A Will or Last Will and Testament is a legal document that governs how property is distributed upon one’s death. The provisions in a Will will vary based upon the unique characteristics of the individuals state laws and the individuals unique circumstances. Nonetheless, there are several Will provisions that should be included in most Wills. Here are a few such provisions:
No contest clause:
A no contest clause specifies that beneficiaries who challenge the Will will be disinherited or receive some nominal bequest. No contest clauses can help reduce the risk that future beneficiaries will fight amongst themselves and squander their collective inheritances by paying expensive attorneys fees and court costs.
The laws of many states provide the courts with the power to hold a no contest clause in a Will invalid if the court is satisfied that there was good reason for thee beneficiary to bring a claim against the estate. This helps ensure that Will beneficiaries have some recourse against unlawful activity on the part of the personal representative, attorney, or other third parties.
A survival clause sets out the period of time beyond which the beneficiary must outlive the decedent in order take under the will.
Survival clauses are particularly useful in cases where it is impossible to determine which spouse passed away first. For example, it is impossible to tell whether a husband or wife died first if both were killed in the same automobile accident.
In these cases state law may specify that each spouse was deemed to predecease the other spouse. This can result in inequities where one spouse owns most of the couple’s assets (and it can be especially troubling where one spouse has children from prior marriage).
Abatement clauses specify what assets are distributed to beneficiaries if the estate is not large enough to make all of the distributions.
Abatement clauses are helpful in cases where the decedent incurred significant debts during his or her last days (such as medical bills), which results in the estate being less than was intended.
Absent a specific abatement clause, the law in most states provides that assets will be distributed in the following order until the assets are dissipated:
- Specific bequests – bequests of a specific item of property (e.g., a house, a car, etc.)
- Demonstrative bequests – bequests of property from a specific source (e.g., $100 in my bank account)
- General bequests – bequests of general estate property (e.g., $100, 100 shares of stock)
- Residuary bequests – bequests of property not specifically set out in the will (e.g., I leave everything else I own to …)
- Intestate assets – property not disposed of by the Will, such as life insurance or retirement accounts that were paid to the estate or assets that were not covered by in the Will
An abatement clause allows the decedent to change these rules in his or her Will.
Personal representative compensation:
A personal representative or PR is generally entitled to compensation for his or her services in administering an estate.
Absent a specific provision, the probate court may allow the PR a reasonable PR fee. What is reasonable varies from state to state. The law in some states provide that a PR can be paid in excess of 8% of the value of the total estate assets.
Many PRs who are friends and family members will simply not request fees if they do not wish to be compensated for their services.
In many cases the named PR is no longer living, cannot be located, or otherwise refuses to serve as PR. In these cases the court will appoint a professional PR, which is usually an estate and trust attorney. Absent a specific provision addressing PR compensation, this non-family non-friend PR could be awarded a significant fee for his or her services – thereby diminishing the property that goes to beneficiaries.