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A Simple Will is Often Not Enough

by Phil Levin, Esq. on March 5th, 2018

While some clients often believe that a “Simple Will” is sufficient, in many cases, a basic Last Will and Testament cannot accomplish each of their estate planning goals. This fact often surprises people who are going through the estate planning process for the first time.

As detailed below, in addition to a Last Will and Testament, other important financial and estate planning techniques and actions are necessary to ensure that your estate planning wishes are honored.

Beneficiary Designations –

Do you and your clients have a pension plan, 401(k), life insurance, a bank account with a pay-on-death directive, or investments in transfer-on-death (TOD) form?

When you established each of these accounts, hopefully, you designated at least one primary beneficiary of the account in the event of your death. However, you cannot use your Will to change or override the beneficiary designations of such accounts. Instead, you must change them directly with the bank, brokerage company, or custodian of the financial institution that manages the account.

Special Needs Trusts –

Do you have a child or other beneficiary with special needs, including physical and/or emotional disabilities?

Leaving money, in addition to other assets, directly to a beneficiary who has long-term special medical needs may threaten your beneficiary’s ability to qualify for government benefits. Such action may also create an unnecessary burden and hardship to other family members who are not capable or do not desire to provide ongoing care and investment management services for a disabled family member. In many situations, an estate planning vehicle called a Special Needs Trust is a more effective way to care for an adult child with special needs and can be established under the terms of a Will or Living Trust.

Conditional Giving with Living Trusts or Testamentary Trusts –

Do you want to place positive incentives or specific conditions on your bequests?

If you want your children, or other designated beneficiaries, to receive an inheritance only if they achieve or continually meet certain prerequisites, you should utilize a trust, either one established during your lifetime, called a Living Trust, or a trust created under the terms of your Will, called a Testamentary Trust.

Estate Tax Planning –

Do you expect your estate to owe estate taxes?

A basic Will, with no tax planning provisions, cannot help you lower the potential estate tax burden on your assets after death. If you think your estate may be liable to pay transfer taxes, at the state or federal level, you can take steps during your lifetime to minimize that burden on your beneficiaries. Certain trusts are very effective for this purpose and specifically designed to operate for the purpose of minimizing or eliminating estate taxes. Gift-giving strategies, during your lifetime, may also be a very effective strategy for transferring assets to the next generation, and reducing the value of your estate for transfer tax purposes.

Pet Trusts –

Do you want to protect and care for your pets or companion animals?

Pets are generally considered property, and you cannot use a “Simple Will” to leave assets to other property (pets). Instead, you can establish a specifically designed legal entity, called a Pet Trust, created under the terms of your Will, to designate a Caretaker for your animals, and to leave a specific sum of money to that person for the care and needs of your pets who survive you.

Joint Tenancy with Right of Survivorship –

Do you own a house with one or more people “in joint tenancy”?

“Joint tenancy” is the most common form of house ownership with a spouse. This form of ownership is also known as “joint tenancy with right of survivorship,” “tenancy by the entirety,” or “tenancy in common.” in the event of your passing, your ownership share in the house may distribute directly to your spouse, or the other co-owner, or under the terms of your Will or Trust, and which is dependent upon the type of ownership arrangement for the property. For example, if your real estate is owned as tenants by the entirety, even a specific provision in your Will devising your ownership share to a third party will not have any legal impact or effect.

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