Yes, you do. But you might be surprised to know that a will might be the least of your estate planning worries.
Almost all of my new estate planning clients begin the conversation with, “I need a will.” What they really mean (but may not yet understand) is, “I need an estate plan.” While a will offers certain benefits and should be part of a complete estate plan, typically it should not be the centerpiece of your estate plan. Why not, you ask? Because a will is the roadmap through probate court. And probate should be avoided.
Basically, the law requires a lengthy probate procedure in order to clear title to real estate, bank accounts, motor vehicles, and other assets that are in the sole name of the deceased person. Probate is a court proceeding resulting in the distribution of a deceased person’s assets to the people listed in his or her will.
Why avoid probate? For one thing, it takes a lot of time. And the proceedings are public records. More important, on average 5% to 10% of the probate estate must be used to pay expenses of administration, including lawyer’s fees and other expenses. In fact, Missouri law allows a probate lawyer to charge a fee equal to about 3% of the value of the estate, making probate administration one of the most lucrative fields for a lawyer.
Rule of thumb: If it’s really good for the lawyer, it might not be best for you.
If your estate plan consists solely of a will, then your heirs can expect to receive only 90-95% of your property after probate. That’s bad news. The good news is that you can leave them 100% with a better plan that won’t cost a lot of money to create, or be made public, or take much time to implement.
Generally, there are two better plans:
- 1. Creation and funding of a revocable living trust;
- 2. Use of non-probate transfers such as transfer-on-death (“TOD”) for financial accounts and beneficiary deeds for real estate.
Each of these plans should include a durable power of attorney, which will allow you to avoid probate in the event of your disability, and perhaps other documents. For a reasonable fee, a good estate planning lawyer can save you a ton of money and make sure that the wealth that you worked so hard to create and preserve is passed on intact.
