1. Life Insurance. Life Insurance is a frequently misunderstood topic as it relates to estate planning. Most of the time life insurance policies are payable to a designated beneficiary or beneficiaries. If that is the case, the life insurance proceeds are not covered by the terms of a Will at all.
Did you know that?
This really hits home for people who have been married more than once. Consider the impact to a current spouse if her husband passes away and the former spouse was inadvertently still listed as the beneficiary on the life insurance policy taken out during a prior marriage.
As an aside, I am often asked if there is a way to control the life insurance policy under the terms of the Will. This can be accomplished by designating "The Estate of the Insured" as the beneficiary on the life insurance form. But, does this necessarily make sense in every situation? Not necessarily. Consider the effect as it relates to creditors. For example, if a life insurance policy is payable to the estate, the proceeds would be subject to the claims of creditors. Whereas, if the insurance policy remains payable to the designated beneficiary, it is not subject to the claims of creditors.
So, not only is it important to periodically review one's life insurance policies to make sure that the beneficiary or beneficiaries designated still make sense and a former spouse is no longer listed unless you are feeling generous, make sure you understand the implications of your decisions and how proceeds will be disbursed.
2. Bank Accounts. If a bank account is registered solely in one individual's name and unless that person has designated someone as a beneficiary of the bank account, the account balance will become a general asset of the estate. On the other hand, did you know that if the bank account is held jointly with someone else, that other person would have the right to withdraw the funds in the account and/or close the account? Consider the situation where an older client, Jane, (who is widowed) adds one of her three children as an authorized signatory on a bank account in the event of an emergency. But, Jane's desire is for her three children to share equally in her estate upon her death. In this scenario, the possibility exists that upon Jane's death, her one child (who is listed as the signatory) could close Jane's bank account and retain the funds. Does this sound like it could happen? How many times have I heard clients say that everyone in their family gets along and there is no cause for concern? That's great. But, money can influence things. Be careful. And to make sure this problem is avoided, appropriate language can be included in Jane's Will about these funds and the bank account to ensure the proceeds go to her estate.
3. Year's Support. Georgia provides for a Year's Support to a surviving spouse and minor children. Did you know that the main advantage for Year's Support is that the amount awarded takes priority over everybody and everything with the exception only of a secured creditor for an asset that is awarded? But, is Year's Support appropriate in every instance? As an example, consider the situation where someone has been married before and he/she wants to provide for the children from the prior marriage. Contrast that with the situation where a couple is newly married and has no children. Depending upon the financial circumstances of the decedent, it may be a good idea for the surviving spouse to have the right to elect Year's Support and to receive the benefits under the Will versus one or the other. Bottom line: it's important to make sure to review your Will and ask the questions as it relates to Year's Support so as to make sure everything is drafted appropriately for your particular situation.
Of course a lot could be said about these areas and it is always recommended to talk with the appropriate professional regarding specific situations, but I hope this high level summary was helpful.