Is a Will Right for Your Clients?
Every client, regardless of the size of their estate or their age, can benefit from a will that gives
legal effect to their inheritance plan. Even if they have a trust to manage asset distributions, a
trust cannot address every estate planning consideration. Wills have limitations as well, but they
belong in a comprehensive estate plan.
What a Will Does - and Does Not Do
Wills, along with trusts, powers of attorney, and living wills, are some of the most basic estate
planning documents. A will states how someone (the willmaker) wants their assets (accounts
and property) to be passed down when they die.
- It names who the beneficiaries are and how much they will receive.
- It also names an individual (the executor or personal representative) who oversees
paying off debts, distributing assets, filing all necessary paperwork with the probate
court, and filing the appropriate tax returns.
- In addition to naming an executor, a will can name a guardian to care for the willmaker's
minor surviving children.
These are the primary functions of a will, but it is equally important to understand what a will
does not do.
- A will only governs the disposition of assets held individually in the willmaker's name
without a beneficiary designation at the time of the willmaker's death.
- A will cannot dispose of assets that are owned jointly or governed by beneficiary
designations or other contracts. Beneficiary designations on life insurance policies and
retirement plans take precedence over a will, as do payable-on-death (POD) and
transfer-on-death (TOD) designations on bank accounts.
- Wills do not provide for incapacity planning.
- Wills only take effect upon the willmaker's death but can be revised any time prior to
death, as long as the willmaker has the required mental capacity.
What the Client Owns Could Play a Role
Whether or not a will is an appropriate estate planning tool for a client may depend on the type
and amount of assets the client owns. If most of what the client owns will be distributed
according to a beneficiary designation, POD or TOD designation, or by operation of law due to
joint ownership, a client may look at a will as a safety net in case there are assets that end up
having to go through probate. If your client has modest accounts or property, the client may be
okay with their loved one receiving their inheritance outright and may think that putting too many
restrictions will eat into the inheritance being left behind. It is important to remind clients like this
that they will be relying on the beneficiary designations to distribute their assets, so their
designations need to be up-to-date.
Some Clients Want an Easy Solution
Although a will has its limitations, some clients are interested in estate planning tools that are
easy to understand and that will be quick to put into action. With a will, the client is leaving
instructions for what will happen at their death. Once the will is signed, the client retains
ownership of their assets, and no additional paperwork is needed to put their plan in place (with
the possible exception of updating beneficiary designations if changes need to be made).
Compare this to a trust-based estate plan, in which all or most of the clients' assets will need to
be retitled to make the trust the new owner after the plan is signed.
A Third Party Can Be a Good Thing in Some Instances
While most people value their privacy and would not want the details of their assets and
beneficiaries made public, using a will and having beneficiaries go through the probate process
can sometimes be a good thing. If the client believes that there will be fighting among family
members, going through probate allows a third party (the judge) to oversee the proceedings and
make sure that everyone is on their best behavior. If the client is worried that their family will be
too lazy to manage things on their own, probate can provide the required structure, timelines,
and oversight to ensure that all the required tasks are completed in a timely manner.
The Importance of Financial Advisors in Estate Planning
Recent survey data shows 7 out of 10 Americans say that estate planning is important - yet just
26 percent have an estate plan.1 The survey also found that working with a financial
advisor is the largest variable in whether someone has an estate plan.2
While estate planning strategies change over time, the documents that comprise a plan are tried
and true. Wills can be thought of as the foundation of an estate plan that, when used
strategically with other documents, supports a strong and lasting legacy.
The ease and simplicity associated with setting up a will is a major selling point that can help to
dispel the notion that estate planning is overwhelming or intimidating. Once a client has a will,
you can steer them toward additional estate planning services that synergize their financial and
legacy objectives.
If you or your clients have questions about wills and estate planning, please reach out and let us
know how we can help.
MEREDITH | PC
4325 Windsor Centre Trail
Suite 400
Flower Mound Texas 75028
214-513-1013
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.
You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions about this or any matters relating to estate planning.
