If you’re one of the many people who has yet to begin your estate planning, you’re certainly not alone. Experts estimate that a clear majority of American adults have not bothered to create a Last Will and Testament – or any type of estate plan, for that matter. People have a variety of reasons for avoiding the will creation process, including simple procrastination. The problem is that we all need to have some form of estate plan in place to avoid confusion and protect ourselves and our families against both the inevitable and the unforeseen. It is thus critical that you understand why you shouldn’t wait too long to create your will.
What is a Will Anyway?
Part of the apathy toward the will creation process may be due to the way that many people view the Last Will and Testament. Most people understand that wills are binding legal documents that enable decedents to bequeath assets to named heirs and other beneficiaries. However, there is often confusion about how they operate and why they are necessary – particularly in cases where people have set up living trusts or other property distribution systems designed to transfer assets when they die. The will offers an opportunity for you to name someone to serve as the executor of your estate so that you have a trusted individual managing the administration of your estate during the probate process. This document also provides the vehicle through which you name a guardian to take on the responsibility of caring for your minor children when you die.
What a Will is Not
Some people believe that wills provide a way for estates to stay out of probate – saving money and securing greater privacy for the family. It is important to recognize that this is not the case. Your estate will go through probate if it contains assets that are not transferrable through other means. For instance, assets that belong to your living trust would not be subject to probate. Bank accounts in your name, however, would require probate. Those same bank accounts could avoid probate if they were titled and setup in a way that automatically transfers account ownership to another party when you die.
And if that all sounds complicated, welcome to the club. These issues can be extremely complex and confusing for the average layperson. That’s why many people either have an attorney prepare their wills from scratch, or at least have their lawyers look at the documents to ensure that everything is done properly.
Why You Need a Will
It is hard to convince someone that he needs a will until that person actually realizes why having a will is such an important part of preparing for the future. Though we’ve already explained some of the things that a Last Will and Testament can do, it is perhaps also helpful to understand what happens if you die without a will.
The key thing to remember here is that your will is your opportunity to declare your last wishes. You get to direct the disposition of your assets, name your desired beneficiaries, and choose someone to oversee the process of settling your estate. When you die, your estate goes through the probate process, your will is validated, creditor debts are settled, and your beneficiaries receive their inheritance as you have directed.
If you die without a will, however, your last wishes mean nothing. You will be judged to have died intestate – which simply means that you died without a legal will. When that happens, the state’s intestacy laws come into effect and your estate is divided up in accordance with the laws in effect on the day you died. That could mean that someone you intended to name as a beneficiary suddenly has no legal right to any part of your estate. It could also mean that some of your assets could go to people you had no intention of naming as beneficiaries.
Beyond that loss of control, there are other consequences that should be of concern to you. First, you won’t have an opportunity to name your own executor. Instead, the court will appoint someone to manage the dissolution of your estate. If you have minor children, you will have also forfeited your one chance to declare how those children should be raised – and who should serve as their guardian.
Waiting Too Long
Last year, musical trailblazer Price passed away – leaving behind a multimillion dollar estate, and no will. As one might expect in such circumstances, that resulted in a wave of relatives and alleged relatives all coming forward with claims to at least a portion of those assets. The court appointed a special administrator to help resolve the issues created by the artist’s intestate death.
You may not be a musical genius or a millionaire, but that doesn’t mean that you’re immune from death or intestacy. If you died tomorrow, what would happen to your home, vehicles, bank accounts, or business interests? If you have a spouse or minor children, who would take care of their financial needs?
Even if you feel as though you have little to leave behind today, there is no telling what tomorrow may bring. A wealthy relative could pass away next year, leaving you a tidy inheritance. Your income could enjoy a sizeable boost, or your investments could suddenly increase in value. Times change, and our circumstances change with them. If you fail to plan ahead for such things now, you may eventually find that your failure to prepare leaves your family suffering even more than they have to when you die.
At Biddinger & Estelle, PC, we understand the risks you face when you wait too long to create your will. Our estate planning professionals know how fragile life can be, and how important it is that you use every available means to provide financial security for your loved ones. Contact us online today or give us a call at (989) 872-5601 to learn more about how we can help you gain the peace of mind you need.