The Simple Will May Not Always Be The Answer
(or Why the Will is Not Always the Best Way)
When people hear the term “estate planning,” they usually think it means some complicated set of documents that have tax ramifications. This could not be further from the truth with respect to the majority of U.S. citizens.
An “estate plan” is a written expression, be it a will, a trust or both, that specifies how you want your assets managed and distributed after your death and even during your life. If you have any property and intend to leave it to someone after you are gone, you need an estate plan. An estate plan can be as simple as a will; or, it can be more complicated and include trusts.
Whether you are married or single, if you want to leave property to a loved one, a charity or to any other person (i.e., a beneficiary), it is important you have at least a will. A “simple will” is typically defined as one that leaves property to each spouse (assuming a marriage) and after the surviving spouse dies (if the person is single, then upon that person’s death), all property is transferred to children or other family members. Most people have simple wills as their primary estate planning tool. In most situations, a simple will is the easiest and best form of planning to transfer property at a person’s death.
However, if a person suffers from a condition, such as a dementia, including Alzheimer’s, and this condition could cause the need for long term care and/or obtaining governmental or insurance benefits , a simple will may not be the best alternative. The following example illustrates my point.
Assume a husband learns his wife is diagnosed with a dementia condition (in this example, a child could be the one diagnosed instead with the same results). The wife is prescribed medication (which, but for insurance or government benefits, would probably bankrupt the couple). The couple has children. The couple has a will indicating that upon the first spouse to decease, the surviving spouse obtains all the marital assets, and, then, after both spouses decease, the assets go to their children. This “simple” will works assuming the wife deceases first. If, on the other hand, the husband deceases first, and if he leaves everything to his wife in his will, the wife could lose long-term care benefits from the government or other entitlement programs merely because of this inheritance. This could be financially devastating. Under Florida law you cannot just disinherit a spouse to solve this problem.
If you find you have a situation where a person is diagnosed with a condition that could have long term implications and also may require the use of expensive medicines, rather than using a simple will and leaving property outright to that person, the use of a Special Needs Trust might be the best way to ensure not only that a person receives the assets you want them to receive, but also assure continued benefits and insurance coverage so a person does not become financially devastated merely because they receive an inheritance. Use of an Special Needs Trust allows property to transfer to the person to whom you want it to go, but should prevent loss of any government or insurance benefits.
Simple wills work; there is no wrong way to transfer your property. However, there are ways you can transfer property by merely adding additional “bells and whistles,” such as a Special Needs Trust, that can ensure your intent on how you want your property transferred is followed, and prevent financial devastation merely because you wish to leave property to your spouse or other loved one.
Robert M. Morgan - born Richmond, Virginia, 1959. Partner in Charge of the Estate Planning and Elder Law Department of Ford, Bowlus, Duss, Morgan, Kenney, Safer & Hampton, P.A., Jacksonville, Florida. Undergraduate degree from Arizona State University and Juris Doctor from Mississippi College, with Distinction. Author of numerous articles and seminars on real property, probate and estate planning issues. Member Florida, Tennessee and Jacksonville Bar Associations; served as chairperson of the Probate and Trust Law Section of the Jacksonville Bar, and is an active member of the Elder Law Section of Florida Bar and the AARP Legal Services Network. Member National Academy of Elder Law Attorneys and Academy of Florida Elder Law Attorneys and the Northeast Florida Estate Planning Council and Adjunct Professor of Law, Florida Coastal School of Law. Practice areas include elder law, estate planning and probate, real estate, corporate and business law. He can be reached at (904) 268-7227 or rmorgan@flfirm.com.
The firm practices in the areas of Estate Planning (including Elder law); Commercial and Residential Real Estate; Corporate and Business and Contract law; Litigation; and Probate and Guardianships.