10 Dangers Lurking In Your Last Will
- A Last Will Requires Probate.
Many people mistakenly believe that a Last Will and Testament allows them to avoid probate. In fact, a Last Will guarantees your estate will go to probate court. The delay, added expense, public exposure, and risks of probate court could all be avoided with proper estate planning.
- Risk of Challenge and Loss.
Once your Last Will and estate enter probate it is subject to all the risks and challenges of the probate process. Your Will only divides up what is left after all court costs, legal and administrative fees, taxes, and creditors’ claims are subtracted. Then, it is still subject to challenge by any “interested party”, including family (even in-laws), friends, business partners and even strangers. Your spouse does NOT automatically get everything!
- Changes in the Law.
Your Last Will and estate are affected by many laws, including state and federal tax law, probate law, family law, creditor law, and many more. Changes in any of these laws since you created your current Will could cause complications and unintended consequences.
- Inadequate Protection for Minors.
Your Last Will may provide for guardianship of your minor children, but it provides no long-term protections for your children or your assets that are intended to support them. There is typically no guidance for the guardian to manage your assets. And worse, if you are divorced, the judge can give custody of your children and control over your assets to your ex-spouse. These decisions could all be made by you instead of the judge with proper estate planning.
- No Future Protection.
A Last Will and Testament does not protect the inheritance you leave your family from life’s most common risks. Risks such as future divorces, lawsuits and financial struggles of your children can be reduced with proper estate planning.
- Out of Date with Your Life.
Has your life changed since you created your current Will? Have you, or your children, gotten married, divorced, had children or grandchildren since your current Will was signed? Has the health or finances of one of your children seriously changed, necessitating a reallocation of your assets? Has your wealth significantly increased or decreased? If your Last Will and estate plan are not up to date, they will not work the way you intended.
- Wrong Individuals Named in Your Last Will.
Are the Personal Representatives and the Guardians named in your Last Will still the best individuals for the job? Because of age or changes in their life, (divorce, illness, relocation out of state) should they be replaced? How prepared are they to do the job? Do you still want your children raised with the children of your named Guardians?
- Your Last Will Does Not Control Most of Your Assets.
Most assets allow you to designate a beneficiary. Bank accounts, life insurance from work, auto insurance, investment accounts, IRAs, retirement accounts, and life insurance purchased on the Internet all have beneficiary designations. Is your current Will coordinated with your beneficiary designations, joint ownership on deeds, and vehicle titles? Do the beneficiaries on your assets include an ex-spouse, a deceased spouse, one child but not all your children? The way you set up your accounts and insurance policies (probably years ago) could undo the directions in your Last Will and Testament. If an asset transfers to someone by designation it is thereafter subject to all the risks in that person’s life; creditors, divorce, Medicaid, etc.
- No Long-Term Care Planning.
Even a perfect Last Will does not provide for possible nursing home costs. Your Will could be undone if high nursing home costs eat up all of your savings prior to death. If Medicaid pays for your care, all your assets in probate court are subject to possible reimbursement claims by Medicaid.
- Is Your Last Will Even Going to be Used?
Do you remember where your Last Will is located? Do your spouse and all of your children know where it is? A Last Will and Testament only works if it is filed with the probate court. Your assets may be taken or distributed before your Will is even found and filed with the probate court. What if your spouse or one of your children disagree with your Last Will and just destroy it before anyone else sees it? (Not uncommon with second and third marriages or disinherited children).
If any of the above dangers are a concern to you, give Legacy Architects a call today at (855) 750-8787 or contact us by email at info@LegacyArchitects.net to schedule a complimentary Get Acquainted Meeting.
Matthew V. Piwowar is a Grand Rapids estate planning attorney. Mr. Piwowar is a member of the State Bar of Michigan, and the State Bar Probate & Estate Planning Section, the National Network of Estate Planning Attorneys, and the Michigan Forum of Estate Planners.