Wills are legal documents that outline your final wishes regarding the distribution of your assets and property.

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Common Misconceptions About Estate Planning

You have worked hard for years, have family members and friends you care about and have approached a time in your life when “estate planning” sounds like something you should do, but you are not exactly sure why. You may feel that you are not wealthy enough or not old enough to bother or care. Or you may already have a Will and feel that you are all set on that front.

Whatever your current position, consider these common misconceptions about estate planning:

Estate Planning is for Wealthy(er) People

False. Anyone who has survived to age eighteen and beyond has likely accumulated a few possessions that are of some monetary or sentimental value. While things like your home, your car, and financial accounts are self-evident assets, that collection of superhero figurines or your iTunes library also deserves proper attention. There is no minimum asset value required to justify having a Will, especially since there are many low-cost options, including estate planning attorneys who will not charge an arm and a leg for a basic Will.

Estate Planning is for Old(er) People

False. Tragedy can strike at any moment, and it is best to have your affairs in order so as not to put your loved ones in a financial or bureaucratic bind while they are grieving. Young parents should ensure that proper guardians are in place to take care of their children if they are no longer around, lest the children end up with the most irresponsible member of the family or, worse, a complete stranger.

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Estate Planning Means Having a Will

False. Having a Will is smart because it puts you in charge of the disposition of your assets. A Will allows you to pick your executor, designate the guardians for your minor children, and name any individuals and charitable organizations as beneficiaries of your estate.

If you were to die without a Will (i.e., intestate), the law of the state where you reside at your death would govern who receives what part of your estate, who administers your estate, and who takes care of your children. There are some situations where state law may override the provisions in your Will (e.g., a spouse’s elective share), but for the most part, you are in the driver’s seat.

However, a Will is only one tool in the estate planning toolbox. There are other vehicles that allow you to remain in control of your possessions and family’s future during life and upon death. Depending on your situation, a Will alone may not be the most efficient or the most cost-effective means to achieve your goals.

Non-Probate Options

Upon your passing, your Will has to go through probate – a process whereby a court reviews your Will and determines its validity. It is a lengthy and often costly process in many states, to begin with, and can become even lengthier if a Will is contested (e.g., on the grounds that someone coerced or cajoled their way into an inheritance).

The delay in the disposition of your assets and the accompanying legal costs may put your family members in financial straits. If your goal is to ensure that your survivors’ cash flow is uninterrupted after your death, it would be wise to incorporate a trust or a life insurance policy into your estate plan. These assets are considered “non-probate” – they pass outside of your Will.

There are other non-probate assets that may constitute a part of your estate. For example, a joint tenancy arrangement on your home, IRA, and payable-on-death (POD) or transfer-on-death (TOD) accounts designate specific beneficiaries upon your death, and the assets pass to them without the delay and cost of the probate process.

If your Will provides for a different beneficiary of your IRA account or another non-probate asset, it will be superseded by the beneficiary designation form on file with that account’s or asset’s administrator. Therefore, it is wise to review all of your beneficiary designations periodically, but certainly upon life-altering events like marriage, the birth of a child, or divorce.

Start Planning Now

You are neither too young nor too poor to engage in estate planning! Just remember that a Will may be a necessary, but not the only means to plan your estate in an efficient and cost-effective manner. Keep on top of your assets, and your survivors will have another good thing to say about you at your memorial.

Now that you know the common misconceptions about estate planning, Contact us today for any questions and to schedule an appointment. 

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Do You Need a Will? The Answer is Yes

Most Americans do not have a simple will as part of their estate plan. You might believe that a will is only for the rich and famous, and not the average person who has a far smaller net worth. On the other hand, you may think that a will is entirely unnecessary since you have a trust, jointly owned property, or have named beneficiaries on your insurance.

Do You Need A Will?

So, do you really need a will? The short answer to this question is “yes.” In fact, everyone who owns anything – no matter how little value it may seem to have – should have a will. This is because a will puts you in charge of directing others on your wishes and distribution of assets upon your death. Without a will or other estate plan – referred to as intestacy – you have no control and your state’s rules determine who gets what after your death. Even if you have a trust, jointly owned property, or have named beneficiaries on your insurance, a will is important, even as just a “backup” plan.

As a practical matter, the simpler your affairs are (typically, the fewer assets you own) – the less complicated your will and overall estate plan is going to be. Surprisingly to most, it does not take much to complicate your estate. For example, if you have minor children your will must name a guardian for those children in the event of your death.

Likewise, if you have a relative who is disabled, elderly, or without the financial sophistication to manage your assets after your death, a will allows you to name someone to watch over these assets for your loved ones in a special needs or supplemental needs trust. And, these are just two examples of the many things that can complicate your affairs and your estate plan.

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Why It’s Important

Many people believe if they have made beneficiary designations on life insurance policies, property deeds or retirement accounts that a will is not necessary at all.  While it is true that those particular designations will ensure the right people you elected will receive benefits or inherit those assets, the distribution stops there. If there are other assets that you own – such as a car, a china set, or jewelry to name a few – or if you would like to give part of your estate to a charitable organization, a will is essential to your estate planning needs.

What Happens If You Don’t Make One

Furthermore, when a person dies without a will (referred to as intestate), the estate goes into probate. Probate is a judicial proceeding by which the court decides the rightful heirs and distribution of assets of a deceased. Going through probate can be both more time-consuming and expensive without a will than it is with a will. This is because your will can waive certain probate requirements (like having the executor post a bond or obtain judicial approval to have an estate sale).

At the same time, probate without a will follows the governing state’s intestacy laws which may likely result in a less-than-perfect split of assets that not only may not be in line with the deceased’s wishes but may leave many surviving loved ones unhappy. Consequently, for many reasons the creation of a will can fill in gaps of property assignment or plug holes in beneficiary claims on life or other insurance policies.

Family dynamics also play a part in estate planning, something state intestacy laws do not account for. Many people have blended families. There may have been second or third marriages. Older couples may choose to cohabitate after a death or divorce and never legally get married. You may have to treat your children differently on current accounts due to distance, and without a will, those assets will not be distributed fairly.

It is important to note that a will can also include a no-contest clause, reducing the likelihood that potential heirs from arguing over its contents, something that simply isn’t possible if you don’t make a will.

Create One Now

Creating a will as part of your estate plan is primarily about passing your wealth to your loved ones after you die since a will only “works” after it’s gone through the probate court process. It really is about giving you both independence and control of what happens to your assets after your death. Instead of leaving the distribution of your property to local intestacy laws, a will can put your wishes down on paper and direct a selected person to carry out your desires exactly as expressed.

Contact us today or give us a call to schedule an appointment to start the estate planning and will process. We are here to help.

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Picking a Guardian for Your Minor Child(ren)

We know it’s hard. Thinking about someone else raising your children can stop you in your tracks. It feels crushing and too horrific to consider. But you must. If you don’t, a stranger will determine who raises your children if something happens to you. Your children’s guardian could be a relative you despise or even a stranger you’ve never met. That’s why it’s crucial you are picking a guardian for your minor children.

No one will ever be you or parent exactly like you, but more than likely, there is someone you know that could do a decent job providing for your children’s general welfare, education, and medical needs if you are no longer available to do so. Parents with minor children need to name someone to raise them (a guardian) in the event both parents should die before the child becomes an adult. While the likelihood of that actually happening is slim, the consequences of not naming a guardian are more than intense.

If no guardian is named in your will, a judge – a stranger who does not know you, your child, or your relatives and friends – will decide who will raise your child. Anyone can ask to be considered, and the judge will select the person he or she deems most appropriate.

Families tend to fight over children, especially if there’s money involved – and worse – no one may be willing to take your child; if that happens, the judge will place your child in foster care. On the other hand, if you name a guardian, the judge will likely support your choice.

How to Choose a Guardian

Your children’s guardians can be a relative or friends. Here are the factors our clients have considered when selecting guardians (and back up guardians).

  • How well do the children and potential guardians know and enjoy each other
  • Parenting style, moral values, educational level, health practices, religious/spiritual beliefs
  • Location – if the guardian lives far away, your children would have to move from a familiar school, friends, and neighborhood
  • The age and health of the guardian candidates:
    • Grandparents may have the time, but they may or may not have the energy to keep up with a toddler or teenager.
    • An older guardian may become ill and/or even die before a child is grown, so there would be a double loss.
    • A younger guardian, especially a sibling, maybe concentrating on finishing college or starting a career.
  • Emotional preparedness:
    • Someone who is single or who doesn’t want children may resent having to care for your children.
    • Someone with a houseful of their own children may or may not want more around.

 

WARNING: Serving as a guardian and raising your children is a big deal; don’t spring such a responsibility on anyone. Ask your top candidates if they would be willing to serve, and name at least one alternate in case the first choice becomes unable to serve.

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Who’s in Charge of the Money

Raising your children should not be a financial burden for the guardian, and a candidate’s lack of finances should not be the deciding factor. You will need to provide enough money (from assets and/or life insurance) to provide for your children. Some parents also earmark funds to help the guardian buy a larger car or add to their existing home, so there’s plenty of room for extra children.

Factors to Consider

  • Naming a separate person to handle the money can be a good idea. That person would be the trustee in charge of the assets, but not the guardian of the children, responsible for the day-to-day raising of the children.
  • However, having the same person raise the children and handle the money can make things simpler because the guardian would not have to ask someone else for money.
  • But the best person to raise the children may not be the best person to handle the money and it may be tempting for them to use this money for their own purposes.

Let’s Continue this Conversation

We know it’s not easy, but don’t let that stop you. You will be glad that you are picking a guardian for your minor children now. We’re happy to talk this through with you and legally document your wishes. Know that you can change your mind and select a different guardian anytime you’d like.

The chances of needing the guardian to actually step in are usually slim (we always hope this is the one nomination that’s never actually needed); but, you’re a parent and your job is to provide for and protect your children, so let’s do this. Contact us or call our office now for an appointment and we’ll get your children protected.

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