What if I told you one of the common wishes of clients when it comes to making a will could cause complete chaos after you pass away? When we think of our last will and testament, we might think of the Hollywood portrayals of adult children and their grandchildren hanging on every word of a lawyer as he solemnly announces each provision of a deceased parent’s will in a corner office. (One that comes to recent memory is in Gran Torino). However, rarely do wills actually go about designating where each piece of property goes. In my last article, I addressed some of the basics of personal property, including what it is and is not, and some complications that may arise when dealing with personal property. In this article, I will discuss the pros and cons of delineating specific recipients for estate assets (called “specific bequests”), or just keeping things general.
To be or not to be, specific. That is the question!
Each of our clients complete a questionnaire before we begin writing their will, and on that questionnaire we ask the question: “do you want anyone to have specific things from your estate?” Most of the time, people answer this question with fairly innocuous answers. One example is that if we are preparing wills for a husband and wife, the wife might say that she wants her jewelry to go to her daughters, and the husband might say that he wants his guns to go to his sons. (We practice in a rural county). The next question we ask is how the husband and wife want to divide the remainder of the estate.
Lawyers are in the business of being cautious. Our job is not just to look at situations where everything goes exactly as planned, but also to protect you when it doesn’t. One situation that is a “worst case scenario” is where the estate ends up being worth less than anticipated when the decedent created the will. Unfortunately, this occurs more frequently than one might think, especially considering the expense of nursing homes and long-term care.
Let’s say for example that in the above situation, when the husband and wife wrote their wills, they had two daughters, a son, and a modest estate. Next let’s say that the husband and wife have passed away, and incurred sizeable medical bills before they died. Continue the scenario by saying that after the bills were paid (and they get paid first), the most lucrative assets in the estate are the guns. Conversely, the jewelry has negligible cash value. If the guns in the estate are worth approximately $10,000.00, but the cash in the estate remaining is only $5,000, than the result of the distribution of the Husband and Wife’s estate would be:
Daughter 1: $1,666.67
Daughter 2: $1,666.67
Son 1 (if he sells the guns): $11,666.66
It is safe to assume that the Husband and Wife probably did not intend for this to be the distribution after they passed away. Although the son could be generous and offer to split the guns with his sisters, he would have no obligation to do so. The executor would be compelled to deliver the guns to the son even if the sisters tried to fight it.
The Gran Torino
With all that being said, there may be times in which it is necessary in order to dictate which pieces of property are going to whom. Consider the movie example I gave above (spoiler alert). The film ends with all the characters eagerly waiting to discover to whom Clint Eastwood’s character leaves his beautiful Ford Gran Torino car. Imagine in a much less satisfying alternate ending to the movie there was no provision in Eastwood’s will concerning the car. That would mean all of the heirs would have to sit down and agree amongst themselves who gets the car. With the contentious family situation that he had, there likely would have been fighting over who got the car, and it would likely just be sold and the proceeds split among the heirs.
While the gruff, swearing, beer-drinking veteran Clint portrays clearly doesn’t pay heed to family drama (I won’t completely ruin the movie by saying who he does give the car to, Google it if you want to know), most people want peace in the valley after they pass away, and to avoid as much consternation between children and heirs as much as possible. Accordingly, if not designating the recipient of a particular piece of property will cause stress because the property is coveted by several different people, the right call might be to go ahead and specifically spell out who gets that property in the will.
So, what should I do?
Though the above situations may seem a bit extreme, less drastic variations on the same themes occur all the time. Although you may believe that there is little chance that these situations could happen to you, it still pays to plan ahead. Accordingly, consider these methods in your estate plan:
- The list:
Although not enforceable by your executor, many of our estate clients will informally list their personal property, and designate who gets each item. This can easily be done in an excel spreadsheet, with one column showing each item, and a second column with names of people to whom each item should go. You can even put approximate values next to each item, so that you can better gauge how equally you are dividing the estate. Or, it can be written on a piece of paper. If something unexpected were to happen to your estate, this method gives your executor flexibility to work things out.
- The codicil:
A codicil is an amendment to a will that requires all of the same formalities. You could do the same thing you do in a list with a codicil, but give it the authority of your will. If you decided that you don’t like the provisions in the codicil, you can revoke it without revoking your whole will. Similarly, if you want to change your codicil, you can do so without having to draw up a whole new will. However, because it does have binding authority, it will not have as much flexibility as a list will.
- The trust:
A trust is different from a will in that creating a trust is like creating a new being that exists on its own. The trust holds title to assets as if it is a person, but it is only a legal entity. What a trust is and whether you should create one is a topic for a whole other article, but the benefit of a trust is that you can easily add or remove items from a trust at any time during your life. Additionally, trusts do not go through probate, granting you increased control over your assets even after you pass away. However, trusts are typically much more expensive than wills, and are also expensive to administer.
When you consider making specific bequests, it helps to be informed as to what possible scenarios may happen when you specifically dictate to whom each item is going to go. Be especially cognizant of how individual pieces of property might affect the residue of your estate, and the equality of the final distribution. Although I paint a picture of potential consequences, there is typically nothing wrong with putting in your will to whom specific property should go. Perhaps in the guns/jewelry situation, you would be fine with the son receiving more out of the estate because he is less financially well off than his sisters. Either way, our job is lawyers is to make sure you are adequately informed to make the best decisions you can regarding your estate. If you have any questions about estate planning and specific bequests, give us a call and we would be glad to help you answer them.