Show #258 Airing: Sunday, June 13, 2004
Everyone should have a will. That’s clear. But it’s also clear that a will is not enough. Here to explain the top four problems you and your family are likely to face if a will is all you have is my law partner, Michael Solomon. And Michael’s here quite will-ingly.
Question: You've made a list of four reasons why a will is not enough. Let's start with: "A will is not enough to avoid probate".
Answer: If you leave your estate to your heirs with a will, everything will pass through probate when you die. Wills go through probate. And probate means there will be delays, paperwork, and legal fees. Most people today want to avoid probate. You can accomplish that in three ways: naming joint owners on your assets, naming beneficiaries on everything, or making a living trust. A will is just not enough to avoid probate.
Question: Your second rule is "A will is not enough to protect younger children".
Answer: If you leave your estate to children, they’ll get it when you die. If they are young, you may name a custodian in a will to manage for them until they reach 21. But under a will, that’s it--at 21 they get the inheritance. For a lot of kids, 21 is too young. With a trust, you can name a trustee to manage the child’s inheritance until the child is 25, 30, any age you pick. A will can’t do this.
Question: Your third rule is "A will is not enough to protect your inheritance from the in-laws".
Answer: When you leave an inheritance under a will to heirs, it’s theirs when you die. If they later get a divorce, your child’s spouse will claim half. If your child dies, he probably leaves everything to the spouse. The only way around this problem is with a specialized bloodline trust.
Question: Fourth rule "A will is not enough to protect from nursing homes".
Answer: A will does nothing until you die. If you go to a nursing home, you’re alive, and the will provides no protection. Most or all of your estate may be spent. You can protect at least part of your life savings, but a will is not enough. You’ll need to create a Medicaid assistance protection plan, which may involve creating an irrevocable Medicaid trust or transferring assets to kids.
Question: You've given us your four reasons why a will is not enough. David Letterman has a top ten list. Can't you at least get us to 5?
Answer: Sure. “A will is not enough to protect in case of incapacity.” If you become incompetent and can’t handle your own finances, you must give someone else the authority to handle your finances for you--withdraw money from your accounts, take distributions for your IRAs, pay your bills. A financial durable power of attorney is the key document. A will is just not enough.
A will is important, but it’s not enough. If all you have is a will, you’ll go through probate, or your kids will get the inheritance no later than age 21, which may be too young. And your in-laws or a nursing home may wind up with your hard-earned money. A will is the starting point for planning, but not the end.
