Under the Hood: What You Need to Know About Wills, Pt. I: The Checklist

Will the marital deduction property pay any debts? 

3) Tax Clause

Issues to check:

Does the will specify how taxes will be paid?

If silent, will state law defeat the testator's purpose?

Example: Will state law require that taxes be paid from certain assets in contrast to the testator's desire?

Will taxes be paid from the probate estate only?

Example: When a person dies and a death certificate is sent to the IRA custodian, the beneficiary will receive the proceeds from the IRA and will not be responsible for taxes due. Is this what the testator wants?

Will marital deduction property pay any taxes?

Example: Does the deceased want the surviving spouse to pay taxes, reducing the inheritance?

Will GST taxes (i.e. generation skipping transfer tax) be paid from any GST asset?

4) Tangible Personal Property Clause:

Issues to check:

Are there any specific bequests?

Have any items been stolen, lost or sold?

Has replacement property been purchased?

Are all beneficiaries clearly identified?

Are any of the beneficiaries minors?

Are there any contingent beneficiaries?

Are all items adequately described?

Are there any gifts of tangible personal property to a charity?

If gifts to charities exist, is the charity's full name and address listed?

Are the charities considered qualified by the IRS?

Are charitable bequests subject to taxes in the estate?

Is a catch-all phrase (i.e. all other tangible personal property) used to pass to residuary?

Are any items referred to by location using the word contents (e.g., contents of house)

Is there a provision to pass any property by reference to an instrument outside the will?

Example: Referred to as "incorporation by reference," which is a method for treating a document as testamentary even though it is not a part of the will. If successful, the will is treated as if the terms of the incorporated document are contained in the will.

If incorporation by reference exists, does it meet the three criteria?

1) Is the intent of the testator clear?

2) Did the instrument exist at the time the will was drafted?

3) Is the instrument properly identified? 

Summing Up

The goal of estate planning is essentially determined by the client. For example, the client may wish to reduce or eliminate estate taxes. In addition, the client may wish to transfer wealth to certain individuals (or entities) in specific portions.

To provide appropriate estate planning advice and identify potential problem areas, the advisor must possess a good understanding of estate dispositive provisions. It's also important to know how to calculate the gross estate (i.e., non-probate estate) and the probate estate.

Perhaps the key issue here is to know how to coordinate the probate and non-probate estate to accomplish the testator's wishes. In my next article in this series, we'll examine additional clauses of the will and identify specific issues in each.