3 Nasty Secrets About Wills

There are many attorneys who are happy to just “go with the flow,” and dole out a Last Will and Testament for their clients when asked. After all, the general public expects that that all they have to do is create a basic Will, and suddenly their estate is completely taken care of. Nothing can be further from the truth. The assumptions that come along with just “doing a Will” are enough to destroy a person’s plans. While a Will does have it’s place, here are three massive secrets that attorneys do not typically highlight to the public when recommending a Last Will and Testament to their planning clients.

1) A Will Does Not Avoid Probate: If I had a dollar for every person who ever said “I have a Will so my estate avoids probate,” I would be a rich person indeed. A Last Will and Testament does not avoid probate but is actually your “ticket” to probate. All a Will really does is describe what you want to have happen with your assets after the probate court process is completed.

Unfortunately, there are a lot of families that find this out the hard way after someone dies when the named executor walks into a bank with a death certificate and a copy of the deceased person’s Will expecting to start liquidating bank accounts and parceling out money to the beneficiaries. That’s when the bank tells them to get “Letters Testamentary” and to contact an attorney. I would also make a tidy some if I received a dollar for every call my office received asking me to “type up” Letters Testamentary. That’s when I have to give them the bad news that they essentially have to initiate a court proceeding that involves costs, delays, potential contests, and loss of privacy. For more information on probate, check out my book Estate Planning Basics, available on Amazon here.

2) A Will Does Not Cover Everything. The second nasty secret is even more pervasive than the first one. Most people assume that they can create a Last Will and Testament laying out where they want their entire estate to go, and then that is exactly what happens. It’s not. As Last Will and Testament only covers what goes into probate, and what goes into probate is only what is still titled in a deceased person’s name after they pass on. So real estate that is joint with a right of survivorship with your cousin Marty does not go to your sister Sheila even though the Will said she gets your half of the house. Your stock account that has a pay on death designation going to the two children you had when you set up the account does not go to all four of your children now alive years later just because that is what is in your Will.

In addition, any age or other restrictions in your Will do not apply to joint property with a right of survivorship or with beneficiary designations. So if you pass on with an account payable on death to your two children who are 19 and 21, they get the money right away and not at age 30 because that is what you put in your Will. For more clarification, check out the video “But the Will says…”.

3) A Current Will Does Not Override Old Beneficiary Designations. Divorce is almost never easy. Any good divorce attorney will usually recommend that their clients create new estate planning documents as part of their office’s standard divorce process. However, just being divorced or even having a properly drafted and court-blessed property settlement agreement outlining that both spouses deny claims against the other’s estate will be effective. State law MAY automatically eliminate a spouse from an existing Will, but state law does not always eliminate a spouse from beneficiary designations on accounts and life insurance. So even if you do what was advised by a divorce attorney to create a new Will, not changing the beneficiary designations on accounts and life insurance may override even a new Will.

Several years ago, I spoke with an insurance agent I know about beneficiary designations and the need to keep reviewing them. As a standard practice in his office, they annually send out notices requesting a review of their insurance and other items, including beneficiary designations. At least once or twice a year, he has to have the difficult conversation with a widow or widower that their deceased spouse’s ex is getting the life insurance proceeds because they ignored those notices for years and never made the necessary changes after the divorce.

 So how do you make sure that an estate plan does everything it is supposed to in a coordinated manner? If you want to avoid probate as well as coordinate your estate plan, then a revocable living trust might be for you. Check out the free information at http://www.FreeTrustCourse.com. If you don’t mind probate but want your plan to be coordinated through probate, then you need to make all of your beneficiary designations to “estate” and specifically make all joint assets not have a right of survivorship on them. We are currently working on a new report on “Funding Your Will,” and we will announce that availability as soon as it is ready. Until then, check out the free trust course or the free report on Wills at http://www.FreeSimpleWillGuide.com.