If you have life insurance, or are thinking about it, you also need to have a will. Not having one means turning over the decision making process and power on the disposition of your estate to the courts in your state. Today’s guest blogger is Dallas attorney, Paula Hartsfield of Hartsfield Law who shares her insight into why each of us needs a will, now!
1. To name who will raise your minor children.
No one wants to think of someone else raising their children. But if tragedy strikes and both parents are gone, do you want a court that has no personal knowledge of you or your children and their needs deciding who will raise them? Do you want a court who knows nothing about your values and religious beliefs making that decision? Also, imagine what your children would go through if family members got into a legal battle over who will “get” the children. Is that what will be best for your children and other loved ones?
You may think it’s rare for children to lose both parents, but do you actually want to take that chance? I personally know of two families who experienced this tragedy. One of the young couples had beautiful twin toddler daughters. The family spent the day at Canton’s First Monday Trades Day and was in their car headed home. The mom was talking on her cell phone with her twin sister when the accident occurred. Both parents and one of the twin daughters were killed instantly. When it was all over, only one member of that precious family was left.
2. Because your have a blended family.
Even if your blended family, (your kids, my kids, and our kids) appear to have a great relationship, the way your estate will be distributed by the state’s intestacy plan (because you didn’t get around to making a will) could forever tear apart that family and result in resentment and distrust that will lasts a lifetime.
For example. Jim and Jane had been married for 22 years. Jim had two children from a previous relationship (not necessarily a marriage). During their marriage Jim and Jane purchased a house together. Jim’s two children Jim and Jane enjoyed a wonderful relationship throughout the years. One day, however, Jim died – without a will. Jim thought the house would go to Jane if he died. After all they purchased it together. Wrong! The house is community property. Under the Texas intestacy plan, Jane will retain her 50% interest in the house. BUT Jim’s two children will receive HIS 50% interest in the house. Can you see any problems here?
3. Because if you don’t have your own plan, the government will use its own with consequences that may be unsatisfactory to your family.
Texas, along with every other state, has its own plan for those of us who die without a will. However, the state’s plan may not be the way you want your assets distributed. A young man, Tim Cole, was wrongfully convicted of a serious felony and sentenced to 25 years in prison. He died in prison after suffering an asthma attack. Later the Innocence Project, using DNA evidence, was able to prove he did not commit the crime and Gov. Perry officially exonerated him. As is normal for the state of Texas, Tim’s estate was awarded approximately $1 million for unlawful imprisonment. Under Texas intestacy laws Tim’s parents would receive his estate.
Almost immediately Tim’s biological father appeared in a Ft. Worth probate court claiming he was entitled to ½ of the $1 million. Even though he had never been in Tim’s life, he was correct. He was legally entitled to that share of Tim’s estate. (Note: since then, there has been an attempt to locate a will Tim had possibly executed while in the military which would leave his estate only to his mother)
4. To decide when your children will have access to assets you leave them (including insurance benefits.)
How old do you think your children should be before they can adequately handle an inheritance, or insurance proceeds? Without a will, once your child turns 18 they will receive the proceeds from insurance and other assets to which they were named a beneficiary. Within a will you can create a trust and determine how old your child will be before he or she receives a distribution. You can also spread out the distributions for however long you feel is in the best interest of your child and estate. With a trust you can also name someone you trust to handle the assets until they are fully distributed to your children.
I met a young woman who had turned 18 and was in college. Her mother died before she was 18 and the mother’s life insurance could not distribute the proceeds from the policy to her because of the daughter’s age. The young woman had been on her own since her mom’s death and worked several jobs just to be able to live and to stay in school. There were other circumstances that made the situation complicated, but had it not been for the swift intervention of the attorney in charge, the insurance proceeds would have gone to the state of Texas rather than the beneficiaries the mother had named. Even though the mother left a will, she had not provided for a trust to handle the proceeds from the life insurance in case the daughter was not yet 18 years old.
5. To name someone you trust to handle your financial, business and medical affairs if you become temporarily or permanently incapacitated.
Under such circumstances it is essential that you have a Durable Power of Attorney, Medical Power of Attorney, a Directive to Physician (Living Will), and HIPAA Authorization. Without these documents it could become necessary for someone to make application to the court for a guardian of your person and/or a guardian of your estate. You would much rather make such decisions yourself in advance rather than have a court make that decision. Maybe a judge would appoint your brother guardian of your estate. Would a judge know about your brother’s poor business judgment and that he regularly “robs Peter to pay Paul” in his own life? Applying for a guardianship is tremendously expensive and requires an ongoing intervention by the court. Having such documents as those named above will put YOU in control and prevent expensive and lengthy involvement of the court into your life and the lives of your family.