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Where There is a Will, There is a Way

Posted by Shanna Tingom, AAMS® on Apr 12, 2016 11:11:36 AM

Guest blog post by Becky Cholewka of Cholewka Law

One of the most common myths about estate planning is, "I have a will so my assets won't go through probate." Wrong! A probate is determined by the types of assets a decedent has and how they are titled, regardless of whether the decedent has a will.

Last Will and Testament

If you have a will, it does not mean you will avoid the probate process. A will merely provides instructions to the probate court about your wishes. Any individual assets that are not titled in the name of a trust, or do not have a beneficiary form stating who the asset will go to at your death, is a probate asset. When assets go through the probate process either formally or informally, the court looks to the decedent's will to determine who the decedent chose as beneficiaries. If the person who died did not create a will, the court must rely on state statutes to determine who will receive the decedent's assets. Sadly, only about 25% of Americans create a will.  This means about 75% of individuals leave asset distribution decisions up to their state legislators.

In a will you name:

  • Who you want to raise your minor children should something happen to you and the other biological parent
  • Who you want to receive any of your financial assets, personal property, real property, or pets that go through the probate process
  • Who you want to act as your Personal Representative (some states call this the Executor) i.e. the person that manages the probate process for your family

If someone dies without a will (called intestacy) then we must follow state law. There are default state statues that instruct the court as to who has priority to act as personal representative and to whom assets are distributed.

There are some surprising examples of what actually happens to assets under Arizona law, especially with blended families where a spouse has a child from a previous relationship. For example, Sally and Bob are married.  Bob has children from a previous relationship. Bob inherited his families' farm which is titled in his name alone and he has kept it separate from the community property he shares with Sally. Bob suddenly dies without ever creating his will. First, all of the community property will be divided equally and Sally will get her 50% share of the community property.  Bob's estate will be distributed as follows:

  1. Bob's 50% of the community property will be awarded to his children equally.
  2. All of the separate property will be split equally: 50% of the family farm will go to surviving spouse, and the other 50% will go to Bob's children equally.

For most blended families, this is not the scenario they expected. I recently had a probate estate for a widow who was married 18 years before her husband passed away. Husband's 20 year-old-daughter received all of the husband's community property assets. Assets that the husband and wife had spent 18 years building together.

There are no state defaults as to whom will be chosen to raise a decedent's minor child. In those extremely sad cases, there is litigation for a judge to make the determination as to who will raise the child based on what the judge believes is in the child's best interest. These trials can be very stressful and contentious. They also come at a time when I child is grieving the loss of a parent and now is uncertain who will raise them or even where they will live.  How dare we as parents leave this critical decision about our most precious assets to someone we don't even know!

Lastly, in Arizona, one may create a holographic will that is handwritten and signed. A holographic will does not need to be witnesses or dated, but it is advisable to at least date the document. Holographic wills are mostly created in emergency situations or end-of-life situations in hospitals where there is not enough time to create a proper will. The drawback of holographic wills is that there is greater risk of making errors in the document that may invalidate the will.

Do you want the court to decide who will raise your children? Or to whom your probate assets should be distributed? If not, I recommend you see an estate planning attorney who can advise you as to what provisions to place in your will based on your family and your goals. A comprehensive and properly drafted will can help ease your family’s pain and expense during a probate process.

Becky Cholewka is the founder of Cholewka Law—an estate planning and probate law firm in downtown Gilbert. She realized the importance of estate planning when her dad died when she was only 19. Through the years she has seen the benefits of great planning, and the nightmare of poor planning. She is passionate about being an advocate —and a voice — for clients and their families.

Topics: Family Matters, Guest Blogger