5 REASONS A WILL ALONE ISN'T ENOUGH
Even though it’s not a topic you like to think about on a day-to-day basis, you know you need to prepare for your family’s life after your death.
A will is one of the most common estate planning documents, but surprisingly, this legal document probably doesn’t suffice and won’t guarantee your wishes are carried out. If you’re relying on a will as your sole estate planning document, you could be leaving your family unprotected. While writing a will is a great start, it isn’t comprehensive enough to account for all of the complexities of your finances and your life.
Here are the top five reasons you need more than a will when it comes to planning your estate:
1. A will is just a suggestion of your wishes and must be validated by a judge through a process known as probate.
Probate is public, lengthy, expensive, and leaves your will and wishes open to contest or challenge by parties who think they should be included. The more assets that pass automatically to your heirs outside of the probate process the better. Probate could prevent your family from gaining possession of your assets for up to a full year following your death, when they may have immediate needs for cash to take care of themselves, pay the bills, pay any estate tax you may owe, and much more.
The probate process is estimated to eat up between 3% and 8% of the value of your estate, which could be a significant sum. You may not be able to avoid the probate process entirely, but a careful and comprehensive estate plan can help ensure as many assets as possible pass outside of probate, and that to the extent you need to go through the probate court the process is streamlined and simplified.
2. A will is often inflexible.
Once a will is written and signed, it is set. It can only be revoked by destroying the original document, leaving you without a will, amending the will through a document called a codicil which still requires the same formalities as a will in order to be legally valid, or going through the entire will drafting process again and signing a new will.
At your death, a valid will, once probated, is set. There can be no changes. A will drafted 15 years ago does not have the flexibility to deal with the unexpected.
On the other hand, while a trust is also indelible, a trust has an appointed trustee. This living person who you trust to follow your wishes is also able to react and deal with the unexpected more appropriately and with more finesse than an aged document that is unable to contemplate every potential circumstance.
3. A will alone won’t fully protect your estate from taxes.
Alone, a will is unable to shield your assets from federal and state taxes, which can significantly reduce the total left to your descendants. This is most likely more relevant to you and your family than you might think: if you have a life insurance policy, equity in your home, and typical retirement savings, your taxable estate could easily exceed the $1 million exemption under Massachusetts estate tax laws, which could cost your family $36,000 or more in taxes. There are additional documents and strategies, including trusts and family gifting plans, which can help you minimize or avoid altogether this additional tax burden on your family.
4. A will is limited to property that does not already pass automatically to beneficiaries.
Simply because you choose to distribute your property equally to your three children, does not mean that all your property will go to your three children. Only property passing under your will and included in your estate will go to your children. Other assets, such as retirement plans, life insurance proceeds, and certain property held jointly, pass automatically to whoever is named as the beneficiary or who owns the property jointly with you. Your will cannot override deeds or beneficiary designations. Whether you have a will or not, it is important to periodically check your beneficiary designations to make sure they have kept up with changes in your life and are consistent with what you want.
5. A will names who will take care of your minor children, but is limited in describing how your children should be raised.
A will can name a conservator and guardian for your children, but the details of how you want your children raised, such as education and religion, are not topics people typically feel comfortable including in a public document.
A will is just a note with your basic wishes expressed. But a comprehensive legal document like a trust has the power to do more than state your expectations. You can delay monetary distributions until your children are old enough to handle such distributions. You can provide more direction for your chosen guardian in terms of education, religious upbringing, and more. You can also protect your children from misuse of trust funds.
Another thing a will cannot do is protect you and your family if you are incapacitated. A will only takes legal effect upon your death, so it cannot control who makes medical decisions for you, or financial or legal decisions, if you are alive but unable to do so yourself. This is why most comprehensive estate plans include two key documents: a health care proxy and a durable power of attorney. These two documents allow you to designate decision makers ahead of time.
Protect Your Family
Estate planning may not be as straightforward as drafting a simple will, but an experienced estate planning lawyer can help you find peace of mind by creating the set of documents, including wills and trusts, that will address your specific situation and goals. Get the confidence that comes with knowing your loved ones are protected – contact slnlaw today for a free estate planning consultation.