Does My Non-Existent Will Exist?

Estate Planning is a fluid process.  What makes sense today, might not make sense tomorrow.  If you ever contemplated planning your estate, you might have realized that from time to time you change your mind about who should receive certain specified assets upon your death.  You might change your mind so frequently – particularly with respect to gifts of tangible personal property – that you might wish there was a way to add flexibility to your Estate Plan.  Most Estate Plans are revocable, meaning that you may change any aspect of your plan by executing a formal amendment or a codicil.  However, you might be tempted to “shortcut” the process by referring to a future created document that will specify how certain assets shall be distributed.  The thinking is that you would save the time, effort, and expense of drafting a formal amendment or codicil by simply having your will or trust refer to a list that you would create later, on your own.

For years, such reference to a future created document was not allowed under the law for fear that after your death, it would be too easy for an unscrupulous person to forge a list that would alter the distributions from your estate.  The thinking was that it would be much more difficult to forge a formal notarized amendment or witnessed codicil. 

Despite the fact that it was not legally recognized, this method of “incorporation by reference” of a future document that does not exist at the time the will or trust is executed was always very popular.  A few years ago, the legislature in an effort to accommodate this popular procedure, changed the law to allow for the incorporation by reference of a future document under certain conditions.

First, the future writing must only refer to gifts of tangible personal property such as jewelry, clothing, furniture, and other household items (i.e., not cash, real property, automobiles, etc.).  Second, each item distributed by a future writing must have a date of death fair market value of $5,000 or less. Finally, the total amount of assets distributed in this manner must not exceed $25,000.

When this law was passed, a common criticism was that these strict rules will still frustrate the intent of many testators as they may not be careful to adhere to the strict rules, may not know about the rules, or may underestimate the value of the assets they are distributing in this manner.  Some wills or trusts might attempt to mitigate these potential problems by stating that if a future writing cannot be incorporated by reference under the law, then such a future writing shall be considered a valid amendment or codicil.

If you are not worried that beneficiaries or heirs will fight over such items tangible personal property if they are aware of your intent, then using this method might be appropriate.  However, if there is any doubt, it is safer to avoid this perceived shortcut and simply execute a formal amendment or codicil to ensure that your wishes will be carried out.