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Reader helps emphasize the importance of having a will
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Reader helps emphasize the importance of having a will

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Reader comment: I am an estate attorney and had a case just like the one you described in a recent column where a person died without a will. In my situation, a man died unexpectedly of a heart attack, intestate. In other words, he had no will.

He left behind his girlfriend and their 23-year old son. All major assets, including the family home, were in his name. It could have been a disaster! I was able to convince his sole heir to deed the house to his mother after it passed to him, as well as many of the other assets. You gave good advice (as usual) to take care of this ASAP. I enjoy your column.

Our take: Thank you for reading our column and sharing the story of your client and his estate. This stuff happens all the time, and often there isn’t the kind of good (enough) ending that you describe.

We can’t stress enough the importance of understanding what you own, what you owe and deciding in advance what should happen to your property when you die. And, we understand it isn’t easy to talk about. Most of us find it incredibly difficult to think about our mortality, the people we’ll be leaving behind, and what to do with all of our worldly possessions.

Harder still, is talking to your loved ones about what you want done, and the hardest thing of all is to take action and put a plan into place. People just become paralyzed, so they decide it’s just easier not to do anything. And, soon, life’s distractions divert attention away from the important decisions that await you and nothing gets done.

It’s perfectly normal to procrastinate writing a will, but it’s absolutely necessary. Sometimes, people can’t decide who should be the guardians of their minor children, or oversee their money. So, they never name a beneficiary for a bank account, 401k account or life insurance policy. And, their home — which is generally the largest part of their net worth — is never even thought about.

When it comes to retirement accounts, life insurance policies and bank accounts, you should make sure to have a beneficiary (and a secondary beneficiary) named in case of your death. If your bank account is only in your name and you can’t name a beneficiary, you should add a family member to the account (not our most favored way of doing things, but better than nothing) or set up a will that designates who gets the money in that account and who will be the representative of the estate to handle those affairs.

You can go one step further and set up a living trust, retitle all of your bank account assets into the trust, and name a successor trustee that would handle the affairs for the trust upon your death. One mistake people often make with their estate plans is to set up the trust and sign the documents, but never put anything into it. (Hint: If the mail from the bank or lender isn’t addressed to the trust you set up, you haven’t retitled the asset correctly.)

In addition to writing a will and setting up a living trust (there are other kinds, if you and your estate attorney decide to get fancy), you should also sign powers of attorney for health care and financial matters. These documents will allow your chosen person to make financial decisions and sign checks or important decisions about your medical care, if you’re unable.

Why execute a power of attorney for financial matters? Simple. When the bank finds out you died, it will freeze the bank account (if you are the only one on the account). This means that your kids, spouse or heirs can’t touch that money unless they have some form of authority to handle your estate and step into your shoes.

The same goes for any stocks, cars, boats and other valuable items that you own in your name. These have registrations that must be transferred to change ownership. When it comes to your property, if you die without a will or trust, your verbally expressed wishes will be ignored, and your property will be disposed of according to state law.

Most likely, your home will go to close family members that survive you, like your spouse and kids. But if you are living with a partner to whom you are not married, and you do not have a will, your partner may not receive any interest in your property and may be kicked out of your home by whoever is deemed to be the rightful heir.

But let’s say you are married. The house would likely get divided between your spouse and children. If you have young kids that are not of the age of majority, your spouse won’t be able to refinance the home or sell the home without getting some official authority to act on behalf of the kids. That may take time and it could delay a sale or refinancing of the home.

As we have come to see frequently during the pandemic, there are many people living together who are not married. Unmarried partners need to be especially careful to protect themselves and their families in these situations. If the surviving partner wasn’t on the title to the home and there was no will, the home would go to the parents of the partner that died.

At the very least, we recommend that everyone write a will. In that document, you’ll decide who will be the executor, entrusted with parceling out your property according to your wishes.

Even if you don’t own much, you want your heirs to be able to walk into a bank and show the necessary paperwork to the bankers to keep the money flowing. If you find yourself getting distracted instead of making tough decisions, remember that doing basic estate planning isn’t about you — it’s about protecting those you love.

When you die, someone needs to pay the mortgage, real estate taxes, utilities, insurance and other home expenses. If your bank accounts are locked up, it will take time and money to get them unlocked. Losing a loved one is never easy, but if you take a few of these steps, at least you can make it less difficult for those you’re leaving behind.

(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through their website, bestmoneymoves.com.)

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