SEATTLE — Planning your will and figuring out what happens to your assets can be confusing, especially when there are so many misconceptions about what you do and don't need. However, it's an important task, and the peace of mind is a great reward for making sure it's completed correctly.
Wills and Estates attorney Teresa Byers is busting some myths so you can get on the right track:
I don’t have enough assets to need a Will.
Wills don’t simply dispose of your assets, they also nominate your executor, namely the person who collects your assets, pays your creditors and distributes your remaining assets. If you don’t name an executor, someone with an interest in your estate, including a creditor, can come forward and ask the court to appoint them as executor. If you have minor children, your Will is also where you nominate guardians to care for them and that nomination carries considerable weight when the court is determining who will act as their guardians until age 18.
I told my spouse/children/friends what I want so I don’t need to update my old Will.
Your executor is required to follow the actual terms in the Will so if your wishes have changed, but your Will hasn’t been updated, they can’t follow your wishes without breaching their duties as executor. A breach may can result in the executor being removed and even personally liable for any loss to the estate from their actions.
My Will covers all of my assets.
A Will covers only your probate assets, it does not cover assets with beneficiary designations such as life insurance, retirement accounts, annuities, assets held in trust or assets designated as joint tenancy with right of survivorship.
I named my child on my bank account so he/she could help me pay my bills but s/he will make sure that all the children share in whatever is left and I’ll avoid probate.
If an account is designated as joint tenancy with right of survivorship, which is virtually all joint accounts now, it passes to the surviving joint tenant. In other words, if mom dies, the account passes to the child named on the account, not all the children. The named child has no obligation to give anything to his/her siblings; in fact, if he/she does give a portion of the account to his or her siblings it is a gift and may need to be reported as a gift for federal gift tax purposes.
My estate isn’t big enough to worry about estate tax planning.
It’s true that the federal estate tax exemption is currently approximately $11.4 million per person and, consequently very few people pay federal estate tax. However, the current federal estate tax law sunsets in 2026. Moreover, Washington is one of a relatively few number of states that continue to have a state estate tax. Each person has an exemption of $2.193 million under current law. For many individuals in the Seattle area, owning a house, a retirement account and a life insurance policy will be enough to put their estate over the exemption amount. Moreover, unlike the federal estate tax, Washington does not allow you to “port” one spouse’s credit to another spouse which means that tax planning is needed to preserve both spouses credits.
My retirement accounts and life insurance pass tax-free.
Life insurance and retirement accounts are included in the calculation of an individual’s taxable estate. While those assets receive favorable treatment as to creditors and income taxes, they do not avoid or receive any relief from state or federal estate tax.
I named my executor and he/she will take care of everything if I get sick and can’t take care of myself or my finances.
An executor is named in a Will and a Will is only effective upon a person’s death. It’s in everyone’s best interest to name a financial and healthcare agent to act for them if they are unable to take care of their own affairs while they are alive. An agent is named in a durable power of attorney, not a Will. If you are incompetent and have not named an agent, then the court may complete an investigation and appoint a guardian to act for you. Guardianship is expensive and requires annual reports to the court so, if possible, it’s better to have an agent under a durable power of attorney.
I wrote up my own Will” or “I wrote changes onto my Will.
Washington doesn’t recognize holographic, or handwritten Wills, signed only by the testator. A valid Will in Washington needs to be signed by the testator in the presence of two disinterested witnesses who also sign. The same if true of any changes that are later made to a Will. An invalid Will is the same as having no Will at all so it’s very important to make sure that your Will complies with all the formalities.
I haven’t created as Will but my family will figure it out
If you don’t execute a valid Will, then you die “intestate” and Washington’s intestacy statute controls the distribution of your estate. In other words, if you don’t make your own Will, Washington imposes one on you and the statutes dictate how your estate is divided among your legal heirs. Generally, this means that your community property passes to your spouse and your separate property is divided among your spouse and your children. If you have minor children, the court will impose a trust on the assets passing to your children and that trust will be subject to court oversight and last until your children are 18, 21 or 25 years of age.
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