4 Things a Simple Will Does NOT Accomplish

When it comes to estate planning, many people believe that having a simple Last Will and Testament is all that’s necessary to ensure that their estate is distributed according to their wishes. It isn’t.

Simple wills can appoint an executor for your estate, distribute property, and name a guardian for your minor children. But if you have certain types of assets or want to reduce estate taxes so that your beneficiaries do not lose a considerable portion of their inheritance, a simple will is not enough.

Here is a list of 4 things a simple will does not accomplish, and reasons why you should address them with an estate planner instead.

Simple Wills Do Not Control Certain Assets

Simple wills do not have any control over assets like the following:

  • Money in an IRA or 401(k) Plan: Instead, it will go to the beneficiary that you named when these accounts were set up.
  • Proceeds of a life insurance policy: This is another asset that will go to a named beneficiary.
  • Property held in joint tenancy with someone else: It will be become the property of the other person when you die.

For many people, assets like this comprise the majority of their estate, so plans for their distribution should be addressed with a qualified estate planner, who will review your wishes and ensure that all administrators and financial institutions have the correct beneficiary information.

Simple Wills Do Not Bypass Probate

A common assumption is that having a simple will can prevent your estate from spending months or even years tied up in probate court before it can be distributed. Not quite.

You can avoid probate by:

  • Owning property in joint tenancy with right of survivorship, which allows it to automatically pass to the surviving owner(s) when you pass.
  • Converting your bank and retirement accounts to payable-on-death versions. When you pass, the money goes directly to your beneficiary without being probated first.
  • Setting up a living trust. After you pass, the property held in trust is not part of your probate estate. The trustee, which technically owns this property, can quickly and easily transfer it to your chosen beneficiaries, without probate.

These are arrangements that your estate planner can help you put together and  formalize. He or she can also advise you on most beneficial process to settle your affairs in this respect.

Simple Wills Should Not Be Used to Convey Burial Instructions

Settling the estate doesn’t usually happen until after the funeral, so if you leave funeral and burial instructions in a simple will, your survivors might not even know what your wishes are until it’s too late. Another problem is that your body is not legally ‘property,’ so it can’t be part of your estate. Therefore, there is no guarantee that your funeral requests will be carried out.

Your estate planner can work with you to create a Durable Power of Attorney for Healthcare, with your Agent being authorized to handle funeral and burial decisions. You may also purchase a prepaid funeral plan that is in accord with your wishes.

A Simple Will May Not Reduce Estate Taxes

A simple will cannot reduce state or federal estate taxes, but a skilled estate planning attorney can assist you in setting up trusts and gifting arrangements that preserve more of your assets for your beneficiaries. They include:

  • Lifetime gifts to children and grandchildren: You can make annual gifts of $14,000 to any number of people without incurring a gift tax, reducing the size of your taxable estate.
  • AB and QTIP trusts: Both trusts allow you to leave a substantial amount of your estate to designated heirs without estate taxes.
  • Irrevocable life insurance trusts: You can reduce the size of your taxable estate by transferring small amounts to an irrevocable life insurance trust, the proceeds of which are generally not taxable.

A simple will is an important part of your estate plan, but to preserve certain assets, distribute your estate according to your wishes, and get the burial you want, discuss your needs with an estate planner today, The knowledgeable team at Legacy Planning Law Group would be pleased to help you make the arrangements that will give you future peace of mind.

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Written by Legacy Planning Law Group

Legacy Planning Law Group is dedicated to working with individuals and families to help protect the assets they have built throughout their life, and make everything simpler for families who have lost a loved one. We help thoughtful people achieve the peace of mind that comes with planning their personal legacy and passing on family harmony.