"Life is much like a winding road, filled with unexpected turns, thrilling highs, and unforeseen detours. As we navigate this intricate journey, we experience the joy of uplifting moments alongside the challenges of difficult times. Ultimately, we all face one destination that none of us can escape — the end of our personal journey," shared RJ Connelly III, a professional fiduciary and certified elder law attorney. "Have you taken a moment to reflect on what will happen to your cherished possessions, your hard-earned wealth, and the meaningful relationships you've built when you can no longer manage your affairs? It's a deeply important consideration, meaning that the will is a crucial component of your estate plan."
In our last blog post, we explored the various documents that form the foundation of a comprehensive estate plan, emphasizing their significance in securing your legacy and ensuring your wishes are honored. We also stated our intention to delve deeper into each of these essential documents. Today, we will look at the will—a crucial component of any estate plan. We will examine what a will entails, its purposes, and its vital role in guiding the distribution of your assets and the care of your loved ones after you’re gone.
Who Gets What
Writing a valid will is important to ensure that your wishes for your estate are followed after you pass away. A will is a legal document that explains how you want your assets—like property, investments, and personal items—to be shared with your beneficiaries. It also sets the rules for transferring these assets so you can decide how to distribute them.
A key part of a will is choosing an executor. This person manages your estate, pays off debts, divides assets, and follows your wishes as stated in the will. By selecting someone you trust as your executor, you ensure this decision is not left up to the state or people who may not understand what you want.
A will is also crucial for naming a guardian for your minor children or dependents. If you pass away unexpectedly, this guardian will care for your children and handle their affairs. Without a legally recognized will, the state will decide who cares for your dependents. This can lead to uncertain and stressful situations for those left behind.
Having a valid will helps you clearly communicate your final wishes, provides peace of mind about managing your estate, and ensures the well-being of your dependents by allowing you to choose their caregiver.
Sharing a Will
Married couples can create a joint will, a single one signed by both partners. However, many estate planning attorneys advise against this approach due to its limitations. In a joint will, the surviving spouse cannot modify the will if one partner dies. Instead, we often recommend creating reciprocal or mirror wills. These types of wills allow each spouse to designate the other as the beneficiary of their assets upon death. This arrangement allows the surviving spouse to update their will as their situation changes.
Assets Outside the Will
As stated earlier, establishing a will is an important part of estate planning, but some assets can bypass probate regardless of a will. These assets transfer automatically to designated beneficiaries upon your death.
For instance, jointly owned bank accounts are automatically transferred to the surviving owner. Additionally, accounts with payable-on-death (POD) designations allow funds to pass directly to beneficiaries without probate by presenting a death certificate. Assets held in a living trust also avoid probate, enabling quick distribution to beneficiaries. Retirement accounts with named beneficiaries ensure the account balance goes directly to them, so updating these designations is vital.
Life insurance policies provide funds directly to named beneficiaries after death, simplifying financial support for loved ones. Real estate owned jointly will transfer directly to the surviving owner, and some jurisdictions may allow a quit claim deed for automatic transfer to heirs.
Changing the Will
You can modify your will as frequently as you wish, but reviewing and updating it following major life events is especially important. Significant changes such as getting married, going through a divorce, or welcoming a new child into your family should prompt a thorough reassessment of your will to ensure that it reflects your current situation and wishes. Additionally, even in the absence of such life changes, it’s advisable to take the time to review your will every three years. This routine check-in can help you ensure that all your wishes, beneficiaries, and asset distributions remain aligned with your intentions and that any changes in laws that may affect your estate are addressed. Making these updates can provide peace of mind that your affairs are in order and that your loved ones are taken care of according to your desires.
Probate May Be Necessary
Many families mistakenly believe that having a valid will eliminate the need for probate. However, a will does not prevent all assets from undergoing this legal process after death; any property solely in your name will typically require probate. This includes real estate, vehicles, and bank accounts.
Consider designating a joint owner while alive to avoid probate for significant assets. This allows property to transfer directly to the surviving owner upon death. However, shared ownership carries risks, such as potential claims from the co-owner's creditors. An alternative is establishing a living trust, which offers greater control and can help avoid probate complications.
In some cases, if your estate's total value falls below a state-set threshold, probate may not be necessary, regardless of asset ownership. Additionally, placing assets in a revocable trust, joint ownership, or titling them as payable upon death can also bypass probate.
Probate for estates exceeding the probate limit with solely owned assets will be required. During this process, your appointed executor must settle outstanding debts before distributing assets to heirs. This can be lengthy and highlights the importance of effective estate planning to ease future burdens on your loved ones.
Passing Without a Will
When an individual passes away without a legally binding will, their estate is classified as having been left "intestate." In such instances, the distribution of the deceased's assets is governed by the probate laws of the relevant jurisdiction, which designate the closest relatives, referred to as "next of kin," as recipients of the estate. Each state articulates specific regulations that dictate the allocation of property, typically prioritizing surviving spouses, children, parents, and siblings. It is important to note that stepchildren and long-term partners who do not possess legal recognition may not inherit in the absence of a will. The estate will be forfeited to the state if no relatives are identified. For properties outside of the state of residence, the laws of that particular state will apply to the distribution process.
A Final Word
"A will is an essential legal document that delineates the distribution of one's assets after death, mitigates potential familial disputes, and may contribute to the reduction of estate tax liabilities," said Attorney Connelly. "Although numerous templates and software options are accessible for will preparation, seeking the guidance of a qualified estate planning or elder law attorney is highly recommended, particularly in cases involving complex estates or guardianship matters. Establishing a will ensures adherence to an individual’s wishes, fosters harmony among surviving family members, and facilitates a more streamlined process during a very emotional time."
Please note that the information provided in this blog is not intended to and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise you to consult your attorney, professional fiduciary advisor, or medical provider.
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