Having a will as part of your estate plan is important especially if you have young children. There are a lot of online shops and discount sites that will sell you cheap will services. But don’t be fooled. Nothing beats having a real estate plan including a will prepared by an attorney, particularly in the ever-changing digital age.
Wills have been around for a long time. And in some respects, standard clauses in wills haven’t changed much through the years. But a proper estate plan requires more consideration than just a standard will. Every estate plan is different and must be based upon the needs of the individual or family. But let’s look at an example involving a husband and wife with one child. The husband is a police officer, the wife works part-time, and the child is 5 years old. The husband gets a standard will done in which he leaves everything to his wife. The will also has a testamentary trust for his child. If his wife dies first, then everything goes to his child. The husband, however, doesn’t have a lot of assets that will pass through his will. But he does have a pension, deferred compensation plan, and PBA annuity fund. Those items pass outside the will to the beneficiary named in the particular plan. It is very important that these plans be considered when preparing the estate plan. Let’s say he named the wife as beneficiary, or if she died first, then his child.
In our example, tragedy strikes, and husband and wife die in a car accident, leaving behind their child. The testamentary trust in the will would spring into action here, and any of the husband’s assets would pass into the trust. But he didn’t have many assets.
This could be avoided by having the appropriate type of will and then changing the beneficiary on the deferred comp and annuity plan. Instead of leaving the child’s name as the beneficiary, the husband could have left as the beneficiary “The trust created by my will.” The assets in the plan then flow directly to the trust created by the will. The trust in the will names the trustee – the person who will administer the funds for the child. The trust indicates how the money can be spent and for what. This can have several advantages. First, a less-lengthy and lower cost probate. Second, the assets in the trust go to the child in the manner dictated by the father (according to how the trust was set up). There are additional reasons as well but we don’t want to bore you.
The deferred compensation and annuity fund, however, are sizable. But they pass directly to the child because he named the child as a beneficiary, and not through the trust created by the will. Most likely, that means a more lengthy and more costly probate process.
Everyone’s needs are different. Don’t settle for a cookie-cutter will from an online service. We can help you create an effective estate plan for less than you think. Get in touch with us today.
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