When drafting Wills for a husband and wife, each member of the couple has his or her own Will. In other words, the wife has a last will and testament and the husband has a last will and testament. From time-to-time, a married couple will talk to me as if they should have one, joint Will.
I have to admit that once or twice in my career I have seen a joint Will, but the fact that such a document has been drafted in the past does not mean that such a document is a good planning tool. In New Jersey’s Probate Code, the series of statutes governing Wills and the administration of estates, the word “Will” is defined in the singular tense to mean the last will and testament of a man or a woman.
From a practical standpoint, I have no idea how a joint Will would work unless both members of the couple died in a common accident, and even then I could see issues arising. For instance, assume a husband and wife have a joint Will and the wife dies in 2000 and the husband dies in 2015. When the wife died, the couple’s joint Will was admitted to probate.
The surrogate issued letters of executorship to the individual nominated to be the executor in the last will and testament. I assume that the husband and wife named the survivor of the two of them to be the executor of their joint Will, though it is a bit odd to nominate yourself to be executor of your Will.
So the question becomes: How would the joint Will be admitted to probate fifteen years later when the husband dies? Who would be the executor of his Will since he was already appointed as executor of the estate back in 2000 when the Will was initially admitted to probate. What if the husband changed his mind between 2000 and 2015 and wanted to leave his estate in a different manner than is provided in the joint Will that was admitted to probate in 2000?
The bottom line is, people should not have joint Wills. Each member of the couple has his or her own Will. Most married people have a Will that says something such as, “I give my entire estate to my spouse. If my spouse fails to survive me, then I give my entire estate to my children.”
These types of Wills are commonly known as “I love you” Wills, because the couple is leaving their entire estate to each other. As the members of a couple get older, I would suggest that “I love you” Wills are inappropriate.
If Mr. and Mrs. Smith, both age 85, have an estate worth $500,000, consisting of a home worth $300,000 and cash of $200,000, leaving their entire estate to the survivor of the two may be the equivalent of leaving their entire estate to a nursing home. Assume that Mr. Smith leaves his entire estate to Mrs. Smith, Mrs. Smith now has $500,000 in assets. If Mrs. Smith enters a nursing home, then she will have to spend the entire $500,000 in assets before she qualifies for Medicaid benefits, which would pay for the same services in the nursing home for which she is paying privately.
What I suggest is that Mr. and Mrs. Smith have Wills that leave each other the smallest fraction of their estate possible under law. A spouse is the only person you cannot effectively disinherit. A spouse can always make a claim to your estate, called the elective share.
The elective share amount is one-third of the “augmented estate.” The augmented estate is essentially the entire estate owned by both the husband and wife. So, in my example, the augmented estate is $500,000. One-third of the augmented estate would be approximately $165,000.
If we divided the Smith’s assets so that Mr. Smith owns $250,000 in assets and Mrs. Smith owns $250,000 in assets and if we draft Wills for the Smiths by which each member of the couple leaves the surviving spouse the smallest fractional share permitted by law and the remainder to the children, then upon Mr. Smith’s death, his entire estate will pass to the children.
Since Mrs. Smith already owns 50% of the augmented estate, she has no claim against Mr. Smith’s estate, because 50% is greater than 33%. Mr. Smith share of the estate, or 50%, can pass to the children. In this way, 50% of the estate is immediately saved from long-term care costs.