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Is a Will All I Need?
Is the solution to estate planning simply to run out and write up a will? For many people, a simple will is sufficient to address all of their estate planning needs. However, a will is not the only consideration. As General Eisenhower advised — it is the planning process that is more important than the actual plan. It is not the will per se, but the fact that we sit down and contemplate what we desire that makes estate planning so important. Failing to properly plan may defeat the intent of even a well-written will.
When we die, there are basically two things that can happen to our property. First, property can become part of our estate. Second, property can pass directly to some other person by operation of law. Which of the two will occur depends on how we own the property in question. Property that we own outright in our own name passes upon our death into our estate.
Property that we own jointly with another may become part of our estate, or it may pass directly to the other party by operation of law. Property that is owned jointly with a right of survivorship passes directly to the surviving joint owner "by operation of law." Joint property that is owned without a right of survivorship passes into a person's estate. Consider the following examples:
- A and B own property jointly with a right of survivorship. If A dies, B becomes the owner of the entire property. Real estate and bank accounts are two examples of property that is commonly owned jointly with a right of survivorship.
- A and B own a piece of real estate together, but do not have a right of survivorship. If A dies, A's share in the real estate passes into A's estate, and A's heirs may become the part-owners of the property.
Only property that is part of a person's estate is subject to the person's will, or absent a will, is subject to state inheritance laws. Is this a problem? It can be. Consider Example 2. Assume A and B are firefighters who also are partners in a vacation home. Each owns an equal share of the vacation home without a right of survivorship. If A dies, his share in the vacation home passes into his estate. As a result, when A dies, B will have a new partner. Initially the new partner will be the estate of A, but eventually it may be A's heirs. That could be A's surviving spouse, parents or siblings. It could also be A's estranged wife or A's minor children (who as minors cannot make any decisions regarding the property), creating a potential nightmare for all concerned.
As if that is not bad enough, consider Example 1. If the vacation home is owned by A and B as joint tenants with a right of survivorship, and A dies, B will become the sole owner of the vacation home. Is that a problem? Why do I waste your time with these boring examples? Because if A had a simple will and did not consider how he owned the vacation home with B, his intention to leave his share of the vacation home in his will may fail.
Assume A is divorced with two children, C and D. Assume A's will states that C is to get A's share in the vacation home, and D will get another piece of property. The problem is that upon A's death, the vacation home passes to B by operation of law and C gets nothing. This is an example of how a will can be defeated, and why it is absolutely essential to discuss your specific situation with a lawyer in order to formulate a plan.
Estate planning is particularly important in modern times given the complexity of many relationships, including those with ex-spouses, ex-ex-spouses, stepchildren, half-siblings and domestic partnerships. This planning process forces each of us to discuss some fairly uncomfortable subjects such as potential guardians, organ donations and funeral arrangements. For example, consider my personal situation — my wife's family prefers cremation and small private funeral services. If I am killed in the line of duty, I want a full fire department funeral, including sufficient funding to ensure libations for all attendees. By sitting down and discussing this, and by placing my desires in my will, the likelihood of an unnecessary confrontation between folks like my brothers (a firefighter and a police officer) and my wife's family is lessened.