Where There is a Will…

Is Updating Your Will Part of Your 2019 Financial Plan? Here’s What you Need to Know

By Donald A. Kress

February 2019

With the start of every year come resolutions and a fresh start to tackling priorities that may have been cast aside due to procrastination or every day responsibilities. Often, an important priority is a financial plan that may include writing or updating a will to ensure your estate is in order for those whom you wish to benefit.   

Most people have a general understanding of what a will is: a way to designate who will get which of your assets when you pass away. Many think the will is the principal governing document in your estate plan, but that’s not entirely true. Many assets don’t fall under a will or probate, and without considering those things, even the best will can be almost meaningless.

Most people have accumulated real estate, life insurance, mutual funds (as part of or separate from a 401k or IRA), bank accounts, and other assets. In most of these cases, when you purchase the asset or sign a life insurance contract, you’re asked to designate a beneficiary, and sometimes a contingent beneficiary.

One of the biggest estate-planning mistakes people make is not reviewing these other financial instruments and aligning the beneficiaries with their total financial plan, or not keeping the beneficiaries current.

This isn’t to say you shouldn’t have a will; there are still assets that fall under probate, including your checking accounts, brokerage accounts, other accounts held in your name only, personal property, automobiles, jewelry, family heirlooms and things of that nature. You don’t want to die intestate, because then state law will determine how your estate is divided, and it will be divided mechanically.

A little thought when setting up your accounts can yield big benefits for your family. Some elderly people add one of their children as a signer on checking and savings accounts, because then the child can help with paying bills and keeping track of finances. But this can be very dangerous, because, if not done correctly, that child will inherit that money when you die, which can cause hurt feelings and disputes among the other heirs. The proper way is to use a limited-purpose power of attorney, so that the adult child can sign on the account but is not necessarily the sole beneficiary. If you don’t want that child to inherit that money, and don’t designate it properly, that property would be solely theirs.

While it’s important to know what does or doesn’t fall under probate, it’s equally crucial to identify all your assets before you ask a lawyer to draw up or revise your will, to have a clear understanding of which of your beneficiaries are already designated to receive certain assets. If not, there can be a great deal of family unhappiness, or, even worse, costly litigation. When you’re sitting in the lawyer’s office, the meter’s running and it becomes costly if you don’t have all that information organized.

If you’ve lived a good life and nurtured your relationships, your family will understandably be sad when you pass away. The object of good estate planning is to minimize their unhappiness, hurt feelings, and, most of all, strife, and to pass your estate to those whom you wish to benefit.

Donald A. Kress is a Director and Chairman of Coral Gables Trust Company’s Trust Administrative Committee. He can be contacted at 786.497.1212 or dkress@cgtrust.com