You know you need life insurance to protect your loved ones. But do you know that having a will is equally important to protect against risks?
Without a will, your family faces a number of potential financial disasters. If you think you don’t need a will because you aren’t wealthy or only own one home, you may be surprised to learn how not having a will leaves your loved ones open to a number of serious and costly problems.
Nerd Wallet’s recent article, “5 Hidden Dangers of Not Having a Will,” lists some of the most challenging issues, reminding you why it’s so important to have an up-to-date, signed will.
- Spendthrift heirs. It’s pretty rare that a child can handle a large sum of money all at once. Some heirs are just bad at handling money, and others may have addiction issues—like gambling or abusing illegal substances. Either way, handing them a windfall can enable bad habits and anger other beneficiaries. Those who didn’t get as much might hire lawyers to fight the proposed distribution.
- Unexpected or contested heirs. Sometimes there can be confusion and questions about the actual beneficiaries of an estate. Someone might appear unexpectedly during the settlement.
- Property (and probate) in more than one state. If you have property in several states, dying without a will can result in some of your estate having to go through probate in multiple states. This can be costly and time-consuming—particularly if each beneficiary hires an attorney in each state. Let’s do a quick math problem: there are three beneficiaries with estate property in four states. How many attorneys might be hired? Answer: 12.
- Fraudulent wills. If there’s no will in place, it gives the opportunity for a treasure seeker to make a fake, particularly if you have a big estate. Remember Howard Hughes? He died with no immediate family and no will. Within a short period of time there were several purported wills claiming to be the legitimate one. His estate spent millions defending against the fake documents. It’s harder to do this these days with more sophisticated analysis tools, but why subject your heirs to potential headaches and unnecessary legal bills?
- Beneficiaries don’t like the appointed court executor. Without a will, there’s no designated executor, so the probate court will appoint one—typically an attorney. There’s no way to know how well or poorly the beneficiaries will get along with this person in charge of taking inventory, appraising and distributing the estate. For the most part, family members will do this faster than any court-appointed executor, who has little incentive to hurry things along.
Having a will prepared by a knowledgeable estate planning attorney will help your family avoid these five issues and more. It will also send a clear message that you cared enough to take care of them—a worthwhile legacy.
Reference: Nerd Wallet (August 3, 2016) “5 Hidden Dangers of Not Having a Will”