Most people want to plan for what happens to their money and property after they pass away. This is where a Will comes in. A Will allows an individual to state their intentions about how their assets should be distributed after they die.
If you die without a Will, the state will appoint someone to distribute your assets according to the state's intestacy laws, which may or may not be what you want.
Married couples sometimes decided to create a joint Will to dictate how their assets should be distributed after one or both passes away. But, while a joint Will may seem like a great idea at the time it is executed, it can easily result in unwanted consequences later on.
A joint Will is one that is executed by two individuals, most commonly, a married couple. Typically, a joint Will provides that when the first spouse dies, the surviving spouse will inherit everything and then when the surviving spouse dies, everything will pass on to their children or other third parties.
A joint Will is effectively a contract between the two spouses that can only be changed, restated, or revoked in accordance with contract law, which will require a "meeting of the mind" or, in other words, a mutual agreement between the spouses.
Because no one knows for certain what the future will bring, there are a number of things that can go wrong with a joint Will. For example, what if you and your spouse have a disagreement in the future?
A joint Will cannot be unilaterally revoked by either party. Furthermore, once the first spouse dies, a joint Will becomes irrevocable—unable to be changed or revoked by the surviving spouse at all.
However, many things can change between the time the Will was executed and the death of the first spouse, and just as many things can change after. For example, what happens if the surviving spouse remarries and/or has more children?
In either of these situations, the joint Will may no longer reflect the needs or wishes of the surviving spouse for the distribution of his or her estate. But, because one of the parties to the joint Will has died, there can no longer be any meeting of the minds. Therefore, the surviving spouse will be unable to change the Will to provide for his or her new spouse and/or children.
Moreover, what if:
In each of these circumstances, the surviving spouse will be unable to make the desired or necessary changes to the joint Will and this may ultimately result in their estate being distributed in a manner that does not reflect what is needed or desired.
Consider the following scenario:
You are married with two stepchildren, but no children of your own. When your marriage was going well, you and your spouse executed a joint Will to provide for each other and then your stepchildren. Later, however, your marriage fails and you find yourself divorced and estranged from both your ex-spouse and his or her children.
In this case, you may no longer wish for your ex-spouse's children to inherit from you. However, unless your ex-spouse agrees to allow you to change the joint Will to disinherit his or her children, which is highly unlikely, your former stepchildren will still inherit from your estate when you pass away. What's more, if your ex-spouse dies before you, you will have lost even the possibility that the joint Will could ever be changed.
Joint Wills are rather outdated concepts and don't reflect the current status quo—marriages are less likely to last a lifetime, blended families are much more common, and individuals and families relocate more frequently.
Today, the use of other estate planning tools, such as a revocable living trust, are better options for directing the distribution of a couple's estate after they pass away. In fact, each of the problems above can be avoided by a revocable living trust.
A properly drafted revocable living trust will allow a couple to express their wishes for the distribution of their estates, while enabling those wishes to be updated as circumstances change.
Also, unlike a will, a revocable living trust is effective during the creator's lifetime, and can be used to manage the family's assets while the creator is alive and well, when they are alive but incapacitated, and after they pass away.
What's more, assets held in the name of the trust avoid probate, saving time and money and facilitating a much faster transfer of assets to loved ones.
Creating an effective estate plan would be relatively straightforward if we could accurately predict the future. But no one knows what the future holds.
Consequently, a comprehensive estate plan is far more than having a certain estate planning document in place. You need a personalized plan that prioritizes your goals, but one that can easily be updated as those goals change.
For more information about estate planning, including Wills, trusts, and other estate planning instruments, consult with a knowledgeable and experienced estate planning attorney.
For those on the wealthy end of the spectrum, a trust is almost always necessary. Unless you have precisely one family member who is very conscientious with their funds, trust documentation assures that your family will be taken care of for years to come.
In addition to this, your trust fund may be exempt from estate taxes or other final expenses. This means that your family or friends get the full benefit of your trust options rather than coping with local laws. If you have a total savings of more than $200,000, consider a trust mandatory exploration.