A Will, also known as a Last Will and Testament, is used to state formally who you want to receive your estate and to name an Executor to settle your affairs. Wills are especially important if you have children, to state at what ages they should receive an inheritance and who will manage it for them in the meantime. You may also name a legal guardian for a minor child (under eighteen years of age).
Without a Will, your assets will be distributed according to state law. In many cases, clients are surprised to learn how different state law is from what they would have wished. For example, if you have a spouse and children, assets would be divided between them, instead of to your spouse first, as most people would expect and want.
Some reasons to review your Will are a divorce, remarriage, additional children, a significant change in assets or if it is more than ten years old.
In order for a Will to be valid, there are strict requirements surrounding its execution. It is preferable to use an attorney to ensure that all of the requirements are met and that your wishes will be honored. You may have estate tax issues that need to be addressed (generally for estates valued at more than one million dollars). You may also want to set up trusts for your children so that you may delay the statutory distribution at age eighteen to twenty-five or thirty years old.
So many clients are advised that they need a will. In fact, will planning is becoming obsolete for persons over sixty for many reasons.
Instead of actually solving problems, wills often create them. First, they must be proven to be valid in a court proceeding, the infamous probate. Court proceedings may be expensive, time-consuming and things often go wrong. Also, when the client dies, that will is usually out-of-date, having been created decades before. The executors may be the wrong persons, the beneficiaries or their percentages may be wrong or other changes in the family have not been taken into account.
Notice of the court proceeding must be given to certain relatives who may be difficult or impossible to locate. Complications arise with relatives in foreign countries who may need to go to the American Consulate for notarization or “consularization” of legal documents. If there is a disabled child, the court will appoint a lawyer to represent that heir’s interests, including preparing a report to the court, and your estate must pay that attorney’s fees.
Proof problems with the will may lead to delays preventing needed funds from getting to surviving spouses or children. It is fairly common for real estate to be tied up, while the probate process drags on, causing potential buyers to be lost. In some cases, stock cannot be sold even though it may be falling in value rapidly. Law firms routinely find they must commence probate proceedings as a courtesy for families who cannot afford the legal fees to get the matter started. The cost of court proceedings today may be expected to be in the five figure range.
Two other pitfalls of will planning bear mentioning. First, since the will is filed in court, it becomes a public record. Anyone may go to the courthouse and order a copy of your will to see what you had and who you left it to. Secondly, since notice must be given to the heirs you may have left out, or left less than they may feel they are entitled to, you run the risk of a will contest if your estate is distributed in anything but equal shares.
When you are in probate court, who is in charge? The judge, not you or your lawyer. Don’t suppose that the judge will always act in your best interests, as the court may have other interests to consider.
Always better to stay out of court, in our opinion. By using a living trust, instead of a will, you avoid probate court proceedings and keep control, or at least control rests with those you have chosen, if you die or become disabled. The expenses are sufficiently less without court proceedings that you may save tens of thousands of dollars.
The other problem with a will? It only takes effect when you die. Today, about half of all people eventually become disabled. Since the will does not provide for disability, you risk guardianship proceedings. These proceedings occur later in life when someone becomes unable to handle their affairs and does not have an adequate plan set up for disability. In a guardianship, the court will appoint someone to handle your affairs. Not only may it not be the person you would have chosen, it may not even be someone you know. Trusts, which take effect while you are living, are considered a highly effective tool to avoid guardianship proceedings so that the person or persons you choose will be in charge. This way, you may be certain that your best interests will be looked after.
In short, when someone tells you that you need a will, think again. It may be a trust that you need instead. Call us today for your free consultation.