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Why “Simple Will” is the most misleading misnomer in estate planning - by Daniel L. O’Neil

by News Editor
in Blog
on 14 March 2016
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Feedback from our clients and others in the community is essential for us so that we have a captivating conversation, rather than a one-sided lecture. The best thing about a conversation is that it is active, we listen to each other and better yet we learn from each other. A conversation is a fun and engaging experience; it is not Jayne Cobb’s “talking AT you” situation he gruffly told Malcolm Reynolds about in the Serenity film within the Firefly-verse. We enjoy the opportunity to have a conversation with you about legal topics and we thank you for reading the blog and sending us feedback so we can continue the conversation with new topics that you find interesting!

 

First, let’s just introduce the common types of Wills:

  1. Holographic Will means handwritten by you, and usually fails to include some of the most basic legally required/recommended provisions that a Simple (uppercase ‘S’) Will prepared by a licensed Texas lawyer most often includes in the Will. If you would like to read more on Holographic Wills  feel free to take a detour to one of our prior posts.
  2. Codicil republishes a prior Will – to make minor updates, to provide additional best evidence of testamentary capacity, and to confirm again (republish) that the Will was executed correctly so it can potentially be admitted to probate as a valid Texas Will.
  3. Simple Will is a type of Will, meaning no tax-planning is involved in the Will. The primary focus of the blog post, we will dive into this in fuller detail shortly.
  4. Pourover Will” in conjunction with a Living Trust is actually a much more simple (lower case ‘s’) type of Will but we don’t call it a Simple Will with the uppercase ‘S’ because of how differently it operates as a larger part of orderly family wealth transfer.
  5. A tax-planned Will is the most complicated ergo the most expensive because of the complicated nature of the assets and/or the amount of dollars involved to effectively plan to remove (or reduce) an estate tax (or gift tax or generation skipping transfer [“GST”] tax) bill that strikes at a 40% tax rate.

 

The term Simple Will is not an ugly term – it’s not an insulting, derisive term. It identifies a type of Will, which is no better or worse than the other types of Wills. It is just an identifier that essentially says careful attention will be paid to it, but it will not cost you $20,000+ as some tax-planned (another type) Wills might run certain people due to their complexity and specific inquiries involved in crafting such a plan. Our Simple Wills (we can’t speak for others and for the online document assembly shops) still contain all of the legally required provisions and items for it to be considered a valid Texas Will. We stand behind our Wills in Probate Court and historically the firm has not had an issue getting our Wills admitted to probate as valid Texas Wills. PROMINENT DISCLAIMER: Past results do not guarantee future outcomes though.

Simple Wills contain provisions identifying you, your fiduciaries, your beneficiaries, your property, the disposition of your property, the powers of your Executor(s) and/or Trustee(s), the appointment details of successor Executor(s) and/or Trustee(s), possibly detailed burial/funeral arrangement details, possibly appointment of guardians for minor children, and often there are trust provisions – contingent trust, spendthrift trust, supplemental needs trust (“SNT”), or other different types. And then there is the boilerplate stuff and the legally required stuff, the formatting of which makes the Will valid-appearing so long as it is executed correctly in a Formal Will Execution Ceremony. The benefit of a valid Will is avoiding intestacy. What is intestacy and why would you want to avoid that? If you would like to read more on intestacy and why you want to avoid it  feel free to take a detour to one of our prior posts on that topic.

The benefit of a real Texas licensed lawyer with a real office in Houston is that we can talk in person and your estate planning needs can receive specialized attention. This specialized attention includes in-person meetings, review of financial documents, extended discussions of appointments for fiduciaries and the types of gifts you are providing to certain beneficiaries, and then additional time spent on drafting and revising provisions with your input – which explains the less simple pricing where your family details and finances come into play more to affect the price than a “simply priced” Will. Also the type of assets you own and your overall plan for orderly family wealth transfer is important in determining whether we need to address such things as business succession planning as a unique component of the plan. If you would like to read more on business succession planning and why it is essential for small business owners to start thinking about today and not tomorrow feel free to take a detour to one of our prior posts on that topic.

If you have complex family concerns, you need nothing less than special attention paid to your unique circumstances. For example, I work a lot with families that need SNTs – and I have my own personal experiences with this since my nephew is special needs and the family situation required complicated drafting to address those circumstances. SNTs are not something you want to print out from the internet people because they are highly customizable and they can be done very badly and create costly, frustrating problems down the line that are either intended or unintended consequences. Families that have a special needs child require special attention. Families with a lot of internal family conflict require special attention since there is usually a pretty strong likelihood that the person in the family nobody likes might contest the Will.

Simple Wills are not simple in the traditional meaning of that word. They contain very important provisions that protect your family, friends, and charitable interests – and they help facilitate an orderly transfer of family wealth when the time comes. They are a huge improvement over Holographic Wills. But unless the $5,450,000 (single person) or $10,900,000 (married) estate tax threshold is a near and present danger, or you have additional specific concerns about gift tax and/or GST tax then a Simple Will in conjunction with necessary and sensible trusts can cover you from A to Z.

The vast majority of Wills executed in the State of Texas are Simple Wills – because most Texan families do not have estate tax issues with the current estate tax thresholds. If the premiere presidential candidate Bernie Sanders is elected the estate tax threshold will drop below where it currently is. As a result tax-planned Wills will see a huge increase in popularity and necessity in a range of “middle class” family wealth levels that have not had to worry about estate tax since 2003 ($1 million exemption and this was without portability.) But for now, Simple Wills cover the legal needs of slightly more than 99% of Texans.

If you want to talk about any type of Will, trusts, or other aspects of estate planning, guardianship, or probate with us today we would love to hear from you.

713-227-1717