Historical Overview of Wills

In the previous two chapters we discussed reasons why it would be prudent to prepare an estate plan. In this chapter, we will start with the nuts and bolts of how to prepare a will, the main building block in an effective estate plan.

All states have statutes that govern the preparation of wills, detailing the specific formalities needed to make the will valid. These modern statutes have evolved from the English Statute of Wills (1540) and the Statute of Frauds (1676).

A will gives a “testator” (person who writes a will) the freedom to creatively determine what happens to his assets after death.

Disposition of personal property

Generally, there are two types of personal property (“personalty”): tangible property, such as cash and personal possession and intangible property, such as stocks and bonds. Intangible property is relatively easy to dispose of, since values are readily ascertainable and there is usually a market for the asset. Additionally, there is the potential for these types of assets to generate income for the estate.

On the other hand, tangible property can be more difficult to value and dispose of. For instance, although the decedent may have thought highly of household furnishings or clothing, they require storage and insurance until they are distributed. In addition, the surest way to place a value on any of these types of items is by selling them. This process can be time consuming.

One way to avoid the pitfalls of distributing personal property is to draft a “pre-residuary” bequest so that someone else becomes responsible for handling this property and its associated costs.

EXAMPLE: “I give and bequeath all tangible personal property owned by me at the time of my death (not including cash or securities), to my children surviving me, to be divided among them by my Executor in as nearly equal portions as may be practical . . .”

As discussed later in this chapter, the testator can be more specific as to distributing the tangible personal property by making his intentions known in a separate letter or memorandum. This ancillary document is much easier to update as the property composition changes rather than changing the will itself.

Disposition of real property

Ordinarily, property owned in fee is not difficult to dispose of, since no one else owns any portion of the legal title. However, it could be possible that contractual restrictions might affect how the property can be distributed. As part of the estate plan, it is usually a good idea to review the abstracts to ensure there are no restrictions on the title that would interfere with conveying the property.

As with tangible personal property, a preresiduary disposition is also a good mechanism for disposing of real property. Since title shifts immediately to the beneficiary, that person becomes responsible for the costs associated with owning real property, such as taxes, insurance and upkeep, instead of the estate.

Example: “I give and devise all residential real estate owned by me at the time of my death . . . in equal shares to my children surviving me . . .”

Cooperative apartments are not considered real property. For instance, under New York State law, an interest in a cooperative apartment is classified as personal property. To avoid confusion in distributing the cooperative shares, it is best to refer to the shares of the corporation, the proprietary lease and apartment number held by the testator.

Example: “I bequeath to my son, Jack Montgomery, if he survives me, any cooperative apartment owned by me at the time of my death, including the proprietary lease related thereto, any shares of stock or other interest of mine in the landlord corporation, and all unearned insurance premiums and claims with respect to such cooperative apartment.”