A will is, for many people, the basis of the estate plan. It’s the first document they draft. It may be all that they think they need.
While writing a will is important, you need to know that you do not have any control over the estate, and you do not have many ways to protect that money. You pass it directly to your children and other heirs, and they can use it in any way that they desire.
This means that the money could get lost due to:
- Frivolous spending
- Bad investments
- Bankruptcy filings
- Predatory friends and family members
- Poor business investments
How much do you trust your heirs to do the right thing? If they have had financial problems in the past, you know that leaving them money in the will is a risk. Once it becomes part of their estate, it could be lost just like all of the other assets they control.
Even if they have not had problems before, you have to consider outside influences. Maybe it’s a spouse who convinces them not to use a prenup and commingles the assets before a divorce. Maybe it’s a “friend” who asks for a loan that they never intend to pay back.
This does not mean a will isn’t useful or necessary. It’s a good place to start. However, you also want to consider what legal steps you can take to pass on your assets along with the will. You must carefully consider what you want to happen with the money and how you can best set your heirs up for a successful future.