Is His Wife of Two Weeks Entitled To All His Money?
Soon after his fortieth birthday, my brother-in-law, Jason, found out he had terminal cancer and died four months later. His death left his family reeling. Jason had a son from a previous marriage.
His new girlfriend had moved in with him less than a year ago. Two weeks before his death, she asked him if they could get married, which they did. His mother questioned the motives behind this request.
Dying without a will.
Jason died without a will. The legal term for this is Intestate Succession. Intestate means dying without a Will, and succession is how to divide the estate of the person who has died.
When you die without a Will, the state decides what to do with your property, bank accounts, and everything you own. And most of the time, the state would determine that your assets should go to your closest relatives.
If Jason had died before getting married, his son would have inherited all his assets. Getting married before his death meant his new wife would now receive the lion’s share of his assets. Was that what he would have wanted?
His death hit home the importance of planning for your death no matter how young you are. This planning process for distributing your assets is known as estate planning.
Why do you need an estate plan?
An estate plan lays out your wishes for your assets upon your death. Because we never know exactly when we will die, it would be wise to have one ready before the inevitable happens.
To provide for dependents.
If your spouse or dependent children relied on your income while you were alive, you would want to continue to provide for them when you die. You will want to set things up nicely to provide for them through an income stream or a lump-sum payment. What about providing for a disabled adult child if you had one.
Minimize disputes among family members.
Conflict is one of the biggest fallouts from the death of an individual. A will and a proper estate plan should communicate your wishes for how you want to divide your assets. If possible, discuss your wishes with your family. Open communication eliminates surprises once you’re gone.
Discuss things like funeral arrangements, secondary properties, and dealing with in-laws. Do your children want to inherit the family cottage?
Talk to your family about who you will wish to be as an executor of your estate. If your children live far from you, be realistic and mindful of their time and ability to deal with your estate when you die.
Estate issues can be complex in blended families, especially if you and your spouse got together when the kids were older.
Minimize your taxes — before and after you die.
A good estate plan allows for rollovers of various tax-sheltered accounts, trusts, and charitable donations to help reduce taxes. You will need to seek the advice of a lawyer and an accountant. Set up correctly, you get to leave more money for your beneficiaries.
Ensure sufficient liquidity.
You can assess your potential estate tax upon death through an estate plan. And make arrangements to pay outstanding taxes and fees through the proceeds from insurance. Your beneficiaries will not have to come up with the cash themselves. They won’t feel forced to sell parts of the estate to pay these taxes and fees. Talk to your accountant about the most efficient way to do this.
Limit government involvement.
Dying without a will means the government will have to step in and manage your estate. Your estate will have to pay a fee for this.
Assesses the viability of your business.
Estate planning gets more complex if you own a business. Your children may not be interested in running your business once you die. Who will take over the company? You will need to deal with these questions with your accountant and a lawyer.
My brother owned a thriving business, but he did not have time left to look for a buyer for his business before his death. It was left to his new wife to decide her intentions for the company.
It provides peace of mind.
Death is a stressful and painful time for loved ones left behind. It is not fair to leave them without a well-thought-out estate plan. They may make poor decisions due to having to deal with the estate while grieving your demise.
The fundamental questions behind your estate plan should be: how do I want to be remembered when I am gone? And with who do I want to share my legacy?
Choosing a guardian for your children.
The role of the guardian will mainly be the role you have now as a parent — caring for your children, acting in their best interests, and providing for them physically, emotionally, psychologically, spiritually, and culturally.
If the child’s other natural parent is alive and competent, they will have guardianship rights no matter who you name as your desired guardian in your Will.
If there are no other surviving parents, you will need to assign someone that role for your dependent children. A Court can review the custody of children at any time.
If a legal custodian is unable or unwilling to act, the Court can appoint another person to be the legal custodian. It is essential to deal with this matter in your Will.
They are an indispensable consideration should someone challenge the issue. So, now we know why we need to spell out our intentions for your assets upon our death; the next question is, what does a good estate plan comprise?
What do you need for a good estate plan?
An Enduring Power of Attorney
A Living Will/Health Directive
A Will is a legal document that a lawyer or notary prepares to state your wishes for who gets your assets after you die. According to a Gallup Poll conducted a year ago, over half of all Americans do not have a Will.
Your Will is the most crucial document in your estate plan. It also names the executor.
The executor is the person who will carry out the terms of your Will. A Will simplifies matters and ensures that your property goes to those you want it to when you die.
In many jurisdictions, you do not need to have a lawyer draft your Will for it to be valid. I still recommend that you not only have a lawyer draft your Will but one who specializes in estate law. They will be able to see potential issues that you may have overlooked.
If you have minor children — you may also want to name a guardian (s) for them in your Will.
If you have a disabled child or grandchild, you may want to make special provisions for them. You can do this through a Trust.
A Power of Attorney.
A power of attorney is a legal document that you sign to give a person(s) the authority to manage your money and property on your behalf if in the future you are no longer mentally able to manage your financial affairs. That person does not have to be a lawyer.
A Healthcare Directive or Living Will.
Jason was not able to make health care decisions, and before he married his girlfriend, the doctors were at a loss of whether they should get his parent’s approval for medical procedures or ask that from his girlfriend, which made it awkward for both parties.
A healthcare directive or Living Will is a legal document providing clear instructions on the extent of medical intervention you would like should you become incapacitated.
Bringing It All Together.
An estate plan is an often-forgotten aspect of a person’s overall financial well-being. More than half of Americans do not have a Will.
Preparing a written plan for how you would like your assets distributed makes it easier for your family to deal with your estate while grieving your death.
Back to my brother-in-law Jason. Although he died without a will, his new wife did provide for his young son. And she did sell his business to someone capable.
We will never know her motivations for getting married even though she knew he had terminal cancer. Death is brutal to everyone, and if you can avoid a family feud, why not do so?