WHEN DO YOU REALLY NEED A WILL?
September 1, 2022 | View PDF
There are a few ways to approach your estate planning and even if you don’t think you have anything you most likely have more than you think. Some people however, do literally have nothing and live month to month and have more debt than assets, but most people do have enough to where they should at least talk to a lawyer.
But let’s say you live month to month and have next to nothing in the bank. Let’s also say you have a car payment, you rent a place to live and maybe credit card debt where you only make minimum payments. Overall your debt is significantly larger than your assets. An heir comes to see me after your death. I would discuss the actual debt and assets but I may talk to your heir about consideration of walking away from everything since they bear no personal responsibility. A Will is always wise to have but probably not worth using in this scenario.
Next scenario you have $4000 in the bank with only your name on it, a paid for car and you rent where you live. You have more assets than debt. Your heir seeks a consultation. Again, having a Will is always good and may well be able to do a Small Estate distribution through the Probate Court. But less costly and a bit easier is the ability to recover less than $5,000 from a bank with appropriate paperwork found in the Code of Alabama and an Alabama Department of Revenue form MV 5-6 to transfer the vehicle to an heir when the estate will not be probated. As well before your death you can put another’s name on your bank account or do a POD (Payable on Death) with the bank and even putting another person on your vehicle title with John or Don Doe.
Next scenario, you are solvent, have a paid for house, one or more vehicles, a boat, bank accounts and investment accounts. You visit two different attorneys and both have workable solutions for estate planning.
I have a good friend that tends to follow solution number one which is to set up a trust. Trusts are generally more expensive to set up and everything that has a deed, title or other evidence of ownership must show the trust as the owner so that the trust can legally move items to the beneficiaries after your death via the trustee. A pour over Will is done should some item or items be missed so that probate can be done if necessary in order to transfer the asset(s) to the beneficiaries or heirs. The goal in avoiding probate is missed if you don’t keep up with the trust owning everything. An example might be if you don’t place a rural real property deed in the name of the trust but rather the deed is in your name.
Solution number two is having a Will. Items for beneficiaries can be specific or as a part of the residual (everything left over). Specific items left to beneficiaries are mandatory gifts provided that all debts are paid and if necessary the residual estate can be sold for debts. If the debts are still not covered then even specific gifts may be equally sold to pay debts. If desired, a hybrid may be done using a Will; possibly including a POD for financial accounts, a TOD (Transfer on Death) for investment accounts or simple beneficiary designations, a life estate may be made where a certain beneficiary or beneficiaries receive the real property after your death, or a beneficiary or beneficiaries may be added to your deed with right of survivorship.
Finally, should you have assets and you don’t have a Will (or trust or other estate planning) then as I tell my clients, “the State of Alabama has a Will for you, and it may not be what you want”. If you die with nothing in place that can distribute your assets then you will have to hope someone in your family steps forward to probate your estate. That person will be bonded based on the value of your assets with an inventory to follow sixty days after they are appointed Personal Representative of your estate to include actual values of the assets. How much fun and time to go through your loved one’s stuff and appraising it all such as pots and pans, $225.00, den couch $350.00, gold coins, $17, 280.00, etc. Bonding of the Personal Representative and an inventory of the assets is required without a Will, but generally in a Will it will say the Personal Representative shall serve without bond and no inventory will be required. I can pretty much guarantee you the cost of a Will is considerably less than the cost of a bond and the amount of time you require to figure out an inventory with actual values.
If you haven’t seriously researched needing a Will, it’s probably time to talk to one.
This article is informative only and not meant to be all inclusive. Additionally this article does not serve as legal advice to the reader and does not constitute an attorney- client relationship. The reader should seek counsel from their attorney should any questions exist.
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