This is the second in an ongoing series of NLBM articles discussing the true costs and consequences of failed estate planning. The series highlights a few of the most common—and costly—planning mistakes we encounter with clients.
A fundamental document of estate planning is a will, which is why people almost invariably associate the two together. However, you need more to your plan if you want it to be effective because if you rely only on a will, you are guaranteeing that your family will need to go to court after you die. There’s a saying in the lawyer world of Wills and Trusts planning: “Where there’s a will, there’s a probate,” and probate is no laughing matter.
In our view, a primary goal of estate planning is to keep your family out of court and conflict no matter what happens to you and a will alone falls woefully short of that goal, leaving your loved ones—and yourself, if you become incapacitated —susceptible to getting stuck in an unnecessary, expensive, time-consuming, and public court process.
A will offers no protection against incapacity
A will’s purpose is to ensure your assets are properly distributed when you die, but it offers no protection if you become incapacitated and are unable to make decisions about your own medical, financial, and legal needs. Should you become incapacitated with only a will in place, your family would have to petition the court to appoint a guardian or conservator to manage your affairs, which can be extremely costly, time consuming, and traumatic. The first article in this series offered an in-depth look at some of the consequences of failing to plan for incapacity.
Your family must still go to court
A will is required to go through the court process known as probate before your loved ones are allowed to legally transfer your assets to themselves and the probate process can be an extremely distressing for your loved ones. The proceedings can drag out over months or even years and in most instances, your family will have to hire an attorney, which generates hefty legal bills that can quickly drain your estate.
Moreover, probate is public, so anyone can find out the value and contents of your estate and what and how much your family members inherit, making them tempting targets for frauds and scammers. And if you think you can just pass on your assets using beneficiary designations to avoid all of this… well, that’s just asking for trouble. In fact, we plan to write a whole separate article on that topic in a future installment of this series.
A will doesn’t protect against creditors, lawsuits, or poor decisions
Passing on your assets using a will leaves those assets vulnerable to several potential threats. If your will distributes your assets to your beneficiaries outright, those assets are not only subject to claims made by a beneficiary’s creditors, but they are also vulnerable to lawsuits and divorce settlements the beneficiary may be involved in.
Furthermore, if assets left via a will pass to beneficiaries without any conditions, those assets are susceptible to the beneficiary’s own poor judgment. For instance, a sudden windfall of cash could cause serious problems for someone with poor money-management abilities and/or addiction issues.
Not all assets are covered by a will
Some assets can’t even be included in a will. For example, a will only covers assets or property owned solely in your name. It does not cover property co-owned by you with others listed as joint tenants, nor does a will cover assets that pass directly to a beneficiary by contract, such as a life insurance policy or retirement account.
Don’t let your plan fall short
While a will is an integral part of the estate planning puzzle, most of the time it’s not enough by itself. Instead, wills are often combined with other planning vehicles, such as living trusts, to provide a level of protection devoid of any gaps or blind spots. If your plan is incomplete, it’s your family that suffers, having to clean it all up after you are gone. As your Personal Family Lawyer®, we will empower you to feel confident that you have the right combination of planning solutions for your family’s unique circumstances. Schedule a Family Wealth Planning Session today to get started.
This article is a service of Levi Alexander, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.