A Will is a Key Component, But It’s Not Enough

When considering estate planning, most people immediately think about drafting a will. While a will is indeed crucial for many planning goals, it’s essential to understand that it’s not the only tool needed to secure your future.

A will allows you to dictate how your assets will be distributed after you pass away. Without one, the state steps in with a process called intestate succession, which follows predetermined rules regardless of your wishes. This means your assets may end up distributed in a way that doesn’t align with your intentions.

Moreover, if you have minor children, a will becomes even more vital. It allows you to name guardians who will care for your children if you and your spouse are no longer around. Without this provision, the court decides on guardianship, potentially appointing someone you wouldn’t have chosen.

While a will is essential, it has its limitations. It doesn’t address what happens if you become incapacitated. To manage such situations, additional documents like durable powers of attorney and advanced medical directives are necessary. These documents empower trusted individuals to make decisions on your behalf when you can’t. Without them, the court may appoint someone who doesn’t align with your wishes.

Working with an experienced estate planning attorney to establish a durable power of attorney and advanced medical directive is essential for maintaining some control over decisions made on your behalf in the event of incapacitation. These documents empower trusted individuals to manage your assets and medical care when you’re unable to do so. Without these documents in place, the court will determine who fills these roles, potentially appointing someone who may not align with your preferences. This could result in decisions being made that don’t reflect your wishes, as the appointed individual may act based on their own beliefs rather than your personal preferences.

Furthermore, many financial accounts require a beneficiary designation to dictate asset distribution, bypassing the instructions laid out in a will. Assets such as life insurance policies, annuities, retirement accounts like IRAs and 401(k)s, and jointly-owned property all rely on the beneficiary designation form to determine post-owner passing asset distribution. Notably, many IRS rulings and court cases have emphasized that the owner’s expressions and intentions in their will hold no significance if they conflict with the beneficiary designation form. This underscores the importance of periodically reviewing beneficiary designations to ensure they align with current wishes, rather than outdated preferences from years prior.

A trust is another estate planning tool families can utilize to provide a greater level of flexibility in how their future is managed. For example, a revocable living trust allows your estate to avoid probate entirely—and the public scrutiny that accompanies it. Trusts can also protect your assets against creditors and other threats while protecting your heirs’ inheritances against creditors, predators, remarriage, and even their own poor decisions if they are not yet mature enough to handle an inheritance on their own.

In short, while a will can help you accomplish important goals, additional estate planning tools and strategies are available to protect you and your loved ones both after you pass away and in the event of tragedy while you are still alive. An experienced estate planning attorney can help you determine the best tools and strategy for you.