10 Important Legal Terms to Know Before Creating a Will
Creating a Last Will and Testament can be a confusing and stressful process. Most people are simply unfamiliar with the seemingly unending list of archaic legal terms used in a will. To make the process easier for our users, the following article provides a brief overview of 10 important legal terms to know before creating a will.
#1 – Testator
A testator is simply the person that makes and executes a Last Will and Testament. For example, if John creates and signs a last will then John is the testator. Someone that has a valid will at the time of their death is said to have died “testate.” While someone that dies without a valid will is said to have died “intestate.”
#2 - Guardian
If you have children under the age of 18, you will need to create a will that names a legal guardian in the event of your death. A guardian is legally responsible for the care of a child following the death of his or her parent. The guardian is responsible for the child’s physical care, education, and welfare until the child reaches the age of 18.
If you fail to name a guardian, the court (or state, if you die intestate) will choose the person(s) responsible for caring for your children. When naming a guardian, you will want to list both a primary guardian and a secondary guardian. A secondary guardian is listed in the event that the primary refuses to serve or cannot fulfill the legal obligations.
#3 – Estate
Your estate essentially includes everything that you own at the time of your death. This includes cash, bank accounts, financial securities, real estate, possessions, and any assets that you own or have a controlling interest in.
When administering your estate, things like debts, specific bequests, taxes, and professional fees will be paid. The remaining property, known as the residue, will be given to your beneficiaries as listed in your last will.
#4 - Specific Bequests / Gifts
A specific bequest, or specific gift, is a gift of an identifiable item that can be distinguished from all other property of the estate. For example, you may write the following in your will: “to my daughter, Melissa, the contents of my safe deposit box at Bank of America on 5th Avenue in Manhattan, NY.”
Even though the contents and the value of the safe deposit box are not specifically listed, it is easily identifiable and distinguishable from other property of the estate. If for some reason the safe deposit box no longer existed at the time of your death, the executor cannot substitute another item to replace it.
#5 - Beneficiary
A beneficiary is simply someone that you name in your will to receive money or other property. A primary beneficiary is the first person in line to receive a benefit. If a secondary beneficiary is named, he or she will only collect if the primary beneficiary is unwilling or unable to collect (i.e., deceased) at the time of your death.
#6 - Residue of Estate
The residue of an estate are the assets that remain after all obligations of the estate are paid. Obligations typically include attorney’s and accountant’s fees, taxes, creditor claims, and specific bequests. A will includes what is known as a “residuary clause,” that expressly states what happens to the residue.
For example, suppose Kate dies with a valid will and an estate worth $100,000. Her estate includes a mortgage for $25,000 that must be paid and a bequest to her church for $25,000. The residuary clause in the will states, “All the rest, residue and remainder I leave to my children, Dave and Jennifer, in equal shares per stripes.”
After the mortgage, $25,000 gift to the church, taxes, and all expenses are paid, the remaining amount is paid equally to Dave and Jennifer.
#7 - Executor
An executor of a will is an individual that you appoint in your will to administer your estate when you die. The executor is legally responsible for ensuring that all assets of the estate are accounted for and transferred to the correct beneficiaries, as well as ensuring that all debts, expenses, and taxes of the estate are paid.
If you fail to name an executor in your last will then the court will be required to appoint one. Serving as an executor is a huge responsibility. Ensure that the individual that you choose is both willing to serve and capable of handling the responsibilities.
#8 - Digital Assets
The treatment of digital assets in a last will is a relatively new thing. Digital assets are essentially electronic records. Examples include online financial accounts, digital photos and music, and even frequent flyer miles.
You typically only want to include digital assets in your last will if they have monetary or tangible value. For instance, if you own some cryptocurrencies that you want to leave to your son, you can include them in your will since they are worth something. Likewise, digital photos stored on a hard drive are tangible and can be included.
Note that it is important to leave detailed instructions when gifting digital assets (i.e., Bitcoin passwords). List the instructions on a separate piece of paper and store them in a secure place.
#9 - Attestation
An attestation is written confirmation that something is true and authentic. When creating a Last Will and Testament, it typically includes what is known as an “attestation clause.” This clause essentially requires a witness to your will to certify that you signed the document in front of them and that you had the required mental capacity at the time.
Attestation clauses are an important legal requirement. Wills that are not properly witnessed under applicable state law can be deemed invalid.
#10 – Witness
A witness to a last will is someone that is present when you sign your will to verify its authenticity and that you were of sound mind at the time. A witness is not required to read your will but must sign it.
Witness requirements vary by state. Most states require at least two witnesses to sign a will. Some states, like Vermont, require three witnesses. A limited number of states allow holographic wills which are wills that are only signed by the testator.