A very common question that we will receive from our clients is regarding their Wills. Many of our clients will start off their conversation with us believing that they have all of their affairs in order because they have a Will that covers everything in the event of their deaths. However, in many circumstances, a Will is simply not enough.
These are the Top Five Reasons Why a Will is Not Enough:
- A Will Does Not Avoid Probate
Probate is the process of all of your assets passing to your loved ones after your death. It is also the paying of all of your valid debts and a public court proceeding. What this means is that all of the assets that you own, all the debts that you owe, and which family members will be receiving which assets will become public record for the entire world to see. In addition to being a public process, probate is also expensive and a long process. In general, probate can last anywhere from six months to two years. Also, probate costs, when you total the attorney fees, court costs, and miscellaneous other costs may total $20,000 or more. Finally, in many cases, your assets will be frozen and your loved ones will have to go to the probate court and obtain an order from the court before they can access any of your assets.
- More Expenses If You Own Out-of-State Real Estate
In addition to the probate expenses that I listed above, you will have to go through this process in each and every state that you own real estate. For example, if you own real estate in Tennessee, Texas, and Mississippi, your surviving family members will have to hire a law firm in Tennessee, a law firm in Texas, and a law firm in Mississippi to take them through the probate court process to get the real estate from each state transferred to the loved ones that you designated in your Will.
- A Revocable Living Trust Can Avoid Nearly All Probate Costs
One of the main reasons that a Will is not enough is that your family will be required to go through a difficult, painful, and costly probate process. However, a revocable living trust will allow you to avoid all probate costs. Generally, setting up a revocable living trust is more expensive than a Will. However, the cost of setting up a revocable living trust will not even compare to the amount of costs that your family will have to incur by going through the probate court process after you die. Although, you should make sure you work with a law firm that guarantees $0 probate costs for your family and lifetime support.
- A Will Does Not Protect You From Nursing Home Poverty
An increasing part of our society and our aging population is the increase of individuals requiring skilled nursing home care. However, a tragedy of this statistic is that many individuals that go into the nursing home end up losing all of the money and assets that they spent a whole lifetime to save and protect. In addition, after all of these assets are spent, the individual requires Medicaid assistance in order to cover the costs of nursing home care. Specifically, Medicaid requires that you have no more than a house, vehicle, prepaid funeral, and $2,000 worth of assets in your name before qualifying for Medicaid assistance. If you have a Will and have performed no acts to protect your assets, you may end up spending your final years spending away your assets for your long-term nursing home care.
- A Will Could Subject Your Estate to Unnecessary Estate and Inheritance Taxes
If you have a Will and your assets are more than $5.34 million as of 2015, the amount that exceeds $5.34 million will be subject to federal estate taxes. Although, this only applies to approximately 1% of the United States population, by only having a Will you can assure that your family will have this tax liability after you die. There is a multitude of estate planning strategies that can be used to reduce, or even completely eliminate, your family’s federal estate tax obligation based on the value of your assets when you die. However, this is a complex area of estate planning and you should speak with a knowledgeable and experience estate planning attorney on how you might be able to reduce your federal estate tax obligation at death.