You have a Will – so You’re All Set?
I hear this all the time: “I have a Will so I’m all set.” At first, I used to internally roll my eyes and say a prayer for them. Then I had an epiphany: Whenever I had a sinus infection, I just always assumed I knew what it was. I went to the doctor when it got bad so that I could get some antibiotics to feel better. One time the doctor did an X-ray to look at my sinus cavities, and guess what?! They weren’t infected. She gave me tips to treat my symptoms at home and I didn’t have to go on unnecessary medication to get better.
This situation is similar to how many people do not understand the process of what happens to their assets when they die. I have more patience and try to find new ways to explain the process so it’s easier to understand. Everyone has their own area of expertise.
So here is how it works: Your Will is the legal document that dictates where your PROBATE ASSETS go and who is in charge of making sure that happens. PROBATE ASSETS are assets in your SOLE name at death. This means an asset (bank account, real estate, investment, etc.) that just has ONE name on it – no beneficiary, no co-owner, no trust, no TOD (Transfer On Death). The Will gets filed at the probate court! (Insert head exploding emoji).
When I work with clients to establish trusts and Wills, we focus first and foremost on avoiding probate. Not all assets are treated alike, so we make a list of all assets and we make recommendations for each one depending on the plan that we are setting up for the client.
Another common assumption that I hear is “Mom has a life insurance policy, I’m the beneficiary.” In theory, this policy should avoid probate because there is a beneficiary on the policy. However, I have seen many times that the company loses the beneficiary designation form! Or people ASSUME there is a beneficiary, but the form was never filled out. Especially if the form was completed before they went electronic. Lots of documents are lost when companies go from paper to electronic record keeping.
I ALWAYS recommend checking that you have a beneficiary form completed and confirmation, in writing, from the institution of who the named beneficiaries are. Let me tell you a little story about a client: Mom set up her estate plan with me. She then moved to another state to be closer to a daughter for long-term care. She applied for Medicaid benefits, which caused her family to provide ALL the assets for Medicaid to qualify. The family was aware of the state-issued life insurance policy, and they were unable to cash it in because there was no cash surrender value. Mom was able to qualify for Medicaid benefits! When mom died, they sent a notice to the life insurance company and they said there were no beneficiaries, so they had to go through probate to get access to the death benefit. It’s not a large amount, but the headache they inherited is! Lesson from this: Always get confirmation that a beneficiary is on file with the institution.
We know what happens when we assume – Ass out of U and Me ????. Don’t assume you know that your estate plan is all set, KNOW that it is! How do we do this? Take action:
- Schedule a review with your attorney to get your questions answered.
- Contact all of your financial institutions to make sure the beneficiaries of your assets match your attorney’s recommendations.
- Make sure you have in writing what your plan does and who your named beneficiaries are so that WHOEVER is handling your estate (don’t ASSUME it will be your named agents, life can be unpredictable!) has proof of beneficiaries.
Don’t have an estate planning attorney? Contact us today to make sure you know that your assets will be passed down according to your wishes! Ladimer Law can be reached at admin@ladimerlaw.com or at 508.532.8689.