Chapter 20. Even If We Have a Will, We May Not Get Our Way
Don't Fret Over Estate Taxes—but Worry About Those Legal Bills
Let the paper chase begin.
To ensure that your money ends up with your loved ones, you need a will. But you also need a whole lot more than that—because there is a good chance your will won't determine who gets the bulk of your estate.
Imagine a fairly typical situation. You are married. You own your home jointly with your spouse. You have a life insurance policy. You have money in a 401(k) plan and an individual retirement account. And, when it comes to things of real financial value, that's pretty much it. So who gets your money when you die? Don't bother reading your will.
Dodging Probate
Your will governs those assets that pass through the probate courts. Those courts oversee the settling of your estate, including confirming that your will is valid, making sure your debts are paid, and ensuring your final wishes are carried out. But many assets don't pass through probate. For instance, if you and your spouse own a home jointly with right of survivorship, it will go directly to your spouse if you die first. Similarly, your 401(k) and IRA will typically be inherited by the beneficiaries named on those accounts, and your life insurance proceeds will usually pass to the beneficiaries listed on the policy. What if you never updated the beneficiaries on your life insurance and it still lists your ex-husband? There's a good chance he'll get the last laugh.
Meanwhile, ...
Get The Little Book of Main Street Money: 21 Simple Truths that Help Real People Make Real Money now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.