Bequest to Minor Granddaughter Requires Legal Controls in Will

Dear Mr. Premack: I had a lawyer write a Will for me last year, but I never signed it. Can I sign it now even if the date on the Will states different? Also, how do I add a clause that states the life insurance I have for my granddaughter be held for her benefit until she is 21 years of age? She is 13 years old now. Thank-you. – M.M.

Start by going back to your lawyer. I assume that if you hired the lawyer to write a Will, and you have the unsigned version in your hands and want to sign it now, that you paid your lawyer for the service provided. Now you want to change that version and, once modified, execute it so that it is a legally valid Will.

Do not just sign it now, especially if the date is inaccurate. Also, be aware that “signing” your Will involves a specific legal procedure: you must sign in the presence of two witnesses, who must see you sign the Will. Then they must sign, in your presence, and you must see them sign the Will. Then, ideally, you and the witnesses will also execute a “self-proving affidavit” before a notary public, who (after you all sign) will sign and seal the affidavit. If you make an error or do not follow the rules, the Will is not legally valid.

As to the provision for your granddaughter, do not try to modify the Will yourself. What you are asking for requires personal legal advice, because you have a choice to make.

Option 1 is to include in your Will a provision under which the life insurance proceeds are payable to a custodian under the Uniform Transfers to Minors Act (UTMA). The custodian will legally hold the funds until your granddaughter is 21, and then must turn them over to her. Before she is 21, the custodian may expend the funds for her education, health care and living expenses.

Option 2 is to include in your Will a testamentary trust, under which the life insurance proceeds are paid to a trustee selected by you. The trustee will legally hold the funds to whatever age you specify in your Will – 21 if that is your choice, or perhaps you would rather your granddaughter be financially supervised until age 25, 28 or beyond. With a trust, you get to dictate how long it lasts, and you get to dictate how the funds may be expended (or withheld).

Option 2 (a testamentary trust) provides you much more flexibility than option 1 (a UTMA custodianship). However, the flexibility which a trust engenders comes via complexity, and complexity results in higher cost. It can give you exactly the terms you desire, but the lawyer will spend more time writing the trust into your Will. Conversely, the UTMA option is rigid and must follow the statute, so the lawyer will not spend much time if you chose option 1.

Either way, you must then contact the Insurance Company that issued the policy on your life. You must change the beneficiary on the policy so it is payable to “my estate” or “my executor” or “the trustee under my Will” (depending on the option you select and the wording the Insurance Company prefers).

These choices involve valuable assets and will have a long-term impact on your granddaughter’s life. Don’t hurt her by avoiding your lawyer. Go back, get the document written correctly, and let the lawyer supervise the signing of your Will so that you know it is proper and legally enforceable.

Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.

Original Publication: San Antonio Express News, October 8, 2010

#LifeInsurance #TestamentaryTrusts #UniformTransferstoMinor