A client (single) has beneficiaries on her retirement account, a transfer on death deed on her house, and pay on death notices on her bank accounts, her two kids get along and can amicably split up her belongings—does she also need a Will? If this client died where all her assets were as just stated, then no, she would not need a Will. However, like life insurance, a Will can help cover unexpected events, and the difficulties a Will can prevent may well outweigh the cost of preparing a Will.
If you own (or receive) assets that are not assigned through beneficiary then the assets are considered Probate assets. If the value of all Probate assets is greater than $50,000, then a file with the Probate Court is required. The Will tells the Probate Court how you wish your assets distributed.
I jokingly tell my clients that a Will is for winning the lottery the day before you die. While this is quite correct, there are other, more likely events that could trigger a probate. Any funds that are assigned to you but not delivered until after your death, are in your estate. An example of this is an inheritance. If you are a beneficiary of a person’s estate, but you die before the distribution of that money takes place, a Will would help the Probate Court know how to distribute the funds. Another scenario in which your assets may end up in Probate involves beneficiaries on your retirement or other investment accounts. Sometimes mistakes happen –a beneficiary is not recorded correctly, accounts change and the beneficiary designation does not follow the change. Fortunately, these are rare events, but they do happen.
Wills can also be the grounding document for your estate plan. By listing how you want your assets distributed, you can be checking against your Will when assigning beneficiaries. For example, say you have 5 children, and you want them to each receive 20% of your total estate when you die. If you have investments that for some reason get distributed to only 3 of your children, you can be sure to create other investments that will be distributed to the remaining 2 children on your death. The need for a grounding document (Will) increases with the complexity of your estate plan.
But, what if you have a trust? A major reason for a trust is to avoid Probate. However, just as in the above scenarios, assets can be outside your trust when you die. In the case of a Trust, lawyers will draft what is called a “Pour-Over Trust”. This is a simple will that states that in the event of Probate, the Personal Representative (Executor) is to follow the terms of the trust when distributing the Probate assets.