Morris & Morris, A Law Corporation - Estate Planning

Arcadia California Estate Planning And Probate Blog

How can I control how my heirs spend their money?

If you have been thinking about your estate plan recently, likely, you will already have a good idea of the people whom you would like to inherit your estate. You may want to leave your estate to your children or grandchildren. If this is the case, you may have some concerns about whether inheriting a large sum of money will be detrimental to their long-term well-being. If a person inherits a large sum of money when they are not wise enough to make smart decisions with it, they may be frivolous with their inheritance.

Luckily, there are ways that estate planners can control the way that heirs spend their inheritance. This means that, to a certain extent, you will be able to prevent a grandchild from wasting their inheritance on partying, and ensure that they invest in it wisely. The following are some tips for setting provisions on trusts.

What documents do you need for medical and financial plans?

You have many decisions to make when you're creating an estate plan. You shouldn't become so focused on what's going to happen to your assets that you overlook the importance of setting plans for your end-of-life care. There are a few things that you should get together so that your loved ones don't have to try to figure everything out on their own.

As part of your plan, you should establish a living will and set up power of attorney designations. These can help to ensure that your wishes are followed even if you're incapacitated. In order for them to be legally valid, you have to take care of them while you're mentally able to make these decisions and understand the gravity of them.

Writing a will when your child is born

People often put off writing a will. Maybe they think it's too confusing. Maybe they think they don't really need one. Maybe they plan to do it and they just don't have the time.

One of the events in life that really makes the need for a will more clear, though, is when a child arrives. The first day with that new child in the hospital, holding them and looking at them under the fluorescent lights, you may realize that you want to get started on that estate planning.

What should you do with an old will?

You wrote a will 15 years ago or so, and it addressed your needs at the time. Those needs have changed a lot in the last decade and a half. You have more assets. With the birth of grandchildren, you have more potential beneficiaries. Some of the things in your older will may not even apply, such as leaving specific assets to people you know no longer want or need them.

You decide, wisely, that it's time to update your will. You draft another one. What should you do with that old document? Keeping it safe was so important for so long, giving your family the assurance they needed, but now it's invalid and useless. What do you do?

Remember that a beneficiary takes precedence over a will

Many people use life insurance policies as a big part of the assets they plan to pass on to their children. Even if they do not have significant assets saved up, they know that a large policy is guaranteed to give their children a financial boost when they pass away. They may spend years or even decades paying into it.

One important thing to remember is that, while the policy can look like part of your estate, it does not always get divided like the rest of your estate. Specifically, the beneficiary that you pick when you buy the policy is going to take precedence over whatever you write in the will.

Consider an annual review of your estate plan

Many people think of estate planning as a goal that they need to accomplish eventually. They put it on a list and then cross it off when they get done with it. They feel prepared for what the future holds.

The reality, though, is that that is not good enough. Don't think of estate planning as something that you need to do once, allowing you to check it off and then count it as something you have already done. That's better than having no plan at all, but you really need to make it a consistent process. You need to review your plan. You need to make sure it's up to date.

Most Americans lack even a basic estate plan

Most people understand the need for a will or an estate plan. They know what it does. They know how it helps their family. They know that they need one.

But the reality is that most people -- more than half -- don't have one. Even that says nothing about more complex plans that use trusts, powers of attorney, advance directives and the like. The percentage of people with intricate plans designed to maximize their advantage is very small indeed.  So, why does this happen? Why is there such a disconnect? Here are a few potential reasons:

Protecting your will from a challenge when you disinherit someone

Families are as complicated as the people who belong to them. It is not unusual for the dynamics of your family to change as your children mature and age. Someone whom you once viewed as trustworthy could later become someone who makes terrible decisions or who struggles with addiction.

It is, unfortunately, common for parents and grandparents to realize that a family member for whom they once wanted to leave an inheritance may no longer deserve an inheritance or would misuse those assets to support a dangerous habit. Choosing to disinherit someone can be a difficult decision, but that doesn't necessarily mean it is the wrong choice.

Why you need to consider creating a living will for yourself

For many people, an estate plan is simply a way for them to officially record their wishes about who gets what when they die. However, an estate plan can and arguably should be far more comprehensive than simply notes about your assets.

If you have children, for example, your estate plan should absolutely include a clause naming a guardian for your child in the event that something happens to you. You may also want to consider expanding your estate plan to include not only a will for when you die but also a living will in case you wind up medically incapacitated.

Why should someone challenge a will?

A will gives the final say on what happens to someone's estate. It splits up money among heirs, instructs them on how to divide physical property and turns over assets to the next generation. Some wills are very simple, essentially just telling their heirs what assets exist and giving them a chance to divide things up as they see fit, while others offer far more detail and really lay out a plan that the heirs must follow.

Generally speaking, this process happens without issue. However, there are cases where people decide to challenge a will. They feel that it should not have the final say and that the family needs a different resolution. Why would someone do this? Below are a few potential reasons:

  • The State Bar of California
  • Expertise Badge 2020
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