Wills: A Cornerstone of Your Estate Planning Strategy

For many of us, the word "will" calls to mind a classic film trope, the one where family members gather in an attorney's office. Emotions run high, with each individual anxious to learn what secrets the mysterious document holds.

While life doesn't always imitate film, one shouldn't underestimate a will’s role in helping make clear exactly where and how you wish to have your assets distributed. In fact, a will is a necessary part of any preparation you do to ensure your family – and your assets – are taken care of in the event of your death. And, as many families discover upon a loved one's passing, a will can provide peace of mind during an emotionally difficult time.

While a will can be very useful, many people struggle to prepare one.

In fact, according to a 2023 survey by Caring.com,

• Only 34% of American adults have made a formal estate plan for what will happen after they die.
• Almost 1-in-4 Americans without an estate plan said that nothing would motivate them to create one.
• Procrastination is cited as the primary reason why 42% of Americans haven’t created a will yet.¹

That’s unfortunate news, especially since drafting a will is simple to do and provides a unique level of protection and security for your family.

While RBFCU Trust Services can’t draft your will for you – that’s the job of an attorney – we can help connect you to our network of attorneys and ensure that a will is part of your overall estate planning strategy. We’re also able to provide you with this broad overview of wills and how they function so that you’re better informed.

What is a will?

A will is a legal document that provides guidance for the distribution of assets and possessions² in the event of someone’s death. Even if you’ve established a trust or made life insurance, retirement or bank accounts payable to a designated beneficiary, a will remains a useful mechanism for directing precisely how you wish your assets to be distributed after your death.

Who needs a will?

Arguably, everyone needs a will. After all, almost everyone has assets, whether they are bank accounts, property, vehicles, jewelry or other possessions. If you want to ensure that your assets are distributed to specific people (or beneficiaries), then a will is a good solution.

Without a will, however, you leave to chance who will inherit your assets. In fact, when someone dies without a will (referred to as dying intestate³), the distribution of assets is left to the government or the courts. Yes, that means your property will be distributed according to state laws.

If you were to die intestate in Texas, for example, your assets most likely would go to your closest relatives, starting with your spouse, then your children and other relatives such as your siblings or cousins. If your estate is valuable – or if there’s considerable friction between potential beneficiaries – it’s possible that individuals may engage in a heated, protracted legal battle over your estate.

What a will can and cannot do

Bearing in mind that each state has specific laws, rules and regulations regarding wills and estate planning – making sound legal guidance essential to a will’s creation, the following information offers a broad overview of what a will can and cannot do.

With a will, you can:

• Name an executor for your estate
• Choose (or leave out) beneficiaries
• Select guardians for minor children

With a will, you cannot:

• Give away jointly titled assets (e.g., property or homes held in joint tenancy, shared bank accounts)
• Gift property or assets currently held in an existing living trust
• Override previously named beneficiaries of life insurance, pension or retirement plans
• Give specific beneficiaries access to funds in a bank account left to them (The executor, however, can distribute the funds according to your wishes.)

In Texas, it’s worth noting that you must be over the age of 18 or be either lawfully married or a member of the U.S. military when you create your will. Additionally, you must have what is called “testamentary capacity,” or the ability to fully comprehend that you’re making a will and are fully aware of the size of your estate and your will’s potential impact on your assets, estate and beneficiaries.

How probate and wills work

When someone dies and leaves a will, the state of Texas requires the assets to be distributed through probate⁴.

Probate sounds daunting to many people, but it simply refers to the legal process through which a person’s estate is resolved, with assets being distributed to beneficiaries. Assets may include bank accounts, real estate, investments and personal possessions — all of which can fall under the probate process.

Although probate can prove to be a protracted, time-consuming process, a valid will that meets your state’s legal requirements may help expedite the process. (Again, an attorney can help draft a will.)

The executor (named in the will) usually navigates the probate process. In addition to distributing the assets, the executor must also estimate the value of the estate, as well as pay any taxes or debts owed by the deceased from the estate. Additionally, the executor may file any personal income tax returns on behalf of the deceased and deal with any estate taxes.

Probate requirements and processes can vary from state to state. In Texas, for example, any estate valued under $75,000 does not need to go through probate. However, a family member still might have to file a small estate affidavit to settle the estate.⁵ This requires time and money, plus the alignment of all heirs.

And even in the case of a small estate that doesn’t require probate, a will can help ensure that assets and family heirlooms are given to your preferred beneficiaries.

It’s important to note that when a will enters the probate process, it becomes part of the public record.⁶ That means anyone can go to the courthouse where the will is filed, pay any required fees, and receive a copy of the will. If you're concerned about personal matters becoming part of the public record, you can establish a trust to help maintain privacy of your assets.

How and why might a will be challenged?

Whether in probate or not, a will can be challenged or contested if someone thinks the will is not valid. Such challenges often occur when someone believes they have been unfairly left out of the will. Sometimes that conflict arises due to a complicated family dynamic.

Other reasons a will can be contested include:

• Undue influence⁷ — A challenge may arise if there is a thought that someone convinced or pressured the will holder to do something they wouldn’t have otherwise done.
• Lack of capacity — If someone didn’t have the mental capacity or understanding of what they were outlining in their will, the will may be successfully challenged.
• Fraud — If the will holder was purposefully tricked or defrauded, the will may not be considered valid.
• Improper execution — If the will was not created properly or does not meet legal standards, it may cause a problem.

Whatever the reason, contesting a will can be costly and time-consuming for your beneficiaries. That’s why it’s important that a will be executed properly — and why an attorney can be such a valuable member of your estate planning team. Establishing or refining a will while you're still of sound mind can also help minimize the risk of the document later being challenged successfully.

Remember, too, that wills should also be kept current, accurate and in a safe location (such as your attorney’s office) so that it can be accessed easily following your death.

The role a will plays in your estate planning strategy

A will provides guidance for your final wishes — the distribution of assets, directives related to minor children and directions for establishing any trusts connected to your assets and property. Even if you do not have substantial assets or investments, a will can be a core component of any estate plan.

Your attorney can help draft and keep your will for you, while a corporate trustee, such as RBFCU Trust Services, can help ensure that your wishes — including those outlined in your will — are carried out after you’re gone.

Questions? We’re here to help.

To learn more about other estate planning strategies designed to protect your legacy, contact RBFCU Trust Services today to schedule an appointment.

210-637-4117 | trustservices@rbfcu.org | rbfcu.org/trustservices

Last updated October 2023

Information in this article is general in nature and for your consideration, not as financial advice. Please contact your own financial professionals regarding your specific needs before taking any action based upon this information.

RBFCU Trust Services is a division of RBFCU Investments Group LLC. RBFCU Investments Group LLC is a wholly-owned subsidiary of RBFCU Services LLC. RBFCU Services LLC is affiliated with Randolph-Brooks Federal Credit Union (RBFCU). Trust services available through Members Trust Company, a federal thrift regulated by the Office of the Comptroller of the Currency.

Trust and Investment products are not federally insured, are not obligations of or guaranteed by the credit union or any affiliated entity and involve investment risks, including the possible loss of principal.

Sources

The following sources were last accessed in October 2023.

¹“2023 Wills and Estate Planning Study.” Caring.com, 14 Feb. 2020, https://www.caring.com/caregivers/estate-planning/wills-survey/.

²Christy Bieber, J. D. “Last Will and Testament: Everything You Need to Know.” Forbes, 18 May 2023, https://www.forbes.com/advisor/legal/estate-law/last-will-and-testament/.

³Ramirez, Dalia. “What Does Intestate Mean?” NerdWallet, 2 Feb. 2023, https://www.nerdwallet.com/article/investing/estate-planning/intestate.

⁴Kagan, Julia. “Probate: What It Is and How It Works with and without a Will.” Investopedia, 16 June 2005, https://www.investopedia.com/terms/p/probate.asp.

⁵“Small Estate Affidavits.” Texaslawhelp.org, TexasLawHelp.org, 9 Nov. 2017, https://texaslawhelp.org/article/small-estate-affidavits.

⁶Texas Probate Passport. Tyla.org, 2015, http://tyla.org/wp-content/uploads/2018/11/TxProbatePassport_20151.pdf.

⁷Quinn, Mary Joy. “Defining Undue Influence.” Americanbar.org, https://www.americanbar.org/groups/law_aging/publications/bifocal/vol_35/issue_3_feb2014/defining_undue_influence/.