Estate Planning Questions

Generally speaking, Wills affect only those assets which are solely in your name at the time of death.  For example, a house or bank account with only your name would be a probate assets and controlled by your Will.  Other assets, such as the proceeds from an insurance policy on your life, IRA’s, 401(k)’s are paid to the designated beneficiary —no matter who the beneficiaries under your Will may be.  Assets such as real estate, automobiles, bank accounts and other property held in joint tenancy will pass to the surviving joint tenant upon your death, not in accordance with any directions in your Will. Similarly, assets held in a trust at your death are distributed according to the provisions of that trust document rather than your Will.  In many instances, a trust executed in conjunction with a Will is strongly advisable. [Read more...]

For people with minor children, dying intestate can have more serious consequences, because the court also will have no idea who you wanted to take care of your minor children.  In your will, you can name people that you trust to act as guardians of your children.  Although you only “nominate” a guardian, the court will give your choice top priority in making its decision.   Choosing a guardian for your children is not an easy decision.  This involves frank discussions about people close to you.

If you don’t make the decision during your life, a judge will make the decision after your death and appoint a Guardian ad Litem.  A Guardian Ad Litem is a person appointed by a judge to represent the minor in a court proceeding in which the minor has some interest. That judge doesn’t know intimately the character of those persons close to you who could act as guardians for your minor children.

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Yes. You should review your Will periodically (at least every 3 to 5 years) because, if it is not up to date when you die, your estate may not be distributed as you wished and subject to Intestacy Laws. You should also review your Will when there are any major changes in your family (such as births, deaths, divorces, and marriages), when the value of your assets significantly increases or decreases, and when it is no longer appropriate for the persons named as Guardian or Executor or Trustee to act in that capacity. Also, a marriage revokes a Will automatically.

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The process by which the provisions in your Will are followed, or the manner in which the Intestate Laws are followed, after your death is known as “probate.” Probate is the court-supervised process developed under state law which transfers the assets in your name at your death to your beneficiaries. It also provides for the determination of the validity of any claims by creditors against your estate assets at your death. At the beginning of a probate administration, a petition is filed with the court, usually by the person named in your Will as executor. After notice is given, and a hearing is held, your Will is admitted to probate and an executor is appointed. Disadvantages of a probate include its public nature, expenses, and the amount of time it takes. For this reason, creating a Revocable Living Trust can save time, money, and help maintain anonymity.

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Generally speaking, Wills affect only those probate assets which are solely in your name at the time of death such as automobiles, bank accounts and real estate. The proceeds from an insurance policy on your life are paid to the designated beneficiary of the policy—no matter who the beneficiaries under your Will may be. Retirement plans, such as a 401(k) or an IRA, are transferred directly to the beneficiary. Assets such as real estate, automobiles, bank accounts and other property held in joint tenancy will pass to the surviving joint tenant upon your death, not in accordance with any directions in your Will. Assets held in a trust at your death are distributed according to the provisions of that trust document. In most instances, utilization of a living trust, or testamentary trust, in conjunction with a Will is strongly advisable.

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A will is a legal document specifying how a person’s assets are divided after death. Without a will, the government, through the laws of intestacy,  directs who receives your property and how property will be distributed.  A will can designate who will take care of any surviving minor children. You should contact an attorney to prepare your will because wills must meet state legal requirements to be effective.

Wills allow you to name your beneficiaries who you want to receive your assets. You may provide for “specific gifts” such as jewelry or a specific sum of money to specific beneficiaries to specific beneficiaries (for example, my wedding ring to my oldest daughter)or a general gift (for example, everything I own to be divided among my two children).

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When choosing a beneficiary for a retirement plan, it’s important to understand how your spouse will be treated under the plan. The rules are different for 401(k)s and IRAs.

With a 401(k) plan, a surviving spouse is the automatic beneficiary of the plan. If you want to name someone other than your spouse as a beneficiary, your spouse must agree to this in writing.

There are some exceptions; for example, the rule might not apply if you and your spouse have been married for a very short time. But in general, it’s a strict rule. In fact, even if your spouse signed a prenuptial agreement saying that he or she has no right to your 401(k), that might not be good enough, because he or she wasn’t your “spouse” at the time of the signing.

On the other hand, this rule is not true for an IRA. Surviving spouses are not automatic IRA beneficiaries.

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