Why a Will Should Never Be Your Estate’s “Plan A”

If you’ve done your research on estate planning, you’ll know that many articles talk about the importance of a will. 

In fact, many have come to consider a will as the foundation or cornerstone of their estate plan. But is a will really as crucial as others make it out to be? 

You may be surprised to learn that a will may not be the most effective route to get your money where it needs to go. A will can possibly create some costly and time-consuming detours. 

Here are a few important considerations regarding wills and their role in your estate plan.

A Will Won’t Cover Everything.

Think of your family’s mudroom. When you walk through the door, it’s the catch-all spot to put shoes, coats, scarves, cleaning supplies, dog food—you name it. It’s your home’s go-to storage for things that don’t fit in anywhere else in the house. Is it exceptionally organized? No. Does it serve as the best home for all these items? Again, typically not.

Similarly, a will is not a catch-all for your financial life. It serves some specific purposes, but it is not designed to carry the full weight of your estate plan.

What Do Wills Cover?

Wills are a vehicle for documenting your intent, which the courts, via probate, will ensure is heard. It will dictate who receives what assets and how much after your passing. Assets could include real estate, cash, collectibles, treasured possessions, and more.

If you’re the caretaker to a minor or dependent, you can also name a new legal guardian in your will.

What Do Wills Not Cover?

There are specific policies and accounts that will already have designated beneficiaries named, such as life insurance policies and retirement savings accounts. If you own property jointly or property is held in a trust, these should not be included in your will either.

Additional considerations such as funeral arrangements should be documented elsewhere, as the estate will not be settled when these plans need to be made.

Wills & Probate

Probate refers to the legal process your estate goes through after your passing. During probate, the court system will work through distributing assets to your heirs based on your final wishes.

This process can be costly and time-consuming—not to mention a public affair.

Having a will does not mean your estate gets to skip probate. If you have a will, it legally must go through the court system. If bypassing probate is a priority in your estate planning, there are other tools to consider instead, such as a trust.

The Probate Process in Michigan

Luckily, Michigan offers a fairly streamlined probate process as compared to other states. This system uses something called the Uniform Probate Code. The UPC creates a more standardized probate process, which can help keep things moving along quickly.

In addition, those with an estate valued less than $15,000 will experience a simplified probate process, which is meant to minimize cost and time.

Are Trusts the Only Alternative? 

A trust can offer certain benefits that a will can not, but it’s not the only way to accomplish your estate planning goals. It is, however, a surprisingly suitable option for families of most sizes and net worth. Despite common misconceptions, you don’t have to be a multi-millionaire to benefit from a trust. 

Instead, your trust should work to help dictate your intent, provide efficiency during the transition process and minimize time and cost. A trust can be constructive when passing on real estate or after-tax brokerage accounts.

Is Establishing a Living Trust Expensive?

There are several ways to go about establishing a living trust in Michigan. You have the option to take a do-it-yourself approach by creating one online. This may range from $100 to $300, depending on complexity. While this is an initially cost-effective option, making your own trust may leave your estate vulnerable to mistakes or missed opportunities.

Hiring an attorney to help establish a trust will be more costly, but you gain the guidance of an experienced professional to address all complexities or concerns. Attorneys will have different rates and fee structures; some may be hourly while others may offer a flat rate for certain services.

How much should your estate plan cost?

It depends on the level of complexity and your situation, but many range from $2,000-$4,000. 

Creating Your Estate Planning Toolbox

A meaningful way to keep assets out of probate and minimize costs is to leverage the full power of your estate planning toolbox. Establishing beneficiary designations on applicable accounts now can make the transfer process smoother later down the line. In addition, consider joint ownership for things like property, cars, and bank accounts. This will allow the co-owner to access assets and funds immediately after your passing. Both of these tools can be used to pass assets directly to heirs without added time and hassle.

Establishing Your Estate Plan

While a will may be a good start, it shouldn’t serve as the catch-all tool in your estate planning toolbox. Legacy Wealth Advisors works with well-established individuals and families preparing for retirement and working through the estate planning process.

As you consider the best way to prepare your estate for your passing, feel free to reach out to our team anytime.

Disclaimer: Advisory services are offered through Legacy Wealth Advisors, LLC dba Legacy Wealth Advisors, an Investment Advisor in the State of Michigan. 

Legacy Wealth Advisors does not offer tax planning or legal services but may provide references to tax services or legal providers. Legacy Wealth Advisors may also work with your attorney or independent tax or legal counsel. Please consult a qualified professional for assistance with these matters.

The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Michigan or where otherwise legally permitted. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication or future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.