Last Will and Testament
An estate plan should also address the questions of who will receive your assets when you pass away, and who will take care of your minor children if you have any. A common tool used to answer these questions is a Last Will and Testament.
A Will allows you to name beneficiaries (or disinherit certain family members) in any allocation you see fit, i.e., all to one person, or 50/50 between two people, or 99% to one person and half a percent to two other people. A Will should also nominate guardians for minor children. Without your memorialization of who you would desire to be in charge of the children, everyone in both spouses' families may throw their name in the ring, and family drama can ensue.
Many families are surprised to learn that relying on a Last Will and Testament to distribute their assets upon death results in a one-way ticket to the probate court process. Probate is a legal proceeding that takes place when a person dies owning assets his/her individual name and without a beneficiary designation. There is no way of avoiding probate if you are relying solely on your Will to distribute your assets. While the Will establishes the terms for who will receive your assets upon death, before those beneficiaries receive anything, we must have the probate court judge review, validate, and consent to all of the terms of the Will - a process that usually lasts upwards of 12-18 months. So that straightforward process you wanted to set up with the simple Will, ultimately results in your beneficiaries waiting a year or longer before they are legally authorized to receive that inheritance.
Everyone Needs a Will
Every adult should have a Will. However, a Will alone is NOT an estate plan! But it is an important piece of an estate plan. And once again, if you don't have a Will and you pass away owning assets in your individual name without a beneficiary designation, your State of residence has a plan for you and the distribution of your assets! That plan can, and often will be, drastically different than the plan you wanted for yourself.