When it comes to securing your family’s well-being after you’re gone, relying solely on a will may not be enough. Although estate planning isn’t a pleasant topic for daily consideration, it’s essential to prepare adequately. While a will is a commonly used estate planning tool, it might not provide the comprehensive protection your family needs. Here we’ll explore the top five reasons why you should consider more than just a will when planning your estate.
5 Reasons a Will Isn’t Enough to Protect Your Family
A will is essentially a suggestion of your wishes, and its validity must be confirmed through a legal process known as probate. Probate can be a public, lengthy, and costly procedure that leaves your will vulnerable to contestation by interested parties. This process could delay your family’s access to your assets for up to a year, which might be detrimental when immediate financial needs arise. Moreover, probate can consume a significant portion of your estate’s value, ranging from 3% to 8%. While complete avoidance of probate may not be possible, a comprehensive estate plan can help ensure that as many assets as possible bypass probate, streamlining the process when it’s necessary.
Lack of Flexibility
Once a will is written and executed, it becomes a fixed document. Any changes require either revoking the original will, amending it through a formal process, or creating an entirely new will. However, this inflexibility can pose problems when dealing with unforeseen circumstances. A living trust, on the other hand, provides more adaptability as it appoints a trustee who can respond to unexpected situations more effectively than an unchangeable will.
Inadequate Tax Protection
A will alone cannot fully shield your estate from federal and state taxes, potentially diminishing the inheritance left for your loved ones. If you possess assets like life insurance policies, home equity, and retirement savings, your taxable estate may exceed exemption thresholds, resulting in substantial tax burdens for your family. To minimize or avoid these additional taxes, consider employing strategies such as trusts and family gifting plans, which go beyond the capabilities of a basic will.
Limited Control Over Assets
A will exclusively covers property that doesn’t automatically pass to beneficiaries. Assets like retirement plans, life insurance proceeds, and jointly held property bypass your will and are distributed according to designated beneficiaries or joint owners. This means that your will cannot override beneficiary designations, highlighting the importance of regularly updating them to align with your preferences.
Limited Guidance for Minor Children
While a will can designate guardians for your minor children, it typically lacks comprehensive details about their upbringing, including education and religious upbringing. These are sensitive topics that people may hesitate to include in a public document. In contrast, a legal document like a trust offers more than just stating your expectations. It allows you to delay monetary distributions until your children are mature enough to handle them, provide explicit guidance for your chosen guardian, and protect your children from any misuse of trust funds. Furthermore, a will cannot assist you and your family in the event of your incapacity, as it only takes effect upon your passing. To address this concern, comprehensive estate plans typically include a health care proxy and a durable power of attorney, which enable you to designate decision-makers in advance.
While drafting a simple will might seem like an easy estate planning solution, it may leave your family vulnerable to various challenges and uncertainties. To ensure your loved ones are well-protected, consult an experienced estate planning lawyer who can help you create a comprehensive set of documents, including wills and trusts, tailored to your specific situation and goals.
Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is a substitute for, qualified legal advice. Your review or receipt of this article by Lexern Law Offices, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.
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