to be signed must be circulated among them, or
• the Co-Executors are unable to unanimously agree on the same course of action.

On the other hand, there are also some advantages to naming Co-Executors. For example, a parent may name both of his children in order to avoid the perception that one child is being favored over the other.

Also, an attractive combination of Co-Executors is a bank trust department and a family member; the bank can assume responsibility for all of the court documents, tax returns, asset management functions, and transfer documents, while the family-member Executor can provide useful insight about the beneficiaries for purposes of distributions.

Finally, some states require (or at least prefer) that at least one Executor be a resident of your state or else be bonded. Therefore, in order to allow an out-of-state Executor, who is your primary choice, to serve without bond, you may want to add a Co-Executor who is a resident of your state to serve.

Who is the Executor?

Residency for Executors

If an individual will be selected as the Executor, that person should be a resident of the same state as you. Some states disqualify nonresident individuals entirely and other states allow nonresident individuals only under certain conditions.

If you want to select a nonresident Executor, you can find out what your state allows by contacting your county clerk of probate court or an attorney.

Executor Responsibilities

The Executor's responsibilities are significant. Therefore, the person or organization you choose should be trustworthy and capable of handling financial matters. A business background may be helpful, but certainly is not required. If the Executor will be working with a capable lawyer, the Executor's responsibilities will be much easier to handle.

Many banks have trust departments that provide executor services, but of course, the bank will charge for its services.

Executor fees can range from 1-2 percent of total assets in some states to as much as 4-5 percent in other locations. An attorney can advise you regarding the customary fees charged in your locality. Usually, the fees are collected upon completion of the work. Frequently, a spouse or adult child is named as an executor, and in such cases, the Executor may "waive" or refuse to accept a fee for services.

Executor and Trustee Powers

The Will includes provisions that grant broad powers to the Executor and Trustee to carry out the terms of the Will and the Children's Trust, if any. The list of powers is short and concise if the Will does not include a Children's Trust, but otherwise the Executor and Trustee powers are more detailed and specific.

Further, in these situations, some optional powers are available so that you can add powers that may be useful to your particular situation. For example, if you own a business, you may choose to include a power that permits the Executor and/or Trustee to continue to operate that business (at least for a short period of time) after your death. In other situations, this power may be irrelevant or undesirable.

Will the Executor serve with or without bond?

Bonding

You may wish to require a bond on your Executor or Trustee. A bond is similar to an insurance policy in that it covers against losses from misappropriation of assets by the Executor or Trustee.You may wish to check with a lawyer regarding the usual practice in your state and the risks of not requiring a bond. Because an Executor or

Trustee might occasionally misappropriate assets--either through theft or error--most states require that they obtain a bond before they are given authority to act as an Executor or Trustee, UNLESS you state in your Will that no bond is required.

Note: These bonds are also known as Fiduciary bonds. A fiduciary is a person or organization who is given the authority and responsibility over assets which are not owned by that fiduciary. For example, an Executor carries out the terms of a will and a Trustee carries out the terms of a trust.

Waiving Bonds

Most people decide to waive (not require) a bond because:

1. the Executor or Trustee chosen is trusted, and
2. because bonds:
   • are expensive,
   • are usually not necessary if a bank is the Executor or Trustee because most banks are already bonded, and
   • require greater court involvement in some states because the court must ensure that the bond is handled properly.

Who will carry out the terms of the Will if the Executor is unable to serve?

Alternate Executor

It is recommended that you select an Alternate Executor who will serve if the first choice is unavailable or unwilling to serve. You may name an Alternate to serve alone or name Alternate Co-Executors to serve together.

Under the latter option, you will also be asked to specify whether, if one of the Alternate Co-Executors is unable or unwilling to serve, the remaining Co-Executor will serve as sole Executor or if another name will be offered to serve so that there will still be two Alternate Co-Executors.

Will the Executor be authorized to limit court involvement in the settlement of your estate?

Informal Administration

Some states have adopted laws which allow the Executor to administer your estate with a minimum of court supervision, if the circumstances of the estate appear to be simple.

States describe this method using various terms, such as "informal," "unsupervised," or "independent." Usually, if problems arise under these less formal methods, there are legal procedures available by which objecting parties can force the estate to revert to more formal methods.

By providing the Executor with the discretion to use less formal methods (where available), you may be able to minimize unnecessary expense and delay in the administration of your estate. However, you must balance these potential savings against the increased possibility of errors or even intentional misconduct by the Executor which could occur due to the reduced court oversight.

If you have any questions about whether your state allows informal administration, or whether you should authorize your Executor to adopt informal administration, a lawyer should be consulted.

Should the Executor be released from personal liability resulting from the performance of his or her duties?

Executor Liability

Generally, most states protect an executor from personal liability in the absence of fraudulent conduct or bad faith (deliberate wrongdoing). However, by including a provision that relieves your executor from personal liability, your intentions are clear and your executor may be more willing to accept your request to serve.

Will any disputes between the beneficiaries be resolved by the Executor?

Resolving Beneficiary Disputes

It is recommended that the Executor be given the authority to allocate specific items of personal property among a class of beneficiaries who are entitled to a group of such assets.

For example, assume your siblings, as a class, are entitled to receive your personal property. If they are unable among themselves to decide who gets your wristwatch, the Executor should have the authority to distribute the wristwatch to one sibling while making an equalization distribution of other items to the other siblings. Otherwise, the dispute could require expensive court intervention.

How many witnesses will sign the Will?

Witnesses

The Will should be signed by the Willmaker in the presence of three DISINTERESTED adult witnesses and a notary public. Many states require only two witnesses, but the signature of a third witness provides some protection against the possibility that one of the witness' signature will be invalid for some reason.

For example, a person should not be a witness if that person is a beneficiary under the Will. In most states, if a beneficiary's signature is counted in order to satisfy the minimum number of witnesses, then the Will is not necessarily invalidated, but that "interested witness" may not receive a share of the estate any larger than if the Willmaker had died without a will.

SIGNING INSTRUCTIONS

This Will does not dispose of property which passes on the death of the Willmaker to a person by operation of law or by any contract. For example, the Will does not dispose of joint tenancy assets or the Willmaker's spouse's share of community property, and it does not normally apply to proceeds of life insurance on the Willmaker's life or to his or her retirement plan benefits.

This Will is not designed to reduce taxes. The tax results of the choices made in this Will should be discussed with a competent tax advisor.This Will is not valid unless it is signed by a Willmaker who is of "sound mind" and of the minimum age for this state. In most states, the minimum age is eighteen. Some states permit an individual below the minimum age to sign a will if the person is married or in the military. Being of "sound mind" requires that the Willmaker: (a) know that he or she is signing a will, (b) know the general nature and extent of his or her property, and (c) know the descendants or other relatives that would ordinarily be expected to share in the estate.

If the Willmaker is unable to sign due to physical disability, another person may be able to sign on behalf of the Willmaker, in the Willmaker's presence, and at the express direction of the Willmaker. However, this document does not provide the necessary language for another person to sign for the Willmaker. For assistance with this procedure, a lawyer should be contacted.

The Will should be signed by the Willmaker in the presence of three DISINTERESTED adult witnesses and a notary public. Many states require only two witnesses, but the signature of a third witness provides some protection against the possibility that one of the witness' signature will be invalid for some reason. For example, a person should not be a witness if that person is a beneficiary under the Will. In most states, if a beneficiary's signature is counted in order to satisfy the minimum number of witnesses, then the Will is not necessarily invalidated, but that "interested witness" may not receive a share of the estate any larger than if the Willmaker had died without a will.

All of the witnesses must watch the Willmaker sign this Will. The Willmaker should verbally declare that the document is intended to be his or her Last Will and Testament, but the witnesses need not read the Will or know of its contents.

Each witness must sign his or her name with the Willmaker and the other witnesses present. The witnesses should be satisfied that the Willmaker willingly signed the document as his or her free and voluntary act, and that the Willmaker was of full age and sound mind.

The Willmaker should initial on the bottom margin of each page of the Will. This is done to prevent the later substitution of pages.

The self-proving affidavit ("Proof of Will" in some states) is a document which should be attached to the end of the Will, and which contains the Willmaker's acknowledgment and the affidavit of the witnesses, made before a person authorized to take acknowledgments and administer oaths. The affidavit recites that the requisite formalities were observed in signing the Will. Although attaching the affidavit has nothing to do with the legality of the Will itself, it can speed the admission of the Will to probate after the death of the Willmaker because it eliminates the need to have a witness appear at the probate proceeding to testify that the formalities in signing the Will were followed. The witnesses may not be available later when they are needed. A self-proved Will may be admitted to probate without additional witnesses or affidavits, but it is still subject to contest on such grounds as undue influence, lack of testamentary capacity, or prior revocation. In most cases, this affidavit should be signed and attached to the end of the Will. Some states do not recognize the self-proving option. Therefore, the affidavit will be of no use in those states. However, including the affidavit in those states will not invalidate the Will.

The date should be filled in wherever requested, using the date on which the actual signing takes place. This step could become essential to the validity of the Will (for example, if this Will revokes an earlier Will).

The number of total pages in the Will should be indicated, including the page(s) on which the witness signature lines appear. The page with the affidavit, if included, should not be counted because the affidavit is not a part of the Will itself.The original of the Will should be kept in a secure location such as a safe deposit box at a bank, because only the signed original can be probated. A copy could be kept in the Willmaker's home files. The Willmaker may wish to provide a copy to his or her lawyer, or possibly to the person named as Executor or Trustee. However, before distributing such copies, the Willmaker should consider that it may become awkward to retrieve them later, should the Willmaker decide to modify the Will and/or change the designation of Executor or Trustee.

In most states, the Will cannot be changed by adding, deleting, or modifying words on the face of the Will. Such changes are usually disregarded. When changes are desired, it is recommended that the Will be revoked by signing a new will which expressly revokes the former Will. For example, if the Willmaker marries or divorces after the Will is signed, he or she should make and sign a new will.

If you indicated that your personal property or residuary estate assets should be distributed in percentages, it is very important that each percentage total equals 100%. Check the printed totals before signing the Will.