Do We Really Need Wills If We Have Joint Accounts?
Allan asks, “All of my and my wife’s assets are held in joint names and we have named each other as beneficiaries of our registered accounts. Is it necessary to go to the expense of having a will prepared?”
This is a common estate planning myth. And it will work out just fine for most couples when one of you dies. If assets are owned as “joint with right of survivorship” or have designated spouses as beneficiaries, they automatically become the property of the survivor and bypass probate.
But what happens if both you and your spouse die together or within days of each other?
Even though it may seem unlikely, it does happen, especially when spouses travel together. What if the surviving spouse becomes too ill or incapable of making a will? Life doesn’t always go as intended. You can’t deal with these possibilities if you only designate your spouse as beneficiary or joint owner.
You need to plan for contingencies and prepare for possible catastrophes. That’s why you take out insurance for accidents, fires and flooding. A will gives you that extra insurance.
Prevent estate problems
Whatever the circumstances, simultaneous deaths can present critical estate problems.
The jointly held property of each spouse, including insurance proceeds and retirement accounts will go into separate probate. This is a nuisance for heirs. It will take time to settle and administrative expenses will increase. For couples with a lot of assets this can become very expensive.
Everyone needs a will
Fortunately, couples can avoid these problems by planning ahead.
Estate documents will usually have a provision that specifically says who will be considered the survivor in the event of simultaneous deaths.
You can name backup beneficiaries and an executor to manage your assets, pay your bills and disburse benefits. This can reduce probate hassles.
The bottom line
Trying to save a few hundred dollars by not preparing a will could seriously backfire and cost your beneficiaries thousands of needless dollars.
Why take that chance?