Every estate plan should include at least three essential documents: a Durable General Power of Attorney, a Healthcare Power of Attorney and a Last Will and Testament. Of these three essential documents, two are used only during life (the Powers of Attorney) to give someone else power to handle affairs if you’re unable; and one is used only after death (the Last Will and Testament, usually simply called a “Will”) to direct final distribution of assets.
It’s important to know that, unfortunately, terminology isn’t entirely consistent in the world of estate planning. There are some documents that go by a couple of different names, and others that are quite distinct but sound similar.
For example, a Will is entirely distinct from a Living Will. A Will is a declaration of an individual’s wishes for handling his or her property after death, and a nomination of the person who should handle it. A Living Will, on the other hand, refers to a document that outlines end of life decision-making, such as use of life-prolonging machines.
We’ll call the person who writes the Will the testator for purposes of this article. A Will usually includes certain sections:
- It recites the testator’s marital status and family relationships
- It outlines the testator’s desire for property division and distribution
- It nominates the people who should serve in fiduciary roles (Personal Representative; possibly a Trustee; possibly a Guardian for minor children)
- It outlines the rights and duties of the Personal Representative in handling the testator’s estate
Some common misconceptions:
- Having a Will means that the testator can avoid Probate
A Will is instruction to the Probate Court about the testator’s wishes. If the property is held solely in the testator’s name, without a payable-on-death designation or a beneficiary designation, it still must pass through probate. Luckily, in Maine this is not a particularly cumbersome process.
- The person named as Personal Representative has immediate authority to handle affairs.
Again, a Will is instruction to the Probate Court. The Court must review the document and then approve the Personal Representative. In Maine, he/she will be issued Letters of Authority when the appointment has been made.
- All of the assets owned by the decedent will be addressed in this document.
Many assets pass outside of the probate process. Assets with joint ownership pass automatically to the survivor and not considered probate assets. Likewise, assets with beneficiary designations (like retirement accounts or insurance products) transfer ownership automatically at death. Payable-on-Death or Transfer-on-Death designations behave the same way.
The Will may suggest that all assets will be distributed a certain way, but it does not govern the types of accounts listed in the prior paragraph. The testator must update those beneficiary designations to match his/her current estate plan.
Even though certain assets are considered probate or non-probate assets, all must be considered for tax purposes.
- Listing beneficiaries in the Will provides creditor protection.
Lifetime debts of the testator, including costs of care, must be paid before beneficiaries receive property.
The Personal Representative has the authority and obligation to handle all assets of the testator. He/she must notify debtors of the death, handle personal property, pay final expenses, file tax returns, and ultimately distribute assets.
Rev 3/23
The information presented on this website is general in nature and not intended to be legal advice. No attorney-client relationship will exist with Jones, Kuriloff & Sargent, LLC unless agreed to in writing. Please contact us to discuss your particular situation.
