Last post, I described several introductory clauses that can be found in a typical Last Will and Testament. This time I will provide further definitions to some basic clauses found in your Will.
- Tangible Personal Property. Tangible personal property generally consists of a person’s clothes, furniture, dishes and the like. You can state whether a specific beneficiary should be entitled to a specific item like “Jane should get my good China,” or can speak in general terms e.g. “The executor should split up my property equally among my heirs.”
- Real Property. If you own property as a tenant-in-common or by yourself, the Will controls to whom the realty is given. In the alternative, you could have a clause confirming any realty owned by joint tenancy with the right of survivorship.
- Cash Bequests. If you are lucky enough to have assets that can be distributed to heirs, the decedent can create cash bequests to heirs. It can be given to a specific person, e.g. “I give Jane $10,000,” or it can be given to a class. An example of class gifts would be: “I give all my grandchildren $5,000.”
- Tax Apportionment Clause. This directs the inheritance and estate taxes to be paid. Many times taxes are paid from the remainder of your estate after your property and money are distributed to named beneficiaries. Look at this closely. Without this clause the beneficiaries will likely pay a share of taxes based on the amount they receive from your estate.
- Payment of Debts and Taxes. Prior to the personal representative distributing property to heirs, debts and taxes must be paid.
- Survival Clause. This clause is important when a testator is married and distributes all of the estate to the spouse. For example, if the married couple dies from the same incident, but one member survives a bit longer, than the other, normally probate would occur twice on the same assets. Double probate means additional probate, legal and professional fees. To avoid these additional costs, it is advisable to have a clause that states how long a survivor should live before that survivor can inherit assets.
- Residuary Clause. This clause will distribute any assets that might have been missed in the will or if a bequest fails for a particular reason i.e. the heir has died and is not survived by any issue. Typically, this clause will state that assets should be distributed to the spouse or heirs. If they are not alive, then the assets will be distribute according to the intestate laws or to some specific entity.
- In Terrorem Clause. An in terrorem clause is also known as a no-contest clause. This clause “threatens” to disinherit a beneficiary of the will if that beneficiary challenges the terms of the will in court and losses. Generally, the courts will allow for a no-contest clause so long as the person challenging the will does not have probable cause to do so.
Next time, I will wrap up this topic by describing personal representative’s powers and the importance of the execution portion of a testator’s Last Will and Testament.