People often oversimplify the process of creating a will. Some people think that the law automatically provides easy answers to the transfer of property, so why bother with a will? Others feel they don’t have enough property to create a will. A recent Gallup Poll reported that only 44 percent of American adults have created a will. Once people reach age 65, they’re more likely to have a will (68 percent) compared to just 14 percent of people age 30 and under.
Unfortunately, many people link the need for a will with loads of money or lots of pricey property. But the fact is, if you own any type of personal property such as a car or home furnishing, have children, are contributing to a retirement fund like a 401k, have a pension, or are eligible for social security, a sound will can reduce family conflict, protect your children, and ensure that your passing does not trigger unnecessary stress or conflict.
Need more proof? Check out this list of seven common mistakes developed by a Going and Plank attorney. This list maps out the mistakes that can be avoided by creating a will and developing a proper estate plan.
Mistake 1: No Will
Without any will in place, the state labels you interstate and will reassign your assets to your next of kin. These assets may include bank accounts, investments, real estate, retirement accounts, and personal possessions like vehicles, pets, and home items. Laws of secession vary depending on your marital status, but your spouse, child, parents, siblings, aunts or uncles, cousins, or even distant relatives could inherit your assets if you die without a will.
While some people may prefer to leave estate decisions to the state, when you skip the process of creating a will, you’ve forced your heirs to make difficult decisions on how to manage your affairs after you’re gone. If you’ve made verbal promises to share your possessions or assets in any way, these agreements may not be honored if you’re declared intestate. Families forced to divide estates in this way often experience conflict, confusion, and hurt feelings.
If you have dependent children, the creation of a will allows you to assign guardianship. If you do not specify guardianship arrangements in your will, the court will appoint guardians.
Finally, administering an estate without the help of a will often results in additional costs to your heirs, reducing their financial gain, and adding the stress of managing your estate. That’s why it makes sense to talk to an estate planning lawyer. To find out more about what you should and shouldn’t include in your will, contact Going and Plank today.
Mistake 2: Not Specifying a Guardian for Children
If you have children who are financially dependent on you, you should think through guardianship in your will. Even if your child is over the age of 18, if you want to ensure that they receive continued financial, educational, or housing support, you may create a trust in your will, assign a trustee, or guardian to step in as parent and look out for your children’s interests, make financial decisions on their behalf, and ensure you dependents get the level of support they need. It’s important to think through these decisions and outline your wishes clearly in a written will. Talk to an attorney experienced in estate law.
Mistake 3: Not Providing Guidelines for Guardians
Even if you assign a trusted adult to the role of guardian, each person has different ideas on how to manage the finances of a dependent. Some people will consider any funds assigned as a subsidy for food and clothing. Other guardians may set the money aside but struggle to meet daily expenses. And what happens if your appointed guardian is unable or unwilling to take on the care of your dependent? Who is next in line?
Taking the time to think through these issues and including them in your estate plan and will reduce stress and conflict for your dependents and their future guardians. Contact our team at Going and Plank to find out how an estate planning attorney can help you.
Mistake 4: Not Planning for the Death of a Beneficiary
Years, even decades, can pass between the writing of the will, and the administration of it after your death. In that interim, your beneficiaries, young or aged, may pass on. To reduce litigation and expense after your death, be sure to include a succession of beneficiaries.
If a beneficiary dies, you may want their share to go to their heirs. For example, if your brother dies, his children would inherit. Or you may want to distribute assets in other ways. As an alternate example, if your brother dies, you may want your favorite cousin to become the beneficiary. Check with your attorney to make sure your will takes the death of a beneficiary into account.
Mistake 5: Using Co-Ownership as a Way to Divide Assets
Some people start creating co-ownership of assets, such as co-owned homes or co-owned bank accounts, prior to their death. This is usually done to avoid probate and associated expenses. However, moving items into co-ownership may not avoid probate and may put your assets at risk in other ways.
For example, if you decide to make your daughter the co-owner of your home, this asset is now legally her property. If she would get divorced, her husband would have a right to half of her share, or one-quarter of your home’s value. He may be able to demand his share of that ownership, even if you are still living in the home.
In Pennsylvania, co-ownership also comes with its own set of tax issues. A shift in ownership may mean your co-owner is now subject to gift or income taxes.
Co-ownership also means your assets could fluctuate in value, providing an uneven inheritance. For example, you may want to co-own your home with your son, and co-own your vacation cottage with your daughter. However, over the years, your home may decrease in value while the value of your vacation cottage skyrockets. At the time of your death, one property may be worth twice as much as the other.
Mistake 6: Planning Your Estate Around Specific Items
While dividing your estate up by making specific requests may seem like a smart way to sidestep in fighting, in many cases specific requests make probate more complicated. When you leave certain property or items to certain heirs, you should create a separate document, called a letter of instruction, that you keep with your will.
However, any items you name may increase or drop in value over the years, so don’t assign personal items based on financial worth. For example, a family photo isn’t going to fluctuate in value over time, but a stock may balloon or be worthless at the time of your passing.
Additionally, specific bequests are handled first in probate. If you no longer own the item or investment named, the estate might be required to replace that item, even if it costs much less or more than originally intended. These types of gifts can slow down the probate process considerably and may have the unintended effect of causing more conflict and delay. If you want to discuss your specific estate issues with a qualified lawyer in Lancaster County, please contact Going and Plank for more information.
Mistake 7: Confusing a Will for an Estate Plan
A will is a legal document that sets forth your wishes, but an estate plan helps you plan for distribution of assets and legacy wishes. When set up properly, an estate plan will help you and your heirs find ways to reduce taxes, fees, and court costs. While it’s important to keep your will updated, it’s also critical to meet with an attorney to review your estate plan periodically, especially if;
- You have underage or dependent children
- You need to assign guardians
- You own property
- You own a business or are a partner in a business
- You have a retirement fund or a pension
- You have investments
- You have life insurance
- You wish to leave part of your estate to a church, non-profit, or other organization
- You’re divorced
- Your financial situation has changed significantly
Talk to an Estate Planning Attorney Today
Creating a sound will and estate plan in Pennsylvania will not only ensure your wishes are met after you pass, but it will also reduce the stress and expense for your heirs. Going and Plank can help you create a will and estate plan that is scaled to meet your needs.
If you’d like to find out more about how the attorneys at The Law Offices of Going and Plank in downtown Lancaster can help you create, review, revise, or administer wills and estates, contact us today.