Having a Will, otherwise known as a Last Will & Testament, is important—and all adults over age 18 should have this document in place. But creating a Will is just one small part of an effective estate plan that works to keep your loved ones out of court and out of conflict. With this in mind, we’ll look at precisely what having a Will in place will—and will not—do for you and your loved ones.
What A Will Does
A Will is a legal document that outlines your final wishes regarding how your assets will be distributed to your surviving family, friends, and worthy causes. Here are some of the things you can do with a Will:
- Choose how assets are divided upon your death: A Will’s primary purpose is to allow you to designate how you want your assets divided among your surviving loved ones upon your death. If you die without a Will, state law determines how your assets are distributed, which may or may not be the same as what you would wish. However, a Will only covers assets owned solely in your name. Other types of assets, such as those with a beneficiary designation and assets co-owned by you with others, are not affected by your Will.
- Name an executor: In your Will, you can name the person or persons you want to serve as your executor, sometimes called a “personal representative.” Your executor is responsible for wrapping up your final affairs after your death. This includes numerous responsibilities, including filing your Will with the local probate court, locating and managing all of your assets, paying off any outstanding debts, filing and paying your final income taxes, and finally distributing your remaining assets to your named beneficiaries.
- Name guardians for your minor children: If you are the parent of minor children, it is possible to name legal guardians for them in your Will. However, naming guardians for your children in your Will alone is seriously risky, and doing so may even leave your kids vulnerable to being taken into the care of strangers if something happens to you. This is true even if you’ve worked with a lawyer to create your Will, because most estate planning lawyers haven’t fully considered what’s necessary to ensure the well-being and care of minor children.
Fortunately, whether you’ve named guardians for your kids in your Will or have yet to take action, you’ve come to the right place. We can create a full Kids Protection Plan® and determine if there is anything else your family might need to ensure the well-being and care of your children.
- Serve as a backup for a living trust: Because it can be challenging to transfer the legal title to every single one of your assets into a revocable living trust before your death, most trusts are combined with what’s known as a “pour-over” Will. This type of Will is a backup to a living trust, so all assets not held by the trust upon your death are transferred, or “poured,” into your trust through the probate process.
What A Will Won’t Do
While a Will is a necessary part of most estate plans, your Will is typically a very small part of a comprehensive estate plan. To demonstrate, here are the things you should not expect your Will to accomplish:
- Keep your family out of court: Following your death, in order for assets in your Will to be transferred to your beneficiaries, the Will must pass through the court process known as probate. During probate, the court oversees the Will’s administration, ensuring your assets are distributed according to your wishes, with automatic supervision to handle any disputes. Probate can be time-consuming, costly, and open to the public. Moreover, there’s also the chance that one of your family members might contest your Will, increasing the time and cost in court.
- Protect you during incapacity: Because a Will only goes into effect when you die, it offers no protection if you become incapacitated and are no longer able to make decisions about your financial, legal, and healthcare needs. If you do become incapacitated, your family will have to petition the court to appoint a guardian to handle your affairs, which can be costly, time-consuming, and traumatic for your loved ones. And there’s always the possibility that the court could appoint someone as a guardian that you’d never want making such critical decisions on your behalf.
You can, and should, execute a Durable Power of Attorney to appoint a trusted loved one to handle your financial affairs if you become incapacitated. The unfortunate reality is that many banks are hesitant to rely upon a Power of Attorney for fear of becoming liable for any losses due to fraud.
For the most seamless continuation of your and your family’s financial affairs, we recommend establishing a trust. A revocable living trust includes provisions that appoint someone of your choosing—not the court’s—to handle your assets if you are unable to do so. When combined with a well-prepared medical power of attorney and living will, a trust can keep your family out of court and conflict in the event of your incapacity while ensuring your wishes regarding medical treatment and end-of-life care are carried out exactly as you intended.
- Pass on certain types of assets: Since a Will only covers assets solely owned in your name, there are several types of assets that your Will has no effect on, including the following:
- Assets with a right of survivorship: These assets automatically pass to the surviving co-owners when you die.
- Assets with a designated beneficiary: When you die, assets with a designated beneficiary pass directly to the individual, organization, or institution you chose without additional planning.
- Assets held in a trust: Assets held by a trust pass to the named beneficiary upon your death or incapacity, so these assets cannot be passed in your Will. This includes assets held by both revocable living trusts and irrevocable trusts.
- Pass ownership of a pet and money for its care: Because animals are considered personal property under the law, you cannot name a pet as a beneficiary in your Will. If you leave money to someone to care for your pet, they have no obligation to care for it. This person could legally keep the money and drop off your pet at a shelter.
The best way to ensure your pet gets the care it deserves after your death is to create a pet trust. We will help you set up, fund, and maintain such a trust so your furry family member will be properly cared for when you’re gone.
- Leave funds for the care of a person with special needs: There are a number of unique considerations that must be taken into account when planning for the care of an individual with special needs. You can easily disqualify someone with special needs for much-needed government benefits if you don’t use the proper planning strategies. For this reason, a Will should never be used to pass on money for the care of a person with special needs.
If you want to provide for the care of your child or another loved one with special needs, you must create a special needs trust. However, such trusts are complicated, and the laws governing them can vary greatly between states. We can make certain that upon your death, the individual would have the financial means to live a full life without jeopardizing their access to government benefits.
- Reduce estate taxes: If your family has significant wealth, you may wish to use estate planning to reduce your estate tax liability. However, a Will is useless for this purpose. To reduce or postpone your estate taxes, you must plan ahead. If you are looking to reduce your estate tax liability, consult with us to discuss your options.
Get Professional Support With Your Estate Planning
Although creating a Will may seem pretty simple, you should always consult with an experienced estate planning lawyer to ensure the document is properly designed, executed, and maintained. As we’ve seen here, there are many scenarios in which a Will won’t be the right estate planning solution, nor would a Will keep your family and assets out of court.
We see estate planning as far more than simply planning for your death and passing on your “estate” and assets to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today.
Contact us today to get started.
This article is a service of Blue Ridge Legacy Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.