A will, also known as a last will and testament, is one of three documents that make up the foundation of an estate plan, according to The News Enterprises’ article “To ensure your wishes are followed, prepare a will.” As any estate planning attorney will tell you, the other two documents are the Power of Attorney for your finances and a Health Care Power of Attorney. These three documents all serve different purposes, and work together to protect an individual and their family.
There are a few situations where people may think they don’t need a will, but not having one can create complications for the survivors.
First, when spouses with jointly owned property don’t have a will, it is sometimes because they know that when the first spouse dies, the surviving spouse will continue to own the property. However, with no will, the spouse might not be the first person to receive any property that is not jointly owned, like a car. Even when all property is jointly owned—that means the title or deed to all and any property is in both person’s names –upon the death of the second spouse, a case will have to be brought to court through probate to transfer property to heirs.
Secondly, any individuals with beneficiary designations on accounts transfer to the beneficiaries on the owner’s death with no court involvement. However, the same does not always work for POD, or payable on death accounts. A POD account only transfers the specific account or asset.
Other types of assets, such as real estate and vehicles not jointly owned, will have to go through probate. If the beneficiary named on any accounts has passed, their share will often go into the estate, forcing distribution through probate.
Third, people who do not have a large amount of assets often believe they don’t need to have a will because there isn’t much to transfer. Here’s a problem: with no will, nothing can be transferred without court approval. Let’s say your estate brings a wrongful death lawsuit and wins several hundred thousand dollars in a settlement. The settlement goes to your estate, which now has to go through probate.
Fourth, there is a belief that having a power of attorney means that they can continue to pay the expenses of property and distribute property after the grantor dies. This is not so. A power of attorney expires on the death of the grantor. An agent under a power of attorney has no power after the person dies.
Fifth, if a trust is created to transfer ownership of property outside of the estate, a will is necessary to funnel unfunded property into the trust upon the death of the grantor. Trusts are created individually for any number of purposes. They don’t all hold the same type of assets. Property that is not properly retitled, for instance, is not in the trust. This is a common error in estate planning. A will provides a way for property to get into the trust upon the death of the grantor.
With no will and no estate plan, property may pass unintentionally to someone you never intended to give your life’s work to. Having a will lets the court know who should receive your property. The laws of your state will be used to determine who gets what in the absence of a will, and most are based on the laws of kinship. Speak with an estate planning attorney to create a will that reflects your wishes, and don’t wait to do so. Leaving yourself and your loved ones unprotected by a will is usually not a welcome legacy for anyone.
Reference: The News Enterprise (September 22, 2019) “To ensure your wishes are followed, prepare a will.”