Even the simplest things become complicated when you don’t have a Will. You may think you are too young for a Will or you don’t believe you have much of an estate. Unfortunately, no one knows what can happen from day to day and by having a Will, you will make the lives of your loved ones easier.
Recently I learned of a husband whose wife died at a young age. They had a minor daughter and the wife had left a life insurance policy for the daughter, naming her as the beneficiary of the life insurance proceeds. The wife did not have a Will. Of course the husband is the natural guardian of their child but what happens with the life insurance proceeds since the wife did not have a Will? Well the insurance company will not pay large sums of money to a minor child. So the life insurance money will be paid to the county surrogate to be held in an account for the child until she reaches the age of majority. Her father will have to obtain a bond in order to access the money for his daughter. The bond will cost the father money every year until the daughter reaches age 18. The father will have no control over where to invest the money for his daughter or how it will be invested. This was probably not the intent of the wife.
Having a Will in this situation could have solved this problem by creating a testamentary trust for the daughter to which the insurance company could have been advised (through a beneficiary designation) to pay the insurance proceeds. The Will could have named the husband/father of the child as the Trustee, thereby preventing the involvement of the Surrogate and giving the father the ability to control the investment and distribution decisions to better benefit their daughter.
Although this case scenario only dealt with money, what happens when parents of minor children die without Wills naming guardians for their children? Often times families fight over who will get guardianship of the child or children and sometimes the children will end up with family members the parents would not have chosen. Preparing a Will to protect your minor or young adult children and your assets is very important.
It is National Estate Planning Awareness week starting October 21, 2013. Get your Will prepared!