America is generally familiar with the will - everyone has seen a movie or show whose plot is based on some relative leaving a pile of money and everyone shows up at the 'reading of the will' to find out what their cut is. But what, besides pitting an already dysfunctional family against itself (according to Hollywood), is a will good for?
Wills, for the longest time, were considered the backbone of estate planning. In my opinion they're being replaced by the trust as primary planning vehicle. Even if that is the case, the will is still an effective estate planning tool.
Why a Will Works
The will acts as an instruction to the court. That means in order for a will to have any effect, it has to go through a probate. In Wisconsin, probate can be formal, in front of a judge, or informal, in front of a register of probate. Both probates admit a will (proving that the will was yours and wasn't forged) and appoint a personal representative (a person who is in charge of administering the estate, which other states call an executor).
The court has the authority to change bank account owners from the person who has passed away to the heirs. They, in turn, delegate that power to the personal representative. They sign a document called 'domiciliary letters' that lets banks and other financial institutions know that someone is the personal representative and that person is allowed to handle the money.
With these letters, the personal representative can then change the bank account and eventually transfer it to the beneficiaries. The personal representative has to obey the court, who makes sure that the personal representative follows the wishes of the will.
Unique Advantages of a Will
There are several unique advantages to to a will. Because of these advantages it may be appropriate to use the will as your primary estate planning vehicle and it is always appropriate to have a backup will alongside a trust for any estate planning that involves a trust.
Naming a Guardian
For parents with minor children, this is the single most important feature of a will. The will allows you to name a guardian for your children; who would watch them if you're gone.
I mentioned in a previous post that this was the motivating factor behind my wife and me doing our planning.
Flexibility with Financial Accounts
Courts have a lot of authority. When it comes to administering estates, there is very little that they cannot do. They can order any bank to transfer accounts to your beneficiaries.
With all other forms of planning, you need to have some foresight. For everything you own - every bank account, every treasury bond, every piece of property - you need to set up a transfer on death, a trust, or some other means in advance to handle the planning. Because a judge can do this on your behalf after you've gone, a will can be like a skeleton key to opening and transferring all of your assets.
For this reason, a will is especially useful for people with constantly changing assets. This is more common among younger people and families - the regular buying and selling of houses, opening and closing of accounts, acquiring and paying off loans.
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