Retirement Income Blog

Trusts play a big part in estate planning. What you don’t know about them can hurt you and your beneficiaries’ financial health and possibly your own.
 
A trust is a legal entity - just like a corporation or a person. It holds assets for a beneficiary.  The beneficiary could be you or another person. A trust document states the purpose of the trust and how it’s to be carried out. A trustee is the person (or entity) that carries it out. The grantor (e.g. you) creates and generally funds the trust.  Trusts in estate planning play a major role as you shall see.

A trust can be revocable or irrevocable. Revocable means that the grantor can decide to revoke the trust and take all the assets back for his use. In fact, such a revocable trust is really an extension of the grantor and taxed as if all the trust assets and their income were his. The most well known type of revocable trust is the living trust.  During your lifetime, this trust is transparent–it does not affect anything.  But upon death, the living trust contains a set of instructions that states how assets are to be divided.  As you see, the use of trusts and estate planning go hand in hand.

Revocable trusts serve to avoid probate. Probate – the court process of transferring assets in a deceased’s name by will or intestate - is a very public process. Trusts are not subject to probate – being a separate entity from the deceased – and can privately pass assets according to the terms of the trust. One of the objectives of trusts and estate planning is to retain privacy.  The additional benefit of a revocable trust is that it allows the grantor to control the assets and income of the trust as he wishes while he’s alive.

An irrevocable trust –once created by the grantor – is no longer under his control. It’s controlled solely by the trust document and the trustee. In this case, it’s taxed as a separate entity –unlike the revocable trust – and has an existence all its own.  In our tax system, whoever has the ability to control an entity is taxed and responsible for what that entity does. The irrevocable nature of a trust breaks that connection relieving the grantor of any subsequent tax or control issues. However, in reality, the trustee is usually a friend, relative or confidant of the grantor over which the grantor has influence and thus, can still exert indirect control over trusts assets. In this case trusts and estate planning serve to separate control (which the grantor still exerts) from ownership.  Assets are removed form the grantor’s estate with favorable estate tax and asset protection consequences.

The legal separateness of an irrevocable trust allows key benefits. First, that the grantor determines how the assets he puts in it are to be handled and distributed to his assigned trust beneficiaries – according to how he writes up the rules of the trust document. Second, the trust as a separate entity, can survive him indefinitely allowing his wishes to continue beyond his death. Third, the beneficiary, the object of the trust, benefits from the trust. Last, the trust’s legally protected from others (i.e, creditors) who may try to invade it or take the trust assets. Trusts in estate planning play these four major roles as just explained.

The use of trusts in estate planning have a clear objective to achieve. Examples of such trusts are:
o Spendthrift protection
o Charitable trust
o Life insurance trusts
o Asset protection trusts
o Bypass Trusts
o Qualified Personal Residence Trust (QPRT)
o Qualified Terminal Interest Property Trust (QTIP)
o Generation-Skipping Trust
o Irrevocable Life Insurance Trust ILIT

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You may be able to achieve more of what you want for retirement than you think. The right retirement advisor, often can help you see implications of your actions, decisions, and wishes and how they impact your retirement and estate planning. But your advisor cannot help you unless he knows what wishes are ultimately on your mind.

Retirement planning–in the most general sense–seeks to optimize a retirement income consistent with what makes you happy and financially comfortable. You can start with a simple tool like the retirement income calculator but you need to explain to your retirement advisor in detail, what you desire for your retirement lifestyle–how many trips you want to take, do you need to stay at the Ritz or will a tent be okay, how often you need to done out, go to theatre, etc. And the choices you make impact both your retirement and estate planning because the more you spend in your retirement years, the smaller estate you leave.

Your required retirement income depends on the amount of assets you have, how you intend to use and draw upon them, where you will live, and if you intend to work during some of your retirement years.  How these questions are answered can have significant impact on optimizing what you have. What’s left will dictate a lot about your estate planning since as mentioned, retirement and estate planning are two sides of the same issue.  Of course, how you protect your estate are matters of specific trust and estate planning.

Your legacy may include a donation to charity and bequests to your children and others. How you make charitable donations and bequeath to others can be achieved in a variety of ways through various financial planning approaches. And how much can be devoted to these desires will depend on the amount in your estate.

There’s a general rule offered by most retirement advisors that you can spend 4% to 5% of your nest egg annually and it will remain intact.  Remember that if you spend 5%, your nest egg needs to earn a lot more to compensate for cost of living adjustments and also taxes.  To have $10,000 to spend, your nest egg needs to generate $12,875 if we assume $2,500 goes to taxes and another $375 needs to get reinvested into the nest egg to compensate for the following year when costs will be 3% higher.

For many people, retirement and estate planning are competing goals because what you spend, you cannot bequeath.  In fact, many advisors will show you that you can  “annuitize” your next egg–i.e. spend not only the income but also some of the principal each year so that you have more spendable income.  Of course. if you erode the principal, the heirs get nothing.

A good retirement advisor can help you minimize the tradeoffs of retirement and estate planning. For example, maybe you want to leave your home to charity but want to reside in it for life now. (You get a tax deduction if you make the arrangement now that you otherwise miss if you leave the home at death.) You can in fact have both of these–live in your home for life, leave it to your favorite charity and even get a tax break today. Experienced retirement advisors are aware of how factors supporting your goals are interrelated, often through complicated tax, social security rules, and financial strategies.

To see what you can actually achieve, you need to talk openly to your retirement advisor about your ideas and wishes.

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A New Type of Trust May be Able to Solve Many Estate Planning Problems

Many wealthy Americans today are worried about what will happen to their estates after they are gone. Although many different types of trusts have been designed to help alleviate this problem, a new type of trust, called the “inheritor’s trust” has a level of flexibility that is unmatched by other estate planning vehicles. This type of trust is a dynasty trust, similar to many other types of dynastytrusts, except that this trust is a “stand alone” trust that allows for changes in investment strategies, as long as the beneficiary is willing to discuss the situation with his or her grantors.

A dynasty trust is one tool of estate planning strategies for the well to do.  Dynasty trusts are multi-generational trusts created specifically for descendants of all generations. Dynasty trusts can survive 21 years beyond the death of the last beneficiary alive when the trust was written. Assume that wealthy Mr. Henderson uses this estate planningstrategy at age 80.  He has a new born grandson.  Assuming the grandson lives to age 90, the trust would continue for 111 years.  This trust could provide retirement income for several generations.

 This type of trust can potentially provide substantial benefits for those seeking long-term, multi-generational planning, such as the type designed to avoid the generation-skipping transfer tax. It can also protect against divorce, creditors and estate taxes as all assets in the trust are immune to liabilities of the trust beneficiaries (this is a basic estate planning strategy–place assets in trust for protection form creditors). Any parent that is currently gifting assets to their children on any kind of regular basis should seriously consider establishing one of these trusts. The key difference between this type of trust and other trusts is that the beneficiaries must be willing to talk openly with their grantors regarding how they want the money invested or handled.

In order to establish an inheritor’s trust, an irrevocable dynasty trust must be established first. The inheritor is more often than not the trustee, and must usually choose a close friend or confidant to be the distribution trustee so that the trustee willingly makes distributions for supplemental retirement income to the beneficiary. This trustee has absolute control over what kind of distributions are made from income and principal. However, this transference to a third-party trustee is exactly what makes the assets of the trust so secure from creditors. Beneficiaries have absolutely no legal right to force any kind of distribution from the trust, which renders creditors unable to force any type of distribution from the trust as well. It is important to select the correct state to create the trust in, as the validity of these trusts will vary according to state law.

If you are worried about your estate tax situation or whether your beneficiaries will be able to do what they want with your assets once you are gone, contact experience legal counsel for the right estate planning strategy. The legal system provides many tools for sophisticated estate planning strategies but do people use them?

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If you don’t want to waste your dollars, its critical that you understand estate tax planning basics and how to avoid estate tax.

The Annual Report on the United States Government reports that Americans paid $26 Billion in estate taxes in 2006. Every dime of those taxes could have been avoided.  How do you think the kids felt when they wrote out a check for $300,000 for estate taxes and then learned from the attorney that mom and dad could have saved them every penny?

If you don’t like wasting money on taxes and don’t want your kids squandering money either, then these estate planning basics will explain what you need to do.

You must realistically answer these questions: 

1. Will your estate be worth more than $1 million ($2 million for a married couple) when you die?   If Congress does not change the estate tax rates and limits, from 2011 and later, estates above $1 million will be subject to estate tax.
 
2. Do you have any assets that could be double-taxed at your death (double taxed by income and estate taxes, which could consume 70% of the value) such as IRAs and annuities? Estate planning basics require that you plan now to avoid this double tax and there are many ways to do so.
 
3. Do you think that if you need to take action, that your attorney would call you up on the phone and tell you? (He probably won’t as many attorneys wait until you call them).  So an important estate planning basic is that no one will tell you what to do.  You need to ask.
 
4. Do you think you have plenty of time to take care of any estate tax problem–like the people who paid $26 billion last year?  Probably the most critical of the estate planning basics is to not procrastinate.  Death does not discriminate by age.  If you are 35 and have a family, get your estate planning in order now.
 
5. Do you incorrectly think that estate planning means giving up control of assets or making gifts or giving to charity?  (A fundamental of estate planning basics is that you can keep total control of assets yet still remove them from your taxable estate).
 
6. Do you have the false notion that a living trust will eliminate your estate taxes?(You will pay estate taxes on assets over the exempt threshold, living trust or not).
 
7. Do you think that you need to die in order to get your estate tax exemption? (You don’t, $1 million is available right now and many wealthy people use their exemptions when they can make the most of them, during their lifetimes).

If you answered “yes” to any of the above estate planning basics misunderstandings, you probably have an estate tax problem.

Your next step–ask your retirement consultant or your CPA what you need to do to get your estate in order.

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One aspect of retirement planning is protecting the assets you have accumulated.  Estate planningis also about protecting the assets you have accumulated but comes at the issue of asset protection from a different aspect. For example, in retirement planning, one is concerned with asset allocation–the idea of spreading your money among different asset classes so that a decline in one class is offset by an increase in another class.  In estate planning, you protect your assets by forming trusts which can protect assets from estate taxes and claims of creditors.  When retirement & estate planning are coordinated, they become a powerful combination of tools to create and preserve wealth.

However, sometimes, the goals of retirement planning and estate planning compete. When its time to retire, one often has the choice to leave their funds in their employer’s 401k (some companies allow retirees to leave their account with the company) or rollover their funds to an IRA.  Is this an issue of retirement or estate planning?  From a retirement planning perspective, one may have more investment choices in the IRA and thus do the rollover.  From an asset protection standpoint, one’s funds are protected from creditors by ERISA.  Such protection is not automatic once the funds are rolled over into an IRA as creditor protection of IRAs is a state law (note that we are addressing non bankruptcy creditor protection here).  In this case, retirement & estate planning objectives may be in competition–we want the rollover for investment flexibility and we want to keep funds in the 401k for ERISA protection.

Another example where retirement & estate planning compete impacts the trade-off of capital gains and estate taxes.  If, for example, you own real estate that you don’t want to see because of high capital gains tax, you are making a retirement or financial planning decision that saves tax on the gain (currently 15% federal).  However, if the asset remains in your estate when you pass, depending on the estate tax laws in effect currently for estates in excess of $2 million, your heirs will pay 45% tax on the entire asset value.  So do you sell the asset now, pay the capital gains tax, gain liquidity which can be distributed from your estate before you pass or do you leave the real estate in your estate, avoid the capital gains tax yet expose the property to estate tax?

Another example of interdependence of retirement & estate planning the naming of beneficiaries on your IRA.  One may consider this a retirement planning issue involving the proper management of your IRA.  However, it is also an estate planning issue as it involves the distribution of your estate, potentially how much estate tax is paid on your estate (e.g. IRA funds left to charitable beneficiaries are exempt from estate taxes) and also estate liquidity.  Whether one spends more of their IRA funds and less of their non-IRA funds impacts how much of each type of asset remains in ther estate and thus we see that retirement & estate planning are again intertwined.

Last, consider the issue that faces most baby boomers coming up on retirement.  Most will learn a word which is unfamiliar to them–annuitization.  This is the process of converting an asset into an income stream.  While baby boomers parents have left many of them substantial assets, many baby boomers will not be able to leave an estate to their heirs as the boomers will need to annuitize their assets in order to produce a sufficient retirement income.  This is the ultimate competition of retirement and estate planning goals.  Time to get out the retirement planning calculator and consult you estate planner.

Post provided by Javelin Marketing

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A trust serves to separate legal and equitable title.  In plain English, this means that a trust holds an asset (any asset like a house, car, or bank account) in the name of one person (called the Trustee), but that the asset is really for the benefit of someone else (called the beneficiary).  Why have trust and pursue trust planning?  The use of trusts gives flexibility and power in controlling how your assets are used if you become incapacitated or pass away or desire to control or protect your heirs.  Different types of trusts can actually be created for all kinds of purposes, and you will hear terms like “Special Needs Trust”, “Land Trust”, and “Revocable Trust”.  Trust planning requires that you simply be precise about your desires and what you wish to accomplish so that you get accurate retirement help from a trust attorney who can draft the documents properly. Proper trust and estate planning can result in several benefits:

• reduction of estate taxes
• protection of assets from creditors
• managment of assets for those who don;t have the knowledge or ability to do so
• control of how your bequest i8s used after you’re gone
• avoidance of probate

A Trust is simply words on a piece of paper–words that rare recognized by the legal system as valid documentation of your desires. The most common trust used in estate and trust planning is a revocable living trust, sometimes referred to as a revocable inter vivos trust.  Within the generic living trust are “sub parts” or flavors, such as A-B Trusts, Disclaimer Trusts, QTIP, and QDOT Trusts.  Living trusts are the most flexible type of trust used in trust planning because the trust can be amended or revoked at any time by the competent trustor (the trustor is the creator of the trust- synonymous with grantor or settlor).  Revocable living trusts are the most basic type of trust and often acts as the starting point for estate and trust planning.

Typically, you will be the initial trustee (e.g. person who controls the assets in the trust) of your trust and you will name Successor trustees to manage and control your assets when you are unable or after you pass. As long as you are living and have the mental and physical capacity to act as trustee, you will continue to do so and have full control over all of your assets as you would without a trust including spending, moving assets around, buying and selling real property and investments.  At the time you become incapacitated or upon your death, the named successor trustee (usually a family member but often an attorney or CPA) will gather your assets, pay valid debts, claims and taxes and distribute your assets according to your wishes as directed in your trust.  Selecting a knowledgeable succesor trustee is a crtical issue in trust planning as you want someone who will make good business decisions to settle your estate.

Although a trust allows assets to pass without probate (which can be lengthy and costly court process), a complete estate plan includes a pour-over Will, as a safety mechanism to move any assets into the Trust that may have accidentally been left out.  A will is also necessary to name guardians for any surviving minor children.  Even in the process of trust planning, wills are used.

A Trust can contain provisions that can reduce or eliminate some estate taxes (by divisions of an estate into parts) and a trust permits you to specify conditions for the distribution of your assets.  A living trust does not require a separate tax return during your lifetime, but other types of trusts which are irrevocable are separate financial entities and will have their own taxpayer ID and complete a tax return.   While trust planning may sound complex, it is a common and straight forward process when done by an experienced estate planning attorney.

Typically, trust planning is am arena of financial planning that does not lend it self to tools like a retirement income calculator, financial planning software or monte carlo simulations as this planning is very individualized and is qualitative vs quantitative in nature.

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When an individual dies, assets of the decedent may be transferred based on how their titled or a named beneficiary.  For example, assets held as joint tenants with right of  survivorship pass directly to the other joint owner.  Similarly, IRA accounts pass directly to the named beneficiaries as do payable on death accounts, transfer on death property, and most life insurance and retirement benefits.  For other assets that do not have a named beneficiary, an estate/trust Administration process is necessary.  In the case of a person who dies with a will, that process is called probate and requires proceedings in probate court.  In the case of a person dying with assets in a trust, then probate is avoided and the estate/trust administration duties fall to the successor trustee named in the trust, typically a family member.

It is the probate court’s responsibility, as it is the successor trustee’s in the case of a trust, to ensure the assets are collected, maintained, and distributed among the decedent’s heirs, beneficiaries, and/or creditors according to the direction of the decedent as expressed through a will or the trust.  This process is known as estate/trust administration of a decedent’s estate.
 
After the death of an individual, an estate may be opened by any interested person filing an application to administer the estate. This is usually done by the executor, a family member named in the will.  In the case of a trust, the estate/trust administration is handled privately, not involving the court and can often be accomplished in a matter of weeks, not months.  That is one advantage of estate/trust administration with a trust–speed.  The other advantage of estate/trust administration is privacy.  While matters involving a will involve the court as explained above, these matters become public.  Estate/trust administration handled when the decedent has a trust is handled privately by a family member or someone close to the family and there is no public record.
 
In both cases, will and trust, the estate/trust administration process involves the following steps:

Application for authority to administer the estate and admit the will to probate if one exists;
Appointment by the court of a  fiduciary (in the case of a will);
Gathering assets and obtaining appraisals as required;
Filing the inventory in a timely manner;
Payment of creditors;
Filing of estate and income tax returns and payment of taxes, if any;
Distribution of remaining assets to beneficiaries;
Closing the estate by filing a final account or certificate of termination in a timely manner.

While it’s usually the case that estates are closed once all assets are distributed, in the case of a trust, the estate/trust administration process can continue for years.  For example, the decedent may have specified in his trust to have $20,000 distributed annually to his 20-year-old grandson.  The would require the trustee to administer the trust over the next 60 years or so. While this is not a difficult job by the trustee, the desires of decedents who use trusts can be more involved and require estate/trust admininstartion over decades.
 
Note that the eatate/trust administration issues have no impact on estate taxes due.  Whether the decedent has a trust or will, the same estate tax impact can be accomplished in the design of the documents. Avoiding probate does not mean avoiding estate taxes. Assets left in trust are subject to estate and inhertiance tax just as assets left through a will.  Avoiding estate taxes requires that tax and estate planning be done well before death, coordinated by an experienced retirement advisor.
 
If a decedent has no will or trust, the estate/trust administration process is similar as if a will had existed. However, the State may decide on the distribution of certain assets because there is no documentation of desires from the deceased.

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Estate planning is not just for the rich. It is for anyone that cares about their heirs.  In fact, most aspects of estate planning basics have little to do with money.

Estate planning basics do address the eventual and economical distribution of your possessions and authority but more importantly, how you take care of your loved ones. Many of you may think you don’t have an estate plan - but you do! Federal and state rules will determine who gets what and how much and how you get treated if you become very ill. If not prepared with basic estate planning knowledge, it cost cost money and heartache.

Putting your estate in order can be complex. It depends on how many assets you have, where they are, your family structure – children, divorced and previous children, state laws – and more. But, no matter how small or large your estate is, here are the four tools of basic estate planning. These are your

1. will or trust
2. durable power of attorney
3. living will
4. health care proxy (medical durable power of attorney)

Your will shows your wishes for disposition of your assets and names a guardian for minors. In it state how property in your name should be distributed, name an executor to be in charge of carrying out your wishes, provide for payments of costs incurred in settling your estate. And for your minor children, designate a guardian and name a trustee to protect their inheritances. One estate planning basic is to use a trust in place of a will because it maintains privacy and avoids court involvement in the settlement of your estate.  Additionally, trusts typically contain conservatorship provisions.  If you should lose your mental capacity in your old age, do you want your family to be in court about your care or would you rather have a written plan in advance?  Estate planning basics call for planning ahead.

Also note that in the case of a larger estate proper planning will also include estate tax planning, covered in a future post.

Your Durable Power of Attorney gives someone else permission to manage your affairs if you become disabled or incapacitated. With it, as soon as you become incapacitated, your designated person, i.e. your spouse, adult child or anyone you trust, can manage (pay bills, make decisions) your affairs or you can retsrict that power to only particular assets or accounts. Don’t wait! You can’t create a durable power of attorney once you’ve become incompetent.

Your Living Will – expresses your wishes to your doctors when they must consider use of life-sustaining measures. This is your declaration on what life-sustaining medical treatments you will (or will not) allow if you become incapacitated. For example, you may request that artificial nourishment be (or not be) withheld if you become terminally ill.  You may recall the Mary Schiavo case on this issue which became a national news story only because these estate planning basics were ignored.

A Medical Durable Power of Attorney (or health care proxy) is a crucial and basic estate planning tool - designates someone to make health care decisions on your behalf in the event you no longer can. It’s a document that gives a person you designate permission to make health care decisions on your behalf if you are unable to do so in the future, and perhaps, consistent with your living will. Talk to the person before appointing him, and be sure he or she understands and is comfortable with your wishes, and is strong enough to carry them out despite some family members’ objections.

Seek professional help in planning your estate consistent with your state laws and your particular circumstances. No one will tell you about the estate planning basics.  Be proactive and ASK your retirement advisors or your CPA what you need to do to get your estate in order.

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The Annual Report on the United States Government reports that Americans paid $25 Billion in estate planning tax. Every dime of those taxes could have been avoided.  How do you think the kids felt when they wrote out a check for $300,000 for estate planning tax and then learned from the estate planning attorney that mom and dad could have saved them every penny?

If you don’t like wasting money on taxes and don’t want your kids squandering money either, then this article will explain what you need to do.

You must realistically answer these questions: 

1. Will your estate be worth more than $2 million (2008 estate planning tax exempt amount, subject to change) when you die?   By the way, you cannot assume that the estate exemption will grow as some people believe.  Congress can change this number at any time and there are powerful people in Congress who want to reduce the exemption.  All you do know is that right now, you can shelter  $2 million of assets, while it lasts.
 
2. Do you have any assets that could be double-taxed at your death (double taxed by income tax and estate planning tax, which could consume 70% of the value) such as IRAs and annuities?
 
3. Do you think that if you need to take action, that your attorney would call you up on the phone and tell you? (He probably won’t as many attorneys wait until you call them).
 
4. Do you think you have plenty of time to take care of any estate planning tax problem–like the people who paid $25 billion last year?
 
5. Do you incorrectly think that to eliminate or reduce estate planning tax means giving up control of assets or making gifts or giving to charity?  (With good estate planning, you can keep total control of assets and still remove them from your taxable estate).
 
6. Do you have the false notion that a living trust will eliminate your estate planning tax? (You will pay estate tax on assets over $2 million living trust or not).
 
7. Do you think that you need to die in order to get your $2 million estate exemption? (You don’t, $1 million is available right now and many wealthy people use their estate exemptions when they can make the most of them– during their lifetimes).

If you answered “yes” to any of the above, you probably have an estate tax problem.

There are several ways to reduce or eliminate estate planning tax, including:

• gifting of assets to heirs now rather than leaving at death
• the use of estate planning strategies and tools (e.g. GRATS, QPRTS) to divide assets into their lifetime value and their discounted remainder value and this reduce the estate planning tax
• discounting the value of assets with minority or fractional discounts (and thus reduce the exposure to estate tax)
• proper estate division between spouses

Other posts in this blog will address these estate planning strategies individually.

Note:  this article uses the term “estate planning tax” to help the 6000 people who search Google each month for this term when they really mean “estate tax.”

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Perhaps you have made your will and now you think you know where your money will go. Think again! Is there a new child, a new spouse, or was there a death in your family? If so, then take these changes into account in your will. Or what if after you pass, things as they are now change–will those heirs you selected get what you want them to have?  Will preparation requires thinking about not only today’s relationships but also potential future relationships.

In addition to a change in the relationships amongst heirs that impact your will preparation, there is also State law. Your will is not the law. The probate court may override your will for various reasons –one of which is non-conformance with state law. State laws often require that a surviving spouse be entitled to a third to a half of the estate. If you have taken her or him into account, then at her or his death, a substantial amount of your estate will shift to other beneficiaries. You may wish to re-evaluate who could get your assets and be more definitive in your will preparation.

Suppose your spouse has died and you prepare a will. You leave your entire estate equally to your two children, each of whom has two children. Your beneficiaries are therefore your children and grandchildren, which the law regards as your “issue” (direct descendants). If you live long enough, there is a chance that you may outlive one of your children.

If one of your two children died, your estate distribution would depend on how you referenced their inheritance–as “per stirpes” or “per capita.”  Huh?  This is where state law can determine who gets what without you even realizing the following could happen.  The following is what make specificity in will preparation so important.

 If you leave an inheritance to your surviving issue per stirpes, then your children’s children will divide the share their parent would have received had he or she lived. On the other hand, if you leave the inheritance per capita, then each surviving issue gets an equal share.  If you don’t  specify this in your will preparation, your State law decides.

To illustrate the above example, we assume that both children were due equal shares of your estate. That would send half of your estate to the remaining child, while the other half would be equally divided by the children of the other child. That’s the case for per stirpes. See figure below.

Under a distribution per capita, when one child dies, all the remaining issue equally divides the estate. The remaining issue is your surviving child and his two children, along with the two surviving children of your deceased child. That is five people and each of them receives one-fifth of the estate. That is quite a significant reduction for your sole surviving child.   Now the preparation of a simple will does not seem so simple, does it?

Lastly, if you willed an inheritance to a friend, but he predeceased you, then his wife will likely receive your bequest (again, this depends on State law which operates when your will preparation and instructions are inadequate). If your intention was that the bequest was only for the friend, then you must state in your will that he must survive you to receive it.

If there is a major change in your family structure–or in your financial circumstances too–you should revise your will immediately.

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