You’ve just kicked the bucket. You are six feet under, pushing up daisies. You’re worm food. You’ve entered the pearly gates (or that other place). No turning back now. It’s the only guarantee other than taxes. Ashes to ashes, dust to dust. Congratulations, you are dead.
Do I have your attention? I’m not surprised. Most of us at least have a healthy respect for death if not a flat out fear of it. Thinking about it is something many people simply refuse to do. Surely it can’t happen to them….. at least not yet. Not for a long time yet. But that is exactly what I want you to focus on for this blog post. OK, maybe not so much your actual death, but what about all of the stuff you have when you do die?
Let’s be honest. When you die, you aren’t going to care about the stuff you leave behind. After all, you never see a hitch on a hearse, right? While you may be long gone, your family and friends will still be here trying to figure out what to do with all of your stuff. If you haven’t even thought about it, your family will have some help. At that point, a probate judge will probably step in to help it all get straightened out. That’s right, the courts might end up giving your stuff away.
“But it will be ok. My family gets along great!” Yeah, sure. For now, as long as everything is hunky dory. But a death of a loved one can bring up emotions we don’t expect. The release of those emotions can come out in really funny directions. And by ‘funny’ I mean different funny, not ha-ha funny. By laying out your wishes before your death, you can relieve your family of what can be a major stressor in the grieving process.
So let’s talk planning from one end of the spectrum to the other.
Intestate simply means you died with no documentation of your final wishes. Now everyone left behind has to try and guess. You better believe the judge will be involved in this one. Everything will be tallied, potential heirs identified, estimations made based on your behaviors prior to death, and everyone will wait. The probate process of dealing with an estate can take months, if not years. Talk about keeping your family from being able to move on.
This is what we normally think of happening when someone dies. ‘Testamentary’ simply means it goes into effect once someone has died. The individual has laid out all of their final wishes before they pass. Now it’s just a matter of making sure the remaining property lines up with the verbiage of the documentation before doling it all out. Again, the probate judge will be involved, but will essentially just be the enforcer of your wishes. It will probably move faster than if you die intestate, but can still take some time.
Want things to move smoothly for your grieving family and friends? Short of dying a pauper and leaving them absolutely nothing to figure out, this is about the easiest method on this list. A living trust is a system that goes into effect even before the individual dies. The owner can still move property in and out of the trust (like buying and selling vehicles), but it is all set up and ready for when they reach that final day. Avoiding probate court in many places, a living will fairly easily transfers ownership of the remaining property to the beneficiaries as outlined in the document. There will be a trustee named, but that person basically is there to just sign off on everything.
Looking at all of this as a spectrum, I would give this one the position of most critical, even though it is different than the others we have discussed. While the others discuss ‘stuff’, this one deals with your very life. Should you be incapacitated, where do you draw the line of holding out for a miracle and letting nature take its course? Who gets to make that decision on your behalf? Do they know they have that power? More importantly, do they know what your wishes would be? Because of the heavy emotions surrounding life vs. death, this is perhaps the most important document you can leave for your family.
This is something we at least briefly cover in our Homebuyer Express classes as our clients are looking at increasing their assets (and potential conflict upon their death). But very few of our first-time home buyers have even thought about a will.
To illustrate this, here’s the conversation I had with a single mom:
Me: So if you die, who’s going to get your stuff?
Her: My son.
Me: How old is he?
Me: And where will he go?
Her: To his dad.
Me: So then, if your son is still a minor, who’s really getting your stuff?
(A long pause with a growing look of disgust on her face.)
Her: MY EX!!!
I’m pretty sure she was headed to have a will drawn up as soon as our class was over.
Yes, having a will or living trust set up is an investment of time and money. But what kind of mess do you want to leave behind for your family?
If you would like more information of the Center for Financial Resources’ Homebuyer Express classes or counseling on getting that finances and budget in order, you can either visit our website or give us a call at 605-330-2700.
written by Breck Miller
images courtesy freedigitalphotos.net