Do you currently control what will be left to the heirs of your estate if you suddenly passed away? Many people don’t. In fact, a lot of people don’t even bother to write out a will. Over 60% of Americans don’t have a will. This is a legally precarious situation to put yourself, your family, and estate into. If you die without a will, anything can happen to your estate, and your heirs will be on their own to clean up your posthumous legal mess.
The State Will Decide Who Are Your Heirs
If you don’t have a will, living will, trust, or similar legal mechanism in place to protect your estate, and legally designate who is entitled to such, the legal system of your state of residency will decide for you. A court, state designated probate sale, or state-designated legal representative can decide who your heirs are, what they are entitled to, and how to bequeath your estate.
A probate sale can be held to liquidate your estate and pay off outstanding bills and/or heirs. Or, lengthy court proceedings can be held to determine who are your heirs. Usually, the living and closets relatives are legal heirs. However, potential heirs can contest legal decisions and fight for a piece of your estate.
Anyone Can Claim To Be Your Heir
Anyone that you knew in life can reappear after your death and claim to be an heir. Like a former lover, former business partner, former friends, or estranged relatives. Whether or not they actually get a piece of your estate is beside the point. People claiming to be heirs to your estate can drag out legal proceedings for years or decades. This can prevent your rightful heirs from claiming their stake.
Worse, such specious legal claims to your estate can wind up bankrupting your estate. Your heirs, or the probate court supervising your estate, may need to use estate funds or liquidate the estate to pay for legal fees to fight off claims. In the end, your estate may go bankrupt fighting bogus claims and leave nothing to bequeath your rightful heirs.
Establish A Will, Living Will, or Trust
You have numerous legal options to protect your estate and control what you leave to your heirs – like leaving behind a will. This is a legal document that details your estates, who are your heirs, and how your estate will be divided among your heirs. However, unless a will is frequently updated, it becomes dated. Any monies, assets, and properties accumulated post-will can be fought over or contested in court.
A living will names a power of attorney or executor who will execute the wishes of your will in the event that you become mentally and/or physically incapacitated. However, you must choose your power of attorney or executor wisely. In the event they gain power over your will, they are legally empowered to do whatever they wish.
A trust is a legal arrangement between a trustor, someone like a lawyer, who executes the will of the trustee, you, on behalf of yourself and beneficiaries. A trust supersedes the decisions of a probate court, whereas a will cannot. Also, a trust-enforced will is very hard for unnamed and interested heirs to contest. A trust may cost you thousands of dollars and is more expensive than a will or living will, but you can comfortably control you leave to your heirs.
Take Control Now
Sometime in the next few decades, over $30 trillion in wealth will transfer from the Baby Boomer generation to Millennials. This will be accomplished through the execution of wills. With estate taxes, heir contesting, probate courts, and many other factors, a lot of that money may not be entirely transferred. Do everything you can to control what you leave to your heirs while you have that control.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.