What are some common drafting techniques used in effective Wills and Trusts? (Part 2)
Recently we discussed some common drafting techniques that are used when creating Wills and Trusts. In this post, we want to continue that discussion and point out some other things that estate planning lawyers do to help their clients avoid ambiguities when it comes time to administer their estate or trust.
Including Assets Not Subject to Testamentary Distribution
This concept is simple. Your Will or Trust should not attempt to transfer assets that are not able to be transferred by a Will or Trust. A simple example is assets that you hold as "joint tenants" with other people. By operation of law, as soon as you die, the other joint owners automatically become the owners of that asset. Including a provision where you try to transfer your interest in joint tenancy property may cause confusion among the beneficiaries and result in a fight among them, and the other joint tenants.
It's impossible to account for each asset that you own. That's why a "residue" provision is always included in Wills and Trusts. Essentially, the "residue" is everything else that is leftover after the gifts are distributed and expenses are paid for. Ensuring that you've named one or more beneficiaries to receive the residue ensures that the balance of your estate will be given to intended beneficiaries rather than passing by intestacy.
Change in Assets
Many years can pass from the time you create your estate planning documents to when you pass away. During that time, unexpected changes may happen to your assets. For example, you may decide to draw down on the equity in your home or move from one house to another. Therefore, it's important to anticipate these types of events. In your Will or Trust, you should include an explicit provision stating whether a particular asset will get distributed subject to, or free of, debt. When making a gift of your home, rather than mentioning a specific address, consider referencing your "personal residence" so that if you move, your then current home will be transferred to the appropriate beneficiary.
If you decide that you would like to exclude your spouse or a child from receiving any assets of your estate, it is best to include a specific disinheritance provision explicitly stating your intent not to provide for them. Without including such a provision, a spouse or child may be able to assert that they are entitled to a portion of your estate as "omitted" heirs.
The mechanisms and provisions employed by estate planning lawyers are too numerous to inventory. Sometimes a great deal of thought and creativity must be used to draft a provision. Explaining your wishes is the first step towards ensuring that your lawyer can help you prepare documents that accurately capture what you want.