Guest post by Jennifer K. Halford, Esq.
Every time I meet with a client to discuss an estate plan I am reminded that no one likes to think about what will happen after they have passed away.
It is unpleasant to think about those difficult questions: What will happen to your family? What will happen to your home and assets? Who will take care of your business?
Because it is so difficult, I find that many people choose to avoid the tough questions. Or they copy a will that they found online because they believe that it will protect them and their family. But they may be wrong.
You may think your will protects you in ways that it really does not. So what things should you know about your will?
1. It won't keep your estate out of probate: In most instances, your heirs will have to probate your will so your assets can be distributed. Most people have to hire an attorney to help them. The probate process is expensive and lengthy. However, there are ways to avoid probate . You can use these estate planning tools in addition to your will.
2. It won't protect your health: Did you know that in some states, if you need major medical treatment and are unable to communicate, your spouse (or parent if you are over 18) cannot make health care decisions for you?
The kindest thing you can do for your family is create a living will and health care power of attorney. These documents allow you to express your medical preferences now in case there comes a time when you are unable to speak for yourself. The durable power of attorney for healthcare also allows you to designate a person who can make end-of-life care decisions for you.
3. It won't update itself : Don't throw your will in your junk drawer and forget about it. Review it annually to ensure that your executor and beneficiaries are correct.
4. It may not be the best way to transfer your business : There are a number of succession planning strategies for small businesses that you should consider to limit unnecessary gift and estate taxes.
5. It may cost your estate money: An attorney will likely need to be hired if your will goes through probate. In fact, administration of your estate in general may cost money. The proceeds from a life insurance policy can help offset these costs.
Jennifer K. Halford is an attorney whose practice focuses on business law and estate planning. She is also a professor at California State University, Chico, where she teaches Entrepreneurial Law.