As a financial advisor, you are well-versed in the intricate labyrinth of the financial world. You can navigate through jargon like annuities, diversification, and yield curves with ease. Yet, when it comes to estate planning, some confusion can arise, especially when explaining wills and probate. At GoGo Estate, we believe in breaking down complex subjects into digestible information that you can use when discussing estate planning with your clients. So, to help you help your clients, we have provided simple explanations and examples about how wills work and how they may be affected by the probate process.

What Is a Will?

Simply put, a will is a legally-binding document that outlines how a person wants their assets distributed upon their death. In legal terminology, this person is known as the testator. To make it easier for clients to understand, describe a will as a set of instructions that specifies who gets what when you're no longer around. It's a personal blueprint for asset distribution that ensures your wishes are honored.

For example, say your client, Mr. Johnson, owns a home, a stock portfolio, and a prized classic car collection. In his will, Mr. Johnson can detail who inherits each asset, whether it be his spouse, children, friends, or a charitable organization.

Why Is a Will Important?

Without a will, the state steps in and distributes a person's assets based on intestacy laws, which generally favor immediate family. This could potentially lead to unwanted outcomes. For instance, if Mrs. Green passes away without a will, her estranged husband might inherit her assets, even though she would have preferred her wealth to go to her siblings. By drafting a will, your client ensures their assets are allocated as per their wishes, giving them peace of mind and control over their legacy.

Wills and Probate

The probate process can seem complex but think of it as the official method through which a will is executed. Once the testator passes away, the executor named in the will (or an administrator appointed by the court if there isn't one) presents the will to the probate court. The court verifies the validity of the will, and the executor administers the estate, ensuring debts and taxes are paid before distributing the remaining assets to beneficiaries as instructed in the will.

Let's use Mr. Johnson's situation again for a clear illustration. After his death, his will goes to probate. The court validates the will and gives his daughter, the executor, the authority to act. She pays off his outstanding debts, perhaps sells some stocks to cover estate taxes, and then proceeds to distribute the remaining assets. The house goes to his wife, the classic cars to his son, and the balance of his stock portfolio to his favorite charity, just as Mr. Johnson wished.

What Happens if There's No Will?

If a client dies without a will (known as dying intestate), their estate still goes through probate. However, the distribution of assets is dictated by state intestacy laws, not the decedent's wishes. This process can be lengthy, stressful, and may not align with what the client might have wanted.

For instance, Mrs. Green's estate, in the absence of a will, would still enter probate. However, her estranged husband might end up with her assets, despite their estrangement. By contrast, had Mrs. Green made a will, she could have left her wealth to her siblings, reflecting her actual wishes.

Your Role

As a financial advisor, you are well-positioned to stress the importance of having a will. By referring your clients to GoGo Estate, you can ensure their financial plans are aligned with their estate plans. You can also assist them in identifying assets that may be subject to the will.

If a client has a complex financial situation, you may consider suggesting that they purchase a GoGo Estate Trust Plan. These plans allow clients more control over the distribution of assets and avoid probate. For example, suppose your client, Mr. Smith, owns several businesses and properties across different states. A revocable trust could help Mr. Smith ensure smooth succession of his assets while maintaining privacy since trusts are not public record.

Conclusion

Wills are important aspects of financial planning and should be discussed with your clients. Though these conversations can be difficult, the potential consequences of not having a will make it essential. It's your duty to ensure that your clients understand that a will is more than a legal documents; it is a way for them to control their financial legacy, express their final wishes, and provide for their loved ones.

By breaking down these concepts into simple, relatable terms and examples, you can help your clients understand the necessity of a will and guide their families through the probate process.