Many people believe a simple will is all they need to handle their estate, especially when their assets seem straightforward. However, even basic wills can create unexpected complications if they fail to account for beneficiary designations, asset ownership, or changing family circumstances.
In other words, the Will says something such as, “I devise my entire estate to my spouse. If my spouse fails to survive me, then I devise my entire estate to my four children, to be divided equally between them.” That is a simple Will.
A simple Will does not include a trust. A trust in a Will is called a testamentary trust because the trust is in the last will and testament of the decedent. A trust adds complexity to a Will. To me, a lawyer, a testamentary trust is not that complicated in most instances, but having a trust is not simple.
Ironically, and I’m not sure why this is, but clients of mine who have the most complex Wills always say the same thing to me. In fact, I would say that a client making this statement is the hallmark of a complex Will. The client will say, “I have a simple Will” or “My Will is the simplest Will you will ever draft.”
The client then proceeds to lay out a highly complex disposition of their estate. The Will might be something such as, “I give $10,000 to these five people, $25,000 to these three people, 50% of the residue of my estate to these 9 people, and the remaining 50% of my estate to these 12 people and three charities.” The Will then has all types of contingencies if any of the beneficiaries die before the client.
Some of the beneficiaries might be minors, and trusts in the Will might need to be established for those minors. It is not good practice to leave money directly to minors because minors cannot legally handle money.
I used to say that I was okay drafting highly complex Wills. It’s the client’s money and whatever the client wants to do with his money is up the client was my old attitude. Decades into practicing law, I have a bit of a different attitude on complex Wills. Since opening my practice, clients have died, and I have seen clients’ Wills being implemented.
Complex plans make for very complex estate administration. Complex administration can cause problems for executors. Having a lot of beneficiaries and having odd percentages pass to beneficiaries makes for difficult tax calculations and difficult distribution calculations.
In addition, the more beneficiaries there are, the more likely it is that beneficiaries won’t be closely related or related at all to one another. This leaves the executor having to communicate effectively with what is essentially a classroom of people who are unrelated to each other and don’t know each other.
One of the most important questions I ask an executor is, “Do all the beneficiaries get along?” If people know each other and get along with each other, the administration of the estate is going to go more smoothly. Mistakes are always made, but if people are willing to understand and to forgive mistakes, then there are going to be few problems with the administration of the estate.
On the other hand, if people don’t know each other or don’t get along, then small issues can become big problems. So, the more complex your Will, the more likely it is that a mistake is going to be made and the more likely it is that the beneficiaries aren’t going to get along and aren’t going to simply overlook the mistake.
You might say, “Well, how can it be complex if I put it in writing?” Because all a complex Will does is put a complex plan in writing, it doesn’t accomplish the administration of that estate.
What appears simple today can become complicated later. Reviewing a will in the context of your full estate plan can help avoid unintended outcomes.