Imagine you have spent decades building a successful business, purchasing investment properties, and saving for your children and grandchildren. You have a will that names your beneficiaries, so you assume everything will pass as you intend when you die. But then you realize that your oldest child is only 16, your business partner has no idea what would happen to your ownership interest, and one of your most valuable properties is located in another state. Suddenly, a basic will may not be enough to handle everything you have worked to build.
A basic will can be an important part of an estate plan, but it may not be enough for every family or financial situation. Certain assets, family circumstances, and long-term goals can create estate-planning needs that go beyond simply naming who should receive your property.
Signs That a Basic Will May Not Be Enough
If any of the following eight situations sound familiar, it may be time to look at whether a more comprehensive estate plan could provide greater protection, flexibility, and control.
1. You Own Real Estate in Multiple States
Owning out-of-state property can complicate the administration of your estate. While a will can explain what you want to happen to your real estate, it does not necessarily eliminate the legal proceedings that may be required in each state where you own property. For example, imagine you live in Texas but own a vacation home in Colorado and rental property in another state. When you pass away, your family may have to deal with the probate process in Texas as well as additional proceedings in the states where you own real estate. This can create additional time, expense, and administrative work for your family.
Depending on your circumstances, a trust or another estate-planning strategy may allow you to transfer certain real estate more efficiently. The right approach depends on how you own the properties, their value, and your broader estate-planning goals.
2. You Own a Business or Partnership Interest
A business can be one of the most complicated assets to address in an estate plan. Simply stating in your will that you leave your business to a particular person may not answer the questions that arise after your death. Who will control the company? Can or should you transfer your ownership interest, and how? Does your business have a buy-sell agreement? What happens if your business partner does not want to work with the person you named as your beneficiary? When your business is a significant part of your family’s assets, these questions matter even more. Your will can complement your business plan in succession, ownership, management, and transfer of interests.
3. You Have a High Net Worth
Not everyone who has a complicated estate is a billionaire. Even an individual with a significant estate, including a home, retirement accounts, investments, business interests, life insurance, and other assets, can easily build up an estate that needs more planning than a simple will.
Estate planning is not only about who gets what, but how, when, and under what conditions. A high-net-worth estate may need strategies involving trusts, lifetime gifts, business interests, tax planning, charitable giving, and asset protection. The aim is to develop a plan that looks at the estate as a whole, not individual assets.
4. You Assume That Estate Taxes Will Be Levied
Another reason to consider more than a simple will is estate taxes. That does not mean everyone with substantial assets will be subject to federal estate tax. The rules are complex, and other factors, such as previous taxable gifts and transfers between spouses, may influence the amount subject to the rule. Tax laws may also change.
If you think that your estate may be close to the applicable exemption, you may not have as many options available to you if you wait until after your death to consider the tax implications. Planning can help you arrange gifts, trusts, charitable transfers, and other arrangements to minimize potential tax exposure. Because estate and gift tax rules are highly technical, you may also benefit from coordinating your estate plan with qualified financial and tax professionals.
5. You Have a Dependent With Special Needs
If you have a child or another dependent with special needs, deciding who receives your assets may be only one part of the equation. You may also need to consider how an inheritance could affect the person’s eligibility for certain government benefits or other forms of support. Leaving a large inheritance to someone with special needs may have unintended consequences. If appropriate, a special needs trust can pass on financial resources without giving the money directly to the person. Your estate plan can also specify who will manage those assets and how you want them used. This can provide more continuity and security for a loved one who might need financial management support long after your death.
6. You Have a Blended Family
Estate planning can become more complicated when you have children from a previous relationship or stepchildren. You may want to provide for your current spouse while also ensuring that certain assets eventually pass to your biological children. Perhaps you want to leave something to a stepchild who has become an important part of your family. Or perhaps you are concerned about what could happen to your assets if your surviving spouse remarries.
A basic will may not provide the level of control needed to accomplish all of these goals. Trusts and other estate-planning tools can sometimes establish specific rules for how assets are used during a surviving spouse’s lifetime and where those assets go afterward. The more complicated your family structure becomes, the more important it can be to make your intentions clear and coordinate the various pieces of your estate plan.
7. You Want to Control How Your Assets Are Distributed
Perhaps you do not simply want to leave your children an inheritance. You want to make sure that inheritance is used thoughtfully and protected for the future. For example, you might want your children to receive money for education, housing, or other significant expenses rather than receiving a large lump sum at a young age. You may also have concerns about a beneficiary’s financial judgment, creditors, divorce, or other circumstances.
A trust may provide you with greater flexibility in distributing assets to beneficiaries. You can set the terms of asset transfers rather than giving them outright at your death. This can be especially valuable when you want your estate plan to continue accomplishing your goals years or even decades after you are gone.
8. You Want More Privacy, Flexibility, or Probate Planning
Another sign that you may need more than a basic will is that you have concerns about what happens during the administration of your estate. A will generally becomes part of the probate process when it is used to transfer assets that are subject to probate. Depending on the circumstances, probate can involve court filings, deadlines, expenses, and administration that your family must navigate after your death.
Some people prefer to keep estate details private or want certain assets to pass outside probate. Trusts and other estate-planning options may provide alternatives for handling particular assets and can give you greater flexibility in how those assets are managed and transferred.
Your estate plan should reflect your actual goals, assets, and family circumstances rather than relying on a one-size-fits-all document.
A Basic Will May Be Only the Beginning
A will can serve an important purpose, particularly for naming beneficiaries, appointing an executor, and expressing your wishes for your property. But as your financial situation or family circumstances become more complicated, your estate plan may need to do more. A simple will might not be sufficient if you own property in more than one state, run a business, have a lot of money, have a dependent with special needs, or have a blended family.
Your objectives may also go beyond just determining who receives your assets. You might want to protect an inheritance, control when a loved one receives it, leave a loved one a gift, or make the transition easier for your family. That is why you should approach estate planning as a complete strategy rather than a document you sign and put in a drawer. An experienced estate-planning attorney can review your assets, family circumstances, and long-term goals and help determine whether a will alone is appropriate or whether your situation calls for additional planning tools.
At Nelson Law Group, we bring both legal and business experience to the estate-planning process
Call Nelson Law Group Today!!
When it comes to protecting your family’s future for years down the road, it is imperative to have an estate planning attorney in your corner at all times. Call our knowledgeable staff at Nelson Law Group, PC, with any questions. Our staff is always available.
For more information about founding partner Brett A. Nelson, click here.