DennisBeaverJuly 23, 2011 (Original publish date) • By Dennis Beaver

“Do I really need a will, or is there some other way of leaving money and property to family or friends?” Jenny asked You and the Law, describing herself as follows:

“I am 32, single, no children. Both of my parents are living. My sister and her family live in San Diego. My car is paid for, I rent an apartment, have a retirement account through work and an IRA. I do not have life insurance. I have a checking and savings account. Currently I do not have anything special to leave to anyone, but would want to be sure my family members can use my assets to pay any of my debts as well as funeral expenses. If there is anything left over, I would like those funds to go towards the education of my nieces and nephews. My net worth, with everything added together, is well under $50,000.”

Not true that everyone needs a will

It is not true that everybody needs a will, and in fact, for lots of people, that’s the last type of legal document they need.

A “do-it-yourself will kit” can be a valuable tool in the hands of someone who knows what they are doing. But if you ask any lawyer who specializes in estate planning to describe the legal nightmares they’ve seen resulting from the frequent improper use of these materials, be prepared to spend an afternoon listening.

Recently, I was invited to meet readers at the Hanford Sentinel’s booth during the Main Street Hanford event, held Thursdays in the summer months. Lots of people dropped by to say Hi or to ask legal questions, many of which concerned wills, family trusts and estate planning in general.

What I found scary were readers who desperately needed a consultation with an attorney, but who either had or were about to buy a will and other documents from some online source. Most did not understand what they were getting into, how much hassle – and expense -they could create for their family by using the forms incorrectly. It became clear during our conversations that very few actually needed a will.

Simple ways for Jenny to transfer property with no will and no probate

“At this stage in her life – looking at the net value of what she has, where it is and how easy it is transfer after her death – Jenny probably does not need a will,” Bakersfield estate planning attorney Melvin Thompson told us. “When the net value of your property is in the $100,000 area or more, then a living trust would be appropriate, but not at this time for Jenny,” he points out.

“Checking and savings accounts, IRAs and retirement benefits allow you to name a beneficiary – that’s the person or people who will receive those funds upon your death without having anything to do with probate or the courts. It is extremely important for Jenny to review all of those accounts and employment-related benefits to be sure that she has named the right family members.

“As long as beneficiary designations have been properly filled out, when the owner passes away, the funds will go to them directly when a copy of the death certificate is provided. These types of accounts are also known as Payable on Death or Totten trusts. What is unique about them is that the beneficiaries have no ownership rights until the person who set up the account passes away. With life insurance policies, it’s the same thing.

“The only issue with Jenny’s wishes concerns her nieces and nephews. While some banks and financial institutions will accept language which reads ‘Payable on My Death to my sister, in trust for her children’s education,’ others would require a trust to be set up.

“The easiest way to provide for her nieces and nephews would be to set up a bank account under the Uniform Gift to Minors Act and make regular deposits. That avoids any will or trust issues,” he suggests.

“Remember that you can generally change beneficiaries at any time. So, if you realize a beneficiary has become unable to manage money, or for whatever reason you want the funds to go to someone else, don’t just think about it. Either go in or contact the financial institution and tell them what you want to do,” he stressed.

“This is Jenny’s money, and she has the right to close savings or investment accounts at any time. That’s one of the benefits of these types of accounts – it’s the owner’s money.”

If not a will, what does Jenny need?

“While your reader does not need a will, there are other, extremely important documents she really should have,” he added.

We’ll look at each of them in our next story.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.