3 Financial Disasters You Can Avoid with a Will
Not to be morbid, but everyone dies. What happens to your money after you pass is entirely up to you. Unless you don’t have a will.
Creating a will offers peace of mind to both you and your family. It is a binding legal document that names an executor, or the person who will carry out distributing or managing your assets. It determines where everything goes, to whom, and it avoids legal disputes — which you definitely want to avoid because death is heartbreaking enough.
So why is a will important? One way to answer that is to look at what happens if you don’t have one. Here are three financial disasters that a will can help you avoid.
Disaster No. 1: Leaving your legacy to chance
Danielle G. Van Ess, attorney and counselor at law at DGVE Law, LLC
Without a will you're anteing it all up, rolling the dice, and walking away from the table before waiting to see where the chips land ....
You won't be there to see your surviving loved ones agonize about your wishes; decide who gets what when; or stop talking to each other gradually over perceived slights [that are] related to who is responsible for settling your final affairs, or how.
Without a will, the law makes assumptions about what you would likely want to have happen, but that often contradicts what people would actually intend. You might not see your children fighting with each other, or with their stepparent, but anyone who is curious can read all about it, as Probate [the legal process that involves distributing a deceased person’s property] is a public process.
Meanwhile, all your assets may be semi-frozen and inaccessible to pay final expenses and legal fees, so your surviving loved ones might have to front those expenses hoping to get reimbursed eventually. While your house is in legal limbo, you might miss the spring selling season and collect less [later on] when the real estate market declines again.
Finally, if you have minor children, someone you know to be a horror show in private, but who looks good on paper, might present to the court as the best possible choice to serve as legal guardian for your minor children.
Don't leave your life and legacy to chance.
Disaster No. 2: Losing money to legal fees
Denise Nostrom, ChFC, CLU, and founder and owner of Diversified Financial Solutions
It is important to have a will if you have assets.
Most assets do not have a directive if one dies, so the onus falls on the person that has to settle the deceased person's estate. It can become very costly and a lot of work for this person since they need to hire a lawyer, and the lawyer must reach out to any and all relatives of the deceased individual.
We had a case where a client was married and widowed to four different women. Each of the women's families had to be reached to ensure he did not have any children or any living spouses. His intent was to give his assets to his one and only brother. Sadly, he never prepared a will, so all this digging and research had to be done. Unfortunately, his brother's inheritance was quite less after all the lawyer's fees.
So, if you have any assets other than retirement plans, which you can put beneficiary designations [on], I would encourage you to prepare a will. It is your voice as to where and what you want to have happen to your assets upon your death.
Disaster No. 3: Missing an opportunity to establish a trust
Heather Austin-Skaret, partner at Mann Lawyers LLP
By not having a will, you've missed the opportunity to establish a testamentary trust to ensure that a beneficiary receives support and has money held until the beneficiary is mature enough to manage it.
Not all beneficiaries over the age of 18 should receive an inheritance outright. Without a will, an adult beneficiary who is not under a disability is entitled to receive, under the laws of intestate succession, their portion of the inheritance without the benefit of a trust.
For instance, we had a client who was trying to administer the estate without a will and was compelled to provide the inheritance to a beneficiary who was incarcerated.
A will is a smart move both financially and legally. Make sure to keep it current with any major life changes, such as marriage, divorce, or childbirth.
Danielle G. Van Ess founded DGVE law® in Hingham, Massachusetts, on Boston's South Shore in 2008 to help people stay in control while they’re here, and leave a legacy rather than a mess when they’re gone. She lovingly plans for and guides families after death, and helps entrepreneurs build, grow, and nurture their small businesses.
Denise Nostrom is the president of Diversified Financial Solutions. Nostrom, a life-long resident of Long Island, entered the financial services industry in 1990. She began her career at Smith Barney as a portfolio assistant. She did not feel that her ambitions were being fulfilled, so she trained to become a personal financial advisor with IDS Financial Services (now commonly known as Ameriprise). She started her own firm, Diversified Financial Solutions, in 1996, which focuses on personalized customer service. Nostrom works with clients from all walks of life, helping them to improve their lives and follow their dreams. Her philosophy is that with time, discipline, and determination you can reach your financial goals and dreams.
Heather Austin-Skaret is a partner at Mann Lawyers in Ottawa. Her practice includes estate planning and administration as well as commercial and residential real estate work. She has developed extensive experience in the area of estate planning and administration, which allows her to assist clients at some of their most difficult times. She is constantly updating her knowledge as a member of S.T.E.P. and the Estate Planning Council. She is a member and past chair of CCLA Solicitors Conference Planning Committee and a speaker at various OBA programs.