Newland's Business Notes

Old Wills

Volume 10 Issue 3 -- May/June 2006

One of the banes of professionals who do estate planning is the oft heard phrase “well, I have a Will, therefore I don’t need to do anything else.” As indicated by a number of the newsletters on our website, having a Will often is not the equivalent of thoughtful estate planning. Even worse then not doing comprehensive estate planning is the tendency of some to prepare a Will and then forget about it. A Will that is old and cold may not come close to fulfilling the purposes for which it was written.

On of the basic reasons people have Wills and Trusts prepared is to indicate the manner in which the assets are to be distributed, at a certain time. That time is usually death, unless there are Trust provisions in a Will or Trust.

Let’s take the example of Nev R. Kare ( Nev ). Nev never believed that he was going to die, but he had a Will prepared in 1982. The Will provided, among other things for dispositions to his children, administrators for his estate (also known as personal representatives or executors), and for the distribution of various assets. It never crossed Nev ’s mind that approximately a quarter of a century after the Will was written, it might have to be administered. As is often the case with such old Wills, one of the first problems is finding it.

Once an old Will is found there can be a host of problems that occur with Wills that have not been considered. Let’s look at some of them. First, beneficiaries change, pass on, etc. Second, if the Will provides for distributions to certain children of a fixed dollar amount, that dollar amount may be woefully inadequate years later. If percentages are used, the percentages could change because of the death of a child or other factors. One of the common problmes that many people fail to think about is to have a dollar amount distribution to one beneficiary and the residue to the other or perhaps the remainder to a group of beneficiaries. If the dollar amount exceeds (or is large compared with) the total estate, there may be very little left for those people who are to receive a percentage of the remainder of the estate.

Aunt Nellie’s Pie Safe

Many Wills contain provisions relating to who gets Aunt Nellie’s pie safe, the John Deere tractor, or similar items. To begin with, it is probably better not to have such items specified in a Will, for one very practical reason. Oftentimes, by the time Nev dies he does not have the John Deere tractor, pie safe, or other assets named in the Will.

Another problem often encumbered if the Will is quite old is the chance that the people named in the Will to provide services as executors or personal representatives may have passed on or be quite ill at the time Nev dies. This was the case in a recent situation where the decedent had two elderly siblings. Fortunately, one was in good health but the other was not. The sibling in bad health could not serve as a co-personal representative, thus creating a problem of finding family members that would be willing to serve in place of the elderly sibling.

Law Changes

As many who have estates of some size know, the tax laws are unfortunately in a state of flux. Our newsletter of May/June 2001 is entitled “Don’t Die Yet – Wait Until 2010.” Many people are not aware that in the year 2010, there is no estate tax, under the current law. While many believe the law will change before 2010, it is quite difficult to project what the law may be. There are many educated guesses, but no one has yet been smart enough to divine the future. Wills prepared as recently as several years ago may need to be reviewed because of substantive changes in the tax law.

It is also possible, over an extended period, that the situation of the children could change considerably. For example, one child may be in great need of funds while another may need no funds because he/she has been successful in his/her profession. It may not be appropriate to provide for equal distributions to both children if one child has virtually nothing and the other child is financially endowed through their efforts.

It is indeed hard to imagine any situation where a Will prepared more than 10 years ago would be adequate in most situations. If you have an old Will, it is probably not consistent with your needs and you should consider reviewing it, or having a professional do so, to see if it represents how you and your spouse want your assets distributed.

Copyright 2006

Published by the law firm of Newland & Associates, PLC
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Manassas, VA 20110
Call us at (703) 330-0000 for a full range of business law and tax-related services.

While designed to be accurate, this publication is not intended to constitute the rendering of legal, accounting, or other professional services or to serve as a substitute for such services.

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