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Guarding Your Wealth for Senior Citizens
When A Will Isn’t The Way
Your wishes may not
be carried out if you are not careful
By Jeffrey D. Voudrie, CFP
 August 2, 2006 - Many people have the mistaken
impression that their Last Will and Testament determines what happens to
their possessions when they die. As John, a reader in Marysville, TN
learned, that’s not necessarily true.
Time and time again we are told about the
importance of having a Last Will and Testament (Will). “What’s a Will?”
we ask. “It tells who gets what when you die,” is the classic response.
So we come away thinking that by taking the time to draft our Will that
we have put our affairs in order. Unfortunately, it is not that simple.
When transfer of ownership of an asset is based on
your Will, that item is said to ‘pass through’ your Will. There is even
an elaborate, mandatory legal process involving the courts that ensures
your Will is handled just right. This process is called Probate. Most
heirs end up using an attorney to navigate the Probate process for them.
As a result, Probate normally takes approximately 12 months and can
easily cost thousands of dollars.
Many things you own will not ‘pass through’ your
Will. Therefore, what you’ve stated in your Will has no affect on who
receives them. The first group of assets that avoid your Will are those
that name a beneficiary. Common examples of these assets are life
insurance, annuities, and retirement accounts.
For instance, I own two large life insurance
policies on my life. If I were ever to pass away prematurely, it is
important for me that my wife and children be taken care of financially.
When purchased, I had to decide who would get that money when I died. I
named the beneficiaries. Now, if I pass away while those policies are
still in force, the beneficiaries I named on that contract are the ones
who will get the proceeds, regardless of what my Will says.
The proceeds of a life insurance policy pass by
contract, not by Will. All beneficiaries have to do is present a
certified copy of your death certificate to the insurance company and
the money is paid out. No Will. No Probate. No attorneys or courts.
Better yet, the beneficiaries get the money in weeks instead of months
or years.
It works the same way with any asset on which you
have named a beneficiary. Company retirement programs, IRAs, annuities
and even bank and brokerage accounts allow you to name a beneficiary.
Properly planned, this can be an effective way to distribute assets at
your death.
The second group of assets not controlled by your
Will are those that pass by Title. Real Estate and vehicles are a
perfect example but this can also apply to bank and brokerage accounts.
It’s common for most couples to own their assets jointly. When one
spouse passes away, that asset passes by title and becomes the property
of the other spouse, regardless of what is in your will. Since your Will
is not involved, Probate is avoided.
Thirdly, assets owned by a trust do not pass
according to your Will and thus avoid Probate as well. The most common
type of trust is a Revocable Living Trust. You decide who receives what
when you set up a trust. Assets such as bank and brokerage accounts,
vehicles and real estate are then titled in the name of the trust. A
trust can be the beneficiary of your life insurance policies. It is also
easy for personal property to be owned by a trust. Properly funded, a
Living Trust can allow someone to avoid Probate altogether.
It is only assets that don’t have a named
beneficiary, that don’t pass by title and that are not owned by a trust
that pass through your Last Will and Testament. So instead of being the
main document that determines the distribution of your estate, it ends
up being the last.
Everyone should have a Last Will and Testament. You
need to make sure that you coordinate your desires between your Will,
your beneficiary designations and the ownership of your assets.
Otherwise, your wishes may not be carried out.
If you have a specific question or would like more
information give me a call toll-free at 1-877-827-1463 or you can also reach me by email at
jeff@guardingyourwealth.com.
About Guarding Your Wealth:
“Guarding Your Wealth” is a
nationally syndicated weekly personal finance column written by Jeffrey
D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group,
a private wealth management firm in Johnson City, TN, that employs sophisticated proprietary
strategies designed to protect and grow its clients' investments. Please
visit his website,
www.guardingyourwealth.com to read past articles under the Guarding
Your Wealth Article Archive.
Guarding Your Wealth for Seniors are
a collection of columns by Voudrie that deal with issues of particular
interest to senior citizens.
Click here
for all columns.
In addition to being a nationally
syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to clients
nationwide.
Looking for an energetic expert who
is passionate about financial and wealth management? Mr. Voudrie is an
excellent speaker who will excite and inspire your audience. Mr. Voudrie
is available for a limited number of speaking engagements, television
appearances and radio talk shows. For booking information, email e-mail
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