We’ve all seen dramatic readings of wills in movies and on television to establish who inherits which property. It’s a good theatrical device, but the reality is much more complicated.
Simply naming an item or asset in your will does not guarantee that it then transfers to the person, people, or charity (the beneficiary) you have named. As the grantor (original owner of the property), you have control of your estate – right up until the moment of your death. Then your will is executed, or legally carried out and fulfilled. Some properties are best tended to with other kinds of legal documents. To ensure that your assets will be distributed as you intend them to be, it’s strongly advised to consult with a lawyer to draft your will.
Automatically Update; Magically Appear When You Die
Some might assume that because they have established a will under the guidance of an attorney, their assets will be distributed as they’d like. But it’s difficult to begin the distribution process if no one close to you knows where to find the original legal document, or if it even exists. Since making a will isn’t a task most people like to think about, many individuals like to put it out of mind as soon as the process is over.
But the process of making a will is just that: a process. End-of-life documents should be reviewed on a regular and consistent basis to ensure that they still reflect your desires and financial situation. For example, recent changes in federal estate taxes might change the way you’d like to arrange for the distribution of your assets. Divorce, death of an intended beneficiary, or the arrival of a new baby might alter the landscape as well. Providing for changes such as these are the best way to ensure your estate is dispersed the way you’d like.
It’s best to register the original document with an attorney, funeral home, or trusted advisor. Then give your beneficiaries copies, with contact information about the location of the original.
Not keeping a will up to date, or entrusting the original to an unreliable keeper, is an invitation to the probate process. It differs by state, but probate is generally a lengthy, expensive legal nightmare that hits right when loved ones are beginning the difficult grieving process. In probate, a court undertakes the distribution of a grantor’s assets. If family members or business associates disagree about the owner’s original intentions, or who has a legal right to his or her assets, the process can drag on for quite some time. Intended beneficiaries can incur not only legal costs, but they can also become responsible for unintended income taxes and debts (such as credit card bills).
Pre-paying all final expenses, such as the cost of a funeral and grave site,is also a good idea. This will ensure that your loved ones aren’t burdened with any more bills while in emotional distress. Also, wills don’t include certain preferences such as style of funeral services, mode of burial, or instructions about headstones or memorials. It’s smart to include this information along with your will.
Pass on Property
If you jointly own property or assets along with a spouse or business associates, a will is a necessity. To do otherwise and assume everyone knows “who gets what” is a good way to invite disaster – and probate.
If you own property in joint tenancy with a spouse, sibling, child, or business partner – whether it is real estate or the contents of a retirement or savings account – it does not automatically transfer. A joint tenancy with rights of survivorship is a legal arrangement in which one person receives the entirety of an account when the other account holder (or holders) passes on. Since a joint tenancy specifies equal rights to certain assets, the terms of the joint tenancy will override whatever you might have stated in an individual will.
Placing property which is transferred in a joint tenancy can avoid probate, but it can come with its own problems. Using one might incur gift taxes or unexpected state taxes upon the death of one of the holders. And, since you hold assets with another person, you must both agree to alter the terms of the tenancy. For example, if a couple enters into a joint tenancy and becomes embroiled in a bitter divorce, the trust may become difficult to manage. If one spouse wants to sell commonly-held property and liquidate the assets, the other spouse must agree to the sale. The same can happen in the event of a business agreement. Consider the implications and tax realities of such an arrangement in a careful manner before signing anything.
Care for Pets
You may have heard of news stories in which eccentric millionaires leave the entirety of their fortune to their cats, dogs, or birds. While this makes for cute, sharable content on social media, the reality is animals may not legally inherit property or funds, even if a will stipulates it. Instead, you must appoint a guardian for your pet.
Responsible pet owners will ensure that their animals are cared for after their death. This may entail building a pet protection agreement, which establishes who you’d like to take care of your pets. It also sets aside assets to ensure that the pet’s new caretaker can meet the needs of the animal; pet protection agreements ensure that such funds must be used for veterinary care, food, housing, and other expenses. Pet protection plans can be stated in general terms so that they cover any pets you own when you create the agreement, as well as any you might own in the future.
A pet protection agreement is particularly important if one owns an unusually long-living pet, such as a parrot, turtle, swan, or even a catfish, which can live 60 years or more. In the event a pet involves complicated care or a great deal of land, such as a horse, cow, or other farm animal, it’s also important to ensure that the animal has a place to live.