t may be an unpleasant task to think about your own mortality, but the fact is, writing a will is one of the smartest financial planning activities you can do. Given this, Fox Business asked some of its contributors to discuss some important things to know before writing a will.
Here's what they had to say in a recent post, “3 Things You Should Know Before Writing Your Will.”
1. A will doesn't actually cover all of your assets. If you own property in accounts that have beneficiary designations (IRAs, 401k’s, and life insurance policies), then the people you choose as beneficiaries will inherit those proceeds, regardless of what your will says. And if you own property in joint tenancy with rights of survivorship, your joint tenant will take full possession automatically at your death. Pay-on-death bank accounts likewise give the surviving account holder the rights to withdraw all of the money when you pass away. Also, property held in trust is handled outside of probate.
Make sure your beneficiary designations are consistent with your will. If you make changes to your will, you should review those beneficiary designations to see if similar changes are needed. If you fail to do this, your effort to update your estate planning could create major gaps that will wreck your plans for the distribution of assets after death.
2. Naming your will's executor takes some thought. The executor is the individual in charge of taking care of your affairs and ensuring that your will is executed as you stipulated. This is a big decision: the executor is responsible for several extremely important tasks. These include:
- Distributing assets as directed by the will.
- Paying bills and taxes on behalf of the estate.
- Appearing at legal proceedings for the estate.
- Maintaining property until the estate settles.
You need to choose the right person for this important job. Many people select their spouse, an adult child, or a trusted friend. But you can also name an attorney as executor. You also can name joint executors and alternates in case the executor you choose can’t serve or he passes away before you do.
Consider these thoughts when selecting an executor. It should be someone you trust to make the right decisions, and a person who is smart enough to ask for help from a qualified estate planning attorney when they need it. Naming several of your children as co-executors might be hazardous, as this could lead to arguments. Your executor doesn't need to be a financial guru, but should be a person you trust with good business and common sense.
3. Take extra care in writing your will if you have young children. In many instances, children can’t deal with the responsibility of inheriting property. Also, if your son or daughter inherits property outright when they're still a minor, the probate court will appoint an individual to be a property guardian if you don't. So it makes total sense to carefully consider whom you want managing your assets for your child after you pass. This is especially vital because a court-appointed guardian will hand over all the inherited property to your child on the day he or she turns 18.
Take some time and think about how you want to address these issues. Your estate planning attorney can help with planning. You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning. However, proper estate planning is not a do-it-yourself project. Why not call us for a complimentary consultation at 757-259-0707.
Reference: Fox Business (August 9, 2015) “3 Things You Should Know Before Writing Your Will”