Last updated on May 19th, 2022 at 05:00 am
A simple will can solve unimaginable problems with your estate. Family members will understand what you expect and hopefully honor your wishes. Neglecting a last will may land your estate in probate court following state law. The probate process can be expensive and eat away at your estate. Your simple will: create it now
You need not hire a law firm to complete a simple will. If you have a complicated estate including a business, the right choice may be to engage a law firm. If it’s important to you that the correct distribution of your assets be done according to your wishes, then a well-crafted will is essential.
I have been an observer several times when family members and friends have argued over the distribution of assets. This has happened even when there is a will covering the distribution of assets. It’s the parents and adult children who argue the most about the terms of the will.
The parents failed to talk about the will
In one example, there were several brothers. The last parent passed and while there was a valid will, the entire estate included many things including real property, collectibles, coins, and more. The parents failed to talk with the children about the distribution of their estate before they passed away.
The adult children had not even seen the will until after the last parent passed. The sons or brothers’ wives were worse than their husbands. It seemed that if one wanted something, the other wanted it as well just because.
Let’s step back a bit and think about what you want to accomplish with your will. If you think that your own will is being created to dispose of your property, think again. Put yourself in the position of those who will inherit your property. An irreparable split between siblings can happen without a complete explanation as to why one or the other is going to receive real estate for example.
Make a list of assets, not dollar amounts just things such as listing your personal property. Items such as a watch, necklace, etc. of a personal nature should be listed separately. Try not to leave anything off the list if it’s important to any member of the family. The good news is with your list in hand, it’s time to have a meeting with your beneficiaries.
Appoint an executor at the meeting to create your simple will
You need not call in everyone. If you have three adult children, call them to a meeting. Explain the purpose of the meeting. Appoint an executor of your estate and go over the simple will form (unless you need a lawyer for assistance). Tell family members that your will is not to be challenged. You have thought it out and then explain what you have written in the will.
A person whom I knew passed away and decided to leave one of three children less than the other two. The reason was because of some incident years earlier. That’s ok, it was her money to give away. The point is that the reason was in the will so the executor, a sibling was not accused of undue influence over the process. Although there was a will, it was not well detailed and a family meeting never occurred.
Something that often happens as the person gets older or becomes ill, is to include a sibling or other family member in joint bank accounts. This is a good strategy because the funds for the funeral and other expenses can be accessed without going to probate court.
A retirement account raided by a sibling
There is a downside as well. I know of at least one situation where the sibling on the parent’s account took all of the funds out and did not share it with the other siblings. You can imagine the grief that caused the other siblings.
I know of another situation where the retirement accounts were raided by a sibling who had a power of attorney but was not the executor of the estate. All of the funds disappeared a few years before the person passed away. The family obtained legal advice and sued the sibling for their share.
What happens to minor children if the last parent passes before they reach the age of majority? This is one reason why all parents of minor children should have a will designating a legal guardian. It’s one thing to list a person as a legal guardian but it’s another if that person was never informed. Another reason for a family meeting.
Your simple will: Create it now and Consider younger children
Life insurance is helpful for parents who have younger children and children with special needs. Some parents have adult children with special needs who will need care after they are gone. A will is essential to ensure continued care for the special needs child.
This is when the type of will is important to discuss with a financial advisor and/or attorney. Young children will not only need care e.g. a sibling as an adopted parent but the distribution of your property will be key to helping support them.
What about those student debts that your family member had? They must be paid by the estate. Be very careful taking proceeds from an estate and spending the money before discharging debts. There are legal requirements for the discharge of debt.
If you are writing your will and you owe for your education, that debt must be paid from the proceeds before anyone gets any funds. This includes any credit cards or other debts as well. One reason for probate court is to ensure that the debtors get their money before the beneficiaries. Don’t forget death taxes in some states.
Medical care must be considered
Your will can also deal with your medical care. If you are on life support your will can state that you want that terminated. Your will can appoint a person to manage your medical decisions. This can be a different person than the executor of the estate.
Many couples live together. If they are not married and there is no will, for legal purposes, the partner may not be entitled to receive anything. In the absence of a will, the estate will generally pass to the closest direct relative e.g. parents, son, daughter, brother, and/or sister.
If you have an existing will that does not address your partner, you should consider if you want to include that person as part of your estate. Marital status is important at the hospital and when making health decisions also. If you are living with another and not married, decide where that person fits in (if at all) in your estate planning. Remember that simple will: create it now.
Someone should know where your legal documents are located
Your family members should know where you keep your important legal documents in the event you pass away from an accident or something sudden. Have the lawyer draft a document indicating who the “executor of my estate” is. You may want an alternate executor as well.
Just when you thought you could get your arms around this entire process, we introduce the concept of a prior marriage or previous marriages. These can add complications depending upon the divorce agreements. Some divorce agreements permit the former spouse to share with the surviving spouse in the retirement payments or any one-time payouts. If such a person is in the past, ask your attorney how this may complicate the disposition of your assets after you pass.
Depending upon your financial situation, you may want to engage an estate planning specialist. Don’t leave things to the executor to sort out. That is the entire point of this article, to be responsible for those you leave behind. You may think that your kids will get along and have no problem dealing with your estate.
Your failure to create a solid will
What if your failure to have that meeting and create a solid will cause them to never see one another again? You will be gone so nothing to worry about. This is why I believe that the will is not for your benefit, it is for your beneficiaries to understand exactly what you want to be done with your estate and why.
Get some good advice from trusted friends who have gone through this process. Read other articles about the care of your children, several beneficiaries, and other aspects of creating a will. If you seem to have trouble getting to an attorney, write out a will and sign it.
This is called a holographic will and is legal in all states even by California law. You can talk to your attorney about a living will and other types of estate planning vehicles in the unlikely event that something happens. A revocable living trust is a common tool for estate planning for a small estate. Ask about adding beneficiaries to your joint account as mentioned above. Read this about appointing an executor
Plan for funeral expenses
Plan for funeral expenses so that your beneficiaries don’t have to. You can pay for the type of final services you want so there is no burden on your beneficiaries. FYI, this only works if you intend to live in the area where you have prepaid for final expenses. Some people pay and move to another state. They are not going to receive funeral services from a business 500 miles away.
Don’t leave your surviving spouse or beneficiaries in a situation where they have to spend months tracking down your assets. Make a list of bank accounts, passwords, etc., and provide this list to your attorney or the executor of your estate. This way they know where to look.
If you pass away with an investment account that no one knows about the funds will eventually go to the state. Just gather basic information, that essential document you create can save many hours of effort on the part of an unpaid family member.
Consider gifting while you are alive
One way to solve issues after you pass is to give away some of your estates. Under federal law, an individual can receive a tax-free gift of up to $16,000 per person per year. Any larger amount would incur a tax to be paid by the giver, not the receiver. If you give $32,000 to your married daughter and her husband, it would take 5 years to give up to $160,000 tax-free.
Funds gifted while you are alive will not be part of your estate and not be listed in your will. If you begin gifting in later years, make it clear to your potential beneficiaries the purpose and that it is not part of your estate. The last thing you want is a fight about how much Dad gave to Peter five years ago. Communicate your actions particularly that the gift is not to be paid back to the estate, it was not a loan.
This brings me to loans. If a sibling received a loan that everyone knew was to be paid back, it should be documented in the will. If Jane received $50,000 in 2020 and the total estate was $200,000 to be divided between 4 siblings, Jane effectively has received hers at probate. Unless there is a stipulation that Jane paid back $25,000 and she gets her fair share after deducting $25,000.
One last thing on this part. Don’t expect your beneficiaries to be magnanimous and give Sharon some money because you decided to leave her out of your will. It’s not correct to put pressure on your beneficiaries to use funds provided to them for others. Be specific, if you want Sharon to have something, give it to her in your will.
Your simple will: help those you leave behind
In closing, remember, the more complete your will the easier it will be for your beneficiaries. Have that family meeting, tell them why you are giving Sandy your father’s watch and why Sam is getting $10 in cash instead of $50,000. Write down what everyone wants, make a decision, and include that in your will. Be sure that everyone gets a copy of your will. Don’t talk about dollar amounts at your family meeting, just shares or specific items.
Please read similar articles at RetireCoast.com. Read this article about assembling your professional support team.
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