Contrary to many people’s beliefs, a last will and testament (a “Will”) does not avoid probate. A Will is the most common document that people think of when the issue of estate planning comes up in life or when a loved passes away. A Will does several important things, including designating a person, the personal representative or executor, to handle the decedent’s affairs, designating who will inherit, and naming guardians for minor age children. However, there are many things that a Will cannot do.
The following is a non-exhaustive list of important things that a Will does not do.
First, a Will alone will not avoid probate (a court proceeding to settle a decedent’s estate). In fact, the primary purpose of a having a Will is to have a court proceeding to assist with settling a person’s affairs. A probate proceeding will be needed in Minnesota to settle the affairs of any person who died owning an interest in Minnesota real estate in their own name and/or had more than $50,000 of assets in their own name that were not transferred by another means (think beneficiary designation). Minnesota probates typically last between nine and eighteen months and some last much longer periods.
Second, a Will does not control the distribution of any asset for which a beneficiary has been named or was owned in joint tenancy. For example life insurance policies and IRAs typically do not pass through probate when beneficiaries are named. Also, any asset that is held in joint tenancy will be owned by the surviving person at the death of the other joint tenant (for example, most married couples own their homes as joint tenants). This means that some of the most significant assets of person may own will be transferred outside of the probate court. Assets passing outside of probate often lead to unintended consequences. A person may think that all of their beneficiaries will inherit pursuant to the terms of their Will. However, many people fail to consider that some or all of their assets will not be controlled by their Will. Non-probate assets may be distributed in ways very different from a person’s wishes expressly stated in their Will. Additionally, it is very common for people to improperly fill out their beneficiary designations. This can lead to an intended beneficairy being inadvertently disinherited. Also, assets that pass outside often leave the person administering the probate estate without sufficient liquid assets to settle the decedent’s affairs.
Third, a Will does not control a person’s finances while they are alive. Specifically, if a person is incapacitated or unable to manage their own affairs, simply having a Will may be of no use. At a minimum, every person over the age of 18 should have a durable power of attorney and an advanced healthcare directive. These two documents designate who would handle a person’s affairs if the person were unable to do so on their own. Keep in mind that a Will is only effective upon a person’s death.
There are many things that a Will alone cannot do. While estate planning often includes the use of a Will, a Will is only a part of a comprehensive estate plan.