estate planningwills

Debunking Estate Planning Myths & Developing Wealth, Pt 3

By April 11, 2012No Comments

In Part 2 of this series, I continued discussing the basic estate planning tools, and addressed life insurance.  Another basic tool and necessity that should be in place for loved ones upon your transition is a will. The Shark Free Zone talked about this topic before, but it is so critical that it bears repeating. Having a will in place if you are an unmarried parent or a guardian of a disabled individual – minor or adult – is vital.  If you do not have a will in place that designates a guardian for your child and you die, the state, not your brother or your cousin who you told to take care of your child, will decide on the custody of your dependent.  The judge will not care about what you said to your brother, all that will matter is what was in the will.  If a will is nonexistent, then what will matter is biological parentage. By having a valid will in place with a guardianship provision, you can make a bona fide argument to the court about who should care for your child or dependent when you pass, not the other way around.  Let’s look at an example:

The Money Jar

Photo: Chris Scott, FL

Bobbi Tina is the minor child of Wilma Dallas and Bobby Black who have been divorced let’s say since before Bobbi Tina’s first birthday.  For the sake of this example, let’s say that Bobby Black has substance abuse problems and hasn’t developed any type of relationship, father-daughter bond with Bobbi Tina.  Let’s also say that Wilma lived in Illinois and did not designate a guardian for Bobbi Tina.Wilma dies in a swimming pool accident, leaving her fortune to Bobbi, who is only 16 years old. Guess who the courts will likely deem appropriate as a guardian for Bobbi Tina, as long as he’s not a felon?  Yep, the hypothetical, substance-abusing, absent father, Bobby Black will be designated guardian and have liberal access to Bobbi Tina’s million dollar money jar.

It’s happened before where a mother died intestate and she and the child had been estranged for years from the biological father, but just because there was no will and then no guidance in the will, the child was given to the estranged biological father.  Consequently, a will is critical for parents or individuals taking care of the disabled.

So answer this question: Who will take care of my child/children/disabled sibling/ if something happened to me tomorrow?

A will is also important for individuals in high-risk professions who are more likely to become parties to law suits than other professionals.  Why? Because the creditor claim period is only 6 months. Therefore, after the probate estate is open, individuals or entities with a claim against the estate only have 6 months to make that claim.

Once the 6 months is over, creditors cannot bring a claim against the estate, despite how large or how valid the claim may be.  Their hands just won’t fit the money jar.

Finally, like life insurance, another advantage of a will is the peace of mind it brings knowing your loved ones are protected.

Part 1 | 2 | 3 | 4 | 5

 

Leave a Reply