You made a will. Good. You did something many people put off for years.
You decided who should receive your property, who should handle your estate and perhaps who should care for your children. Those decisions matter.
But here is something I often explain when someone brings me a will they prepared years ago or created online: a will may not do everything you think it does.
One of the biggest misunderstandings is, “I have a will, so my family won’t have to go through probate.”
Unfortunately, a will does not avoid probate. It tells the probate court who should receive the property that passes through your estate and who you want to handle the process. Depending on what you own and how it is titled, your family may still face court proceedings, expenses and delays before receiving your property.
A properly created and funded living trust can help avoid probate. But the word “funded” is important. Signing a trust does not automatically transfer your house, bank accounts or investments into it. Very often, trust documents are sitting neatly in binders while the assets were never properly transferred to the trust.
Your will doesn’t control everything you own.
Your will may say everything goes equally to your children. But what does your IRA beneficiary form say? What about your life insurance?
Assets with beneficiary designations generally pass according to those forms, not according to your will.
An old beneficiary form could still name a former spouse, someone who has died or a child outright when your current plan says that child’s inheritance should remain protected in trust.
That is why you shouldn’t just look at your estate planning documents. You should also know what you own, how it is titled and who is named as beneficiary.
What if you are alive but cannot make decisions?
Your will cannot help you if you become incapacitated. It only takes effect after your death.
What if you have a stroke, develop dementia or are seriously injured and cannot make decisions for yourself?
A complete estate plan should also address who can manage your finances and who can make health care decisions for you. A durable power of attorney and advance health care directive are important parts of that planning.
Without them, your family may have to go to court simply to obtain the authority to help you.
Your estate plan needs to keep up with your life.
Estate planning is not something you should do once and forget about.
People marry and divorce. Children grow up. You buy or sell property. You open new accounts. The person you named as trustee 10 years ago may no longer be the person you would choose today.
That is why I encourage you to review your estate plan regularly. Don’t just review the documents. Review your assets, beneficiary designations, trustees and agents and what has changed in your family.
A will is an important first step. But the goal isn’t simply to have a signed document. The goal is to have a plan that actually works when you and your family need it.
Send your questions to ccolan@colanlegal.com and use “Alpine Mountaineer estate planning question” as the subject. We’ll answer your questions in our upcoming issues.This article is provided by your local estate planning attorney, Corina Colan. The Law Office of Corina I. Colan / (909) 265-3315 / www.colanlegal.com
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