American's Favorite Estate Plan Idea? Do Nothing!

Category: Estate Planning

I have written before about what happens if you don't have a will ("Married and Don't Have a Will? New Jersey Has One For You"), but I thought the beginning of this article summed it up nicely:

Writing a good will � it's all relative - Personal Finance - MSNBC.com: "No one wants to acknowledge their own mortality, especially in writing. This is probably why avoiding doing so is the favored estate plan for many Americans. "

The article goes on to point out that 70% of adults have no estate plan (and think how many have children????); and that 1 out of 3 affluent adults have no estate plan (a gift to the government in taxes).

If you don't make a Will it doesn't mean that you don't have one - it just means that you didn't write the one you have. For those who don't write their own Will, there are intestacy statutes that say who gets what and how. A comment from the article: "Letting the state decide may save the decedent a few hours of thinking through their exit plan, but it can be exceedingly costly and aggravating to those left behind. Ultimately leaving a will is a much better legacy than dying without one."

The law empowers you to make your own choice about who gets what and how - a failure to plan leaves you with a plan, but that plan may fail your family.

The Emergency "Vacation" Will

Category: Estate Planning

Having just gotten back from vacation (in case you were wondering where the blog went) I have been thinking about the not infrequent phone calls I get that go something like this “Help, I need a Will. I have 2 children and my wife and I are going on vacation in 5 days and we don’t have Wills!!!!”

Well, the first reaction (to be thought and not necessarily said to the prospective client) is – if you have children, why don’t you have a Will? A Will is the only place where you can name Guardians for minor children. In a Will you can create trusts to hold and manage assets passing to your children – minor or otherwise (Remember what you were like at 18/21? Would you give large sums of cash to your younger self?).

Of course, a Will isn’t a fun think to think about – it’s more of a necessity, like health insurance. And even though it is far safer to fly than drive, many people only think of the fact that life’s little necessity of a Will is missing when they are taking a long trip somewhere. Hence the emergency “Help!” phone calls.

What to do if you need a Will in a hurry? Get a referral to an attorney who does a lot of estate work. A good estate planning attorney can prepare a “temporary” Will for you on rather short notice. In this Will, you can expect to name Guardians (as well as Executors and Trustees) and set up a trust to hold in assets for your children. What you will likely NOT get is any kind of tax planning to save taxes when passing dollars to your children (remember (1) in New Jersey, if you and your spouse both die in short proximity to the other, it is likely that only one exemption of $675,000 will exist; all assets above that will be subject to estate taxes, and (2) life insurance death benefits are part of your taxable estate unless you have done planning to remove them from your estate). This type of planning takes review and analysis of your assets, which likely cannot be done under your time constraints.

The moral? While it is better to have some Will then no Will, it is best to have planning done in advance, not under pressure, so a will can be created that best meets your needs.