Be wary of a Financial Planner who is not an estate planning attorney who thinks she is qualified to review your wills or estate planning documents for their legal substance. She would be stepping into an area in which she is not competent or licensed to advise you, and she may even be breaking the law.

Unfortunately, financial planners do this quite often, usually unaware of what a problem it is or can be. How will your Financial Planner know if there is something fundamentally wrong with your Will, other than if you have a wrong designee, or if it appears old? You might rely on your financial planner’s review and avoid seeking the competent legal counsel that you truly need. If you rely on your planner’s advice that your will is satisfactory for your needs, and it isn’t, there will likely be trouble for you, your beneficiaries, and your planner.

Estate planning law is different all over the country and it changes constantly, if usually subtly. Only someone who actually practices in it can provide competent advice. Even lawyers go to other lawyers to have their Estate Planning work done. Yes, it costs money to hire a lawyer. But what will it cost if you don’t?

Your financial planner, providing she is not an attorney, will not be able to interpret or provide legal advice about your legal documents, but if you show them to her, she can at least be assured of their existence. If your documents seem old or obsolete, your planner might advise you to consult your attorney.

I am not advocating the unauthorized practice of law by your planner, but if she sees that your will was drafted thirty years ago, or if all of your beneficiaries are deceased, she may correctly advise you to seek legal counsel to see if it is necessary to update your will. She will also serve to remind you of your need for estate planning documents, no matter the size of your estate. Those are the types of things you can rely on from your Financial Planner. That’s all.

Wills

What is a Will and why do you need one? A Will is a written document that provides instructions for the disposition of a decedent’s (dead person’s) property. The Will is also the document in which a person names a guardian for her children in case she dies while they are still minors. The term “Last Will and Testament” is simply a more complicated name for a Will.

If a person dies with a Will, which is called dying “testate,” the probate court determines if the Will is valid, hears any objections to the Will, orders that creditors be paid and supervises the process to assure that the Executor distributes the remaining property in accordance with the terms and conditions of the Will.

If a person dies without a Will, which is called dying “intestate,” the probate court appoints a person to receive all claims against the estate; pay creditors; distribute all remaining probate property in accordance with the laws of the state; and determine the guardian for the decedent’s minor children.

The major difference between dying testate and dying intestate is that an intestate estate is distributed to beneficiaries in accordance with the distribution plan established by state law; a testate estate is distributed in accordance with the instructions provided by the decedent in his or her Will.

So if you die without a valid Will, your property is distributed according to state law and the courts will decide who raises your children. Let’s repeat that because it is important and people really don’t seem to think through the ramifications of not having a Will. If you don’t have a Will, your property will be distributed according to state law and the courts will decide who raises your children.

 In addition to property that people can pass by Will (“probate property”), most people also have “non-probate” assets. Non-probate assets don’t go through the probate process because the ownership arrangement you have dictates who will receive the property at your death. Thus, non-probate assets are unaffected by the existence of a Will because the assets pass at death by operation of law regardless of whether a Will exists and irrespective of what it may provide.

Non-probate property typically includes life insurance, pension or profit sharing plans, IRAs, living trusts, and certain joint property. With such assets, the property passes according to the terms of the policy, plan, and/or trust or to the surviving joint owner, and not in accordance with your Will. For example, if you have a life insurance policy or an IRA that names your husband as a beneficiary, the proceeds of the policy will pass directly to your husband regardless of what your Will says.

Therefore, it is usually not enough just to execute a Will. To ensure that your non-probate assets are distributed the way you want them to be, you should make sure that the appropriate documents are correctly filled out, including the beneficiary designations on your life insurance policies and retirement accounts. You should check these every few years to make sure that they are accurate and reflect your current wishes.