Estate planning is a critical process that ensures your assets are distributed according to your wishes after you pass away. A will is one part of the estate planning documents that outlines who gets what, who's in charge and even who cares for your children. However, it's a common misconception that drafting a will is sufficient for keeping peace in your family. In fact, a will alone is not enough to avoid probate; it merely acts as instructions for the New York probate judge. This article delves into why relying solely on a will can be inadequate and explores the essential strategies to create a more robust estate plan.
White Plains Estate Lawyer David Parker explains in his video why a will is a bad idea for planning for the future.
A will is a legal document in which you write down your instructions about what you want to happen to your stuff after you pass away and who's going to be in charge of distributing inheritances and managing finances of your estate. If you have minor children, the will also allows you to designate a guardian to take charge of your kids upon your death. The will is essentially your voice in the probate court, guiding the distribution of your estate. But here's the catch: a will alone subjects your estate to probate, a court-supervised process that can be lengthy, costly, and public.
Probate is the judicial process through which your will is validated, and your assets are distributed under court supervision. This process is mandatory for wills, but it's time-consuming, public, expensive, and strips away any semblance of privacy by making your estate matters public record in the state of New York.
A significant oversight of a will is its inability to protect you if you were to become incapacitated. Should you become unable to make decisions, a will offers no guidance for your medical, financial, or legal care, potentially leaving your family in a bind to seek court intervention. Learn more about ways to document your wishes in case you're unable to do so in our article, Why You Need Advance Directives Right Now.
Assets and property distributed through a will are exposed to creditors, lawsuits, and even the beneficiaries' poor decision-making. This exposure can lead to your hard-earned assets being diminished or lost entirely due to external claims or mismanagement.
It's crucial to recognize that not all assets can be included in a will. A will alone only transfers property in your name. Properties co-owned as joint tenants, as well as assets that pass directly to a designated beneficiary by contract like life insurance policies and retirement accounts, bypass the will and probate altogether.
While naming beneficiaries on retirement accounts like IRAs and life insurance policies can avoid probate, it's not without pitfalls. IRAs require careful consideration when designating beneficiaries. Factors like tax implications and the age of the beneficiary can significantly impact the distribution of the IRA. In addition, many people forget to review beneficiary designations regularly. Life events such as marriage, divorce, or the birth of a child can result in someone you didn't expect receiving your money because you forgot to update your retirement or life insurance policies. Beneficiary designations must be carefully coordinated with your overall estate plan by working with an experienced White Plains estate planning attorney.
For homeowners, the simple act of adding someone's name to the deed does not sidestep probate; it only complicates matters. Another type of estate planning document, trusts, however, can ensure real estate is transferred smoothly and privately, bypassing the probate process entirely. Read more in our article, How Does Probate affect Real Estate Transactions?
Trusts are a powerful tool to circumvent the drawbacks of a will, offering a seamless transfer of assets outside of probate. They provide privacy, reduce estate taxes, and can be structured to protect your estate from creditors and mismanagement. This legal entity takes hold of your assets, managing and distributing them according to your precise instructions, both during your lifetime and after. Unlike a will, a trust offers a private, probate-free path tailored to complex or unique personal circumstances.
While a will is an essential component of any estate plan, it is merely a starting point. A comprehensive estate plan should include a combination of wills, trusts, and careful beneficiary designations to ensure your assets are protected, your wishes are honored, and your family is safeguarded from unnecessary legal hurdles. Book a call with our trusted White Plains estate planning firm to learn how to prepare for any eventuality, ensuring peace of mind for you and your loved ones.
If you become incapacitated and only have a will, your family may need to petition the court to appoint a guardian or conservator to manage your affairs, which can be costly, time-consuming, and stressful.
No, a will does not protect your assets from creditors. Assets passed through a will are subject to claims by creditors, as well as potential lawsuits and divorce settlements against your beneficiaries.
Probate is public, which means the details of your estate become a matter of New York public record. It's also often a lengthy and costly process that can deplete your estate's value and delay asset distribution to your beneficiaries.
Unlike a will, a trust takes effect during your lifetime and can manage your assets in the event of incapacity. Trusts also allow your estate to bypass the probate process, offering privacy, speedier distribution of assets, and protection against creditors and legal challenges.
No, certain assets that are co-owned or have designated beneficiaries, such as life insurance policies and retirement accounts, are not covered by a will and pass outside of probate directly to the named beneficiaries.
To ensure your estate plan is comprehensive, consult with our experienced White Plains estate planning law firm to discuss your specific situation and goals. Your plan should likely include a combination of a will, trusts, powers of attorney, healthcare directives, and carefully coordinated beneficiary designations to cover all aspects of your estate.
The 15 minute initial phone call is designed as a simple way for you to get to know us, and for our team to learn more about your unique estate planning needs.