Hello to all of the procrastinators out there. Nine months of 2017 have passed and you have still not taken steps to protect yourself and your family with a will or a trust. Why not? Here are the five most common reasons:
I’m never going to die: Clearly, the first reason not to have a will or a trust is unrealistic. The saying is “nobody is getting out of this alive.” In spite of this, it is amazing how many people put off creating a will or a trust because they are afraid. They think planning for a will or a trust will cause them anxiety about their own death. The easy solution to this problem is to think about creating a will or a trust to protect the people you love. You do not have to face your own death to create a will or a trust; just focus on how you want to protect those you care about. Without a will or a trust, they are defenseless. And, young or old, almost all of us have loved ones we want to protect. Even if we are elderly and alone and do not have any loved ones, many of us want to create a legacy for the charities we care about. If we are young and have children, we are already involved in protecting them. Without a will or a trust, your children could very well end up in foster care when you die. Having children means taking steps to protect them. What good is funding their college education if you have not created a mechanism to distribute your property to them upon your death? How are you helping?
I have no estate: How about the excuse that you have no estate to protect? Do you have a home? A car or a boat? A bank account? Personal property like furniture, jewelry? All of that becomes part of your estate. If you don’t make plans to distribute your property in a will or a trust, the state will decide for you.
Many people I talk to think that putting their child on the deed to their property solves their problem about not having a will or a trust. But, there are tax and other consequences of doing this. Let’s say you bought a house for $50,000 and market value is now $100,000. If you put your child on the deed, now, that child “takes” his interest in the property at the value you paid for the property, not at market value. That means, if the child sells the property when you die, the child will have to pay tax on the difference between $50,000 and $100,000. If the child takes the property when you die through a will or a trust, however, the child takes the property at market value and when they sell it for $100,000, no tax is owed. And, there are other reasons not to put your child on your deed. Once you do so, you expose yourself to the child’s creditors. Those creditors may have claims on all the child’s property, including property formerly owned solely by you.It’s too expensive: Have you ever purchased a big screen TV? The average cost of a will is about the same as a big screen TV. Trusts are more expensive but do not require probate. Legal fees for making the probate filings can easily become far more costly than a trust. I know some people are using will forms provided online and a word of caution about those. First, the online services do not provide legal advice. It is one form fits all and if you do not fit into the form, too bad for you. After hundreds of years, certain common language has developed that is used in a will or a trust and expertise is required to use that language. You would not go to a plumber to perform surgery on you. Why trust something as important as your family to chance? Creating a will or a trust is your last act of love and affection for your family. What price can you put on that?
My family will take care of everything: Whoa. The excuse that “my family will take care of everything” is simply not true. It is amazing how many families fight during the probate process, with or without a will. I am not talking about fights over huge estates. Otherwise normal families allow themselves to be torn apart arguing over property. Without a will or a trust, the arguments can take on epic proportions. “Dad loved me best” and wanted me to have the gun collection, “Mom told me she wanted me to have the diamond ring”. Old wounds re-open, childhood memories come flooding back and family nightmares are common during the probate process. Some people think that the best approach is to leave everything to one child, counting on that child to distribute everything to his or her siblings. Keep in mind that if you leave all your property to one child, that child is under no obligation to share it with siblings unless you specifically put your intention in writing. Even if that child is attentive to your wishes, what if that child has a spouse who wants all the property for themselves? The only way to resolve the situation is to speak through a will or a trust and make known your wishes while you are alive.The bottom line is: protect your loved ones. Make a will or a trust and do it now. I offer no-charge seminars open to the public that discuss wills, trusts, powers of attorney, living wills and other estate planning topics. The next seminars are at Rod N Reel Restaurant in Chesapeake Beach on Oct. 26, 2016 and another on Nov. 9, 2016, from 6:30-8pm. Space is limited so call 301-855-2246 to reserve your seat.
About the Author: Lyn Striegel is an attorney in private practice in Chesapeake Beach and Annapolis. Lyn has over 30 years experience in the fields of estate and financial planning and is the author of “Live Secure: Estate and Financial Planning for Women and the Men Who Love Them (2011 ed.).” Nothing in this article constitutes specific legal or financial advice and readers are advised to consult their own counsel.