Gain Peace of Mind About Your Family’s Financial Future
Putting solid estate planning tools in place is an important part of ensuring the financial future of your family. Establishing a will, writing a living will in Kentucky or assigning a power of attorney over healthcare can make a significant difference in how your family will have to deal with issues at the time of your death. Without putting simple estate-planning tools in place, you are turning over your estate to the state to decide what to do with your assets and your children’s care.
We will work with you to create an estate plan that works for you and your family and will continue to work during your lifetime and after. We will guide you throughout the entire process so that you can make the best legal decisions for your family. Your loved ones will have a trusted advisor that they can turn to after you are gone.
What’s the Difference Between a Last Will, a Living Trust and a Living Will?
- Last Will– Used to distribute property to beneficiaries, specify last wishes, and name guardians for minor children. It is an important part of any estate plan. Without one, the courts will make the critical decisions for you.
- A Living Trust– Used to transfer property to beneficiaries. But unlike a will, a living trust is not usually subject to probate court.
- A Living Will– Lets you outline important healthcare decisions in advance, such as whether or not to remain on artificial life support. A Living Will includes a Health Care Surrogate that allows you to appoint someone you trust to make critical health care decisions for you.
Schedule a free consultation with us to decide which option is best for you!
Will Basics
Introduction to Wills
A will is a document you create to control who receives your property, who will be the guardian of your children and who will manage your estate upon your death.
The importance of a will cannot be overstated. A will is perhaps the most important legal document a person ever signs. Yet, over 70% of American adults do not have a will. “Not enough time,” “I cannot afford an attorney,” “I am too busy to think about it”, “I do not have anything” — are all common reasons why people do not prepare wills.
Through our interview process, you will be asked a series of simple questions in plain English. We will generate a legally binding will ready for you to sign that is valid in all states.
What Happens Without a Will?
If you die without a will (known as “intestate”), the state, not you, will decide how your property is to be distributed. In Kentucky:
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Probate Court
“Probate Court” is the legal proceeding in which a court determines how an estate will be divided. The court will follow your Last Will and Testament in distributing your property (unless it is contested by your heirs and they are successful).
Some people think having a will avoids probate. This is not the case. A will is used in probate to determine who receives what property, who is appointed guardian to any minor children and who will be responsible for carrying out the wishes contained in the will. If an estate includes real estate or minor children, a formal probate action in court is generally required. However, if the value of the estate does not exceed a certain amount, probate can be “dispensed with” in Kentucky.
Probate can be very expensive if you do not plan correctly. For instance, if you do not have a will, the court will need to appoint an administrator. This can take a long time and cost a significant sum of money.
To avoid probate, other estate-planning devices can be used. Joint tenancies, pay-on-death accounts and living trusts are some of the most common estate planning methods.
Leaving Property to Heirs in a Will
In a typical will, there are two types of gifts: specific gifts and general gifts. Specific gifts leave a particular object to someone and are optional. They are also the first gifts to be distributed from a will. For example, a specific gift might read: “I leave to my daughter, Cynthia, my engagement ring.” You can also choose to forgive a specific debt someone owes you.
A general gift leaves a percentage of all that remains after specific gifts are made. The people who receive general gifts are known as “principal heirs” because they usually receive the bulk of the estate after the smaller, specific gifts are distributed. Usually, the principal heir is the will maker’s spouse or closest relative. Each will must list at least one principal heir. For example, the principal heir clause might read something like, “All the rest of my property I leave to my spouse, Sarah.”
Who is the Executor?
The personal representative you appoint in your will (known as the “executor”) is responsible for dividing up the gifts and making sure your wishes are carried out.
Assets that Pass “Outside” Probate
There are certain types of property and accounts that are typically not distributed through a will. These include:
- Life Insurance: The proceeds from a life insurance policy go directly to the beneficiary named in the policy, if there is one named. If there is not one named, then it will go into the estate and be distributed according to the will.
- Retirement Plans: Many people designate a beneficiary directly in their 401(k) and IRA accounts. Upon the death of the account holder, the funds go directly to the named beneficiary.
- Pay-on-death Bank Accounts: If your bank account has a designated beneficiary upon death, then, generally speaking, that person will become the account owner when the depositor dies.
- Real Estate held in Joint Tenancy or Community Property: If the deed to your real estate indicates that title is held in “joint tenancy” or “community property,” it means that two co-owners hold identical interests in the property at the same time. Joint tenants and owners of community property each have a “right of survivorship” to the other’s share. As a result, if one joint tenant dies before the other, the deceased person’s share automatically goes to the surviving joint tenant.
Beneficiaries for these assets are named directly in their governing documents, and a contrary provision in your will naming a different beneficiary will have no effect.
If you have questions or would like to change beneficiaries for your life insurance, retirement plans or bank accounts, please contact a representative from your insurance company, brokerage or bank.
Assigning Guardians in a Will
If you have minor children, naming a guardian for them is one of the most important considerations in your will. Typically, if one parent dies, the surviving parent will remain responsible for the children. However, complications arise if both parents die simultaneously. Unless you name guardians for your minor children in your will, the court can decide who takes custody of the children in those situations. The court will balance your desires with the best interests of the children. For example, if you remarry and want your current spouse (and not the child’s natural parent) to be the guardian, you may want to state your reasoning on why your current spouse would be better for the children.
Guardians are responsible for a child’s health, education and other daily needs. They are also responsible for managing a child’s property (unless a testamentary trust has been created for the child – see the section on “Testamentary Trusts”).
Resolving Debts in a Will
Upon death, a person’s property is first used to pay for probate and funeral expenses, then to pay debts. Generally, all debts must be paid before assets are distributed. Your outstanding credit card balances, for instance, will be paid before gifts are distributed to your heirs.
Creating a Testamentary Trust in Your Will
If you intend to leave property to your minor child or someone else, you may want to consider conveying that property in a testamentary trust. A testamentary trust is created by your will after your death and can be used to manage the property for your children’s (or another person’s) benefit. For example, say you want to leave $10,000 to your 12-year old child. Instead of making a direct gift in your will, you could place the money “in trust” and assign an adult to handle the money until your child reaches a certain age or finishes school.
The person you name to take care of the property is called the trustee, and your child is the beneficiary. The trustee is usually the person you appoint as the guardian to your children, but it can be someone else you appoint instead.
Many rules apply to the trustee. For example, the trustee must act in the best interest of the beneficiary. The trustee cannot mishandle the property or use the property for his or her own benefit.
Amending a Will
You can make changes to your will or revoke it at any time. There are, however, some very important rules to follow. One way to make changes to a will is to make a codicil, which is an amendment to a will. Another way is to make an entirely new will, which revokes and takes precedence over any older wills. A codicil is a separate document and must be signed and witnessed just like a regular will. Because of these formalities, it is usually easier to make a new will.
Be sure not to make any changes or markings on your will after it has been witnessed and signed. This is absolutely vital. If you cross out a person’s name or add writing to a will that has already been signed, you risk invalidating the whole will.
Revoking a Will
To revoke a will without making a new one, all you have to do is intentionally tear it up, deface it, burn it or destroy it. If this is done accidentally, then the will is not revoked.
An old will cannot be revived once it has been revoked. If you make a new will (which revokes all prior wills) and then decide you like your old will better, you would need to make a whole new will that replaces the new one and mimics the old one. Otherwise, all old wills are invalid.
Marriage and Wills
Certain events will automatically change your present will. These events include:
- getting married
- getting divorced and
- having or adopting children
If you get married after making your will and do not rewrite it, your new spouse automatically gets a share of your estate. The share is the same as if you never wrote a will in the first place.
Exceptions to this rule are if you have a prenuptial agreement, if you made a provision in your will for your spouse, or if you wrote in your will that you specifically intended not to mention your prospective spouse. None of these exceptions are considered in the Last Will and Testament. Therefore, in the event an automatic change occurs, you should rewrite your will or seek the advice of an attorney.
Divorce and Wills
If you get divorced after writing your will, your former spouse is automatically deleted from his or her share of the estate. However, you should not rely on this and you should rewrite your will. Otherwise, he or she may contest the will, costing your estate a lot of money in defense.
Children and Wills
If you have a child after making your will and do not rewrite it, the child gets a share of your estate as if the will were never written in the first place.
