July 30, 2020

Family Finances

Will you please have a will

Now and then, we all wrestle with the fact that we will not live forever. While most of us find this topic difficult to think about, it will happen to all of us and the circumstances will vary. For some, it will be sudden, while others will have prolonged battles with health issues and may require nursing facility assistance for end of life care.  Responsible adults should be mindful of the fact that they are unlikely to choose how and when they will die. Once you accept this notion, your thoughts should eventually drift to, “How do I want my assets distributed after I die?”  This is where the Last Will & Testament comes into play.

As you may know, your “Last Will,” as it is commonly called, specifies how assets held in your name will be transferred to family members, friends, relatives or charities after you die.  I cringe when clients, friends, and relatives say they don’t have a will. Sometimes, they say, “Why would I need a will…I don’t have a lot of assets.”  Or they incorrectly assume things will just “get worked out” among a spouse, parent, minor child, stepchild, ex-spouse or relative. They often don’t.

The truth is, even if you don’t have a valid Last Will and Testament, you do have a ‘default’ estate plan provided to you by New York State. New York State’s intestacy laws (dying without a will) dictate how assets are divided at your death.  Unfortunately, these rules may not match the manner in which you want your assets distributed among your heirs.

If you have a few minutes, I recommend that you Google “New York State intestacy laws” to see how your assets would be distributed according to New York State.  The intestacy laws as a safety next protecting New York state residents who don’t have a valid will.  But, with a little effort, you can control exactly what happens to your assets when you pass.  I recommend meeting with an attorney who specializes in this area law since they are adept at answering your questions and spotting issues that may require more than a simple will (Trusts, buy-sell agreements…etc).  A Last Will nominates your Executor, a person who carries out the process of retitling assets, retiring debts, paying final expenses, etc.  Without a will, the New York State Courts will appoint an Administrator for you (identical duties as an Executor). We think it’s best that you name a capable and trustworthy Executor to ensure that your wishes are adhered to and family disputes are avoided.  You may own a private company, have involvement with business partners, a farm, real estate holdings, alimony, leases, child support, valuables, artwork or die in a wrongful death case.  The possibilities are endless and it is best to have a plan in place that suits your particular needs.

Assets such as IRAs, 401(k)s , 403(b)s, life insurance policies or annuity contracts should contain designated beneficiaries that you have named to inherit your assets. Your will does not control these assets unless you name your estate as your beneficiary (not typically recommended).  Assets jointly owned with your spouse will typically fall into their control when you pass.  However, assets jointly owned with persons other than your spouse need to be carefully titled to ensure they are passed on to the heirs you specify.  A Last Will can help avoid family disputes or costly court proceedings to sort out these matters after you die.

Financial advisors who have been in this field long enough will have seen some real family inheritance disasters.  Many of these disasters could have been avoided with a simple 1-3 page Last Will drafted by an attorney.  The costs of such a document can be only a few hundred dollars.  If you need to revisit your estate plan, please contact your Rockbridge advisor.  While we don’t provide legal advice or draft legal documents, we can guide you through the scenarios and options specific to you and your family.  Then we can refer you to trusted partners to help you draft the appropriate legal documents.

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