A written will is one of the most popular forms of making arrangements for the management of a person’s estate and securing their legacy after their passing. In fact, it is one of the estate planning essentials. It ensures that the assets of a deceased can be smoothly transferred to the designated beneficiaries. Without a will, this process is overseen by a court and there is no guarantee that it will be conducted according to the estate owner’s wishes.
However, as practical and important as it may be, a will has certain legal limitations and it cannot achieve all crucial objectives with regards to estate planning. These limitations are often overlooked, so we will explore and discuss 4 things that a will cannot accomplish in this blog.
A Will Does Not Protect Your Estate From Probate
Without a valid will, a person’s assets will be distributed by a court in a lengthy process known as probate that can fail to address the deceased’s wishes. However, even with a valid will in place, the process of transferring the assets to the beneficiaries will be overseen by a court. This process is called probate and its main purpose is to determine whether a will is valid and authentic.
Probate proceedings are usually viewed as undesirable for at least two reasons. First, with a person’s estate in probate, many months can pass before the assets find their way to the designated beneficiaries. This can endanger the financial security of the deceased person’s family members and thus put them under great economic and emotional pressure, especially if the deceased was the family’s most important economic provider. Second, probate files become public court records, which means everyone can access and read the details of the proceedings. This can be uncomfortable for the beneficiaries and even make them a target for burglars or scammers.
Certain Assets Cannot Be Transferred By a Will
Assets such as annuities, life insurance, and retirement accounts will be transferred to a beneficiary named on a form without reference to a will. Thus, even if you mentioned specific persons as beneficiaries for such assets in your will, the beneficiary designated in your pension plan, individual retirement account (IRA), or 401(k) will take precedence and acquire the assets. Other assets that are transferred outside the will and probate process include property held in joint tenancy or money in a payable-on-death bank account.
A Will Does Not Reduce Taxes on Your Estate
The amount of the estate tax depends on the size of the estate. A simple will cannot, therefore, reduce the tax liability simply because it cannot reduce the size of your estate. You can, however, use your will to designate which assets will be used to pay the estate tax bill.
A Will Can Be Ineffective for Passing Funeral Instructions
When a person dies, the decisions with regards to memorial services, funeral arrangements, and the disposition of a body are urgent and therefore taken immediately by the surviving family members or close friends. Wills are usually found many days or even months after a person’s death and funeral and for that reason are impractical for passing instructions with regards to a funeral. Composing a separate document with such details and distributing a copy of such document to a trusted family member can be a more effective way of ensuring that one’s wishes regarding the funeral are fulfilled.
Trusts Can Accomplish What Wills Cannot
Many of the shortcomings of a will mentioned in this article can be offset by arranging assets in a trust. Trusts are flexible, can help avoid probate, reduce estate taxes, and offer other benefits. If your estate plan doesn’t include a trust yet, it may be a good time to talk to a lawyer about it. Schlegel Livingston, LLC employs a holistic approach to estate planning and probate with an emphasis on getting to our clients and understanding their individual needs. Contact us today to book your free consultation and see how can we help your estate plan.
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