“I LOVE YOU WILLS”: A NOT-SO-FUNNY VALENTINE
In honor of Valentine’s Day, we will focus on the trappings of so-called “I Love You Wills”.
An “I Love You Will” is a simplified Last Will and Testament that directs that upon your death, everything in your name will be left to your spouse. Your spouse typically has a “reciprocal” Will directing that everything will pass to you if they die first. While this may seem like a good plan, this plan fails to take a number of potential (and likely) factors into consideration, such as:
- Probate Avoidance: An “I Love You Will” ensures that you will be subject to a formal probate administration. Court-administration of your Estate can be costly and time-consuming, and without privacy. Utilization of a trust-based plan can help with probate avoidance.
- Disability of the Testator/Testatrix: Utilization of a trust-based plan (as opposed to a Will-based plan) can also provide some additional protection for you, for instance: by providing a framework for the management of your financial affairs if you become incapacitated, thus avoiding the stress and expense of court-intervention via Guardianship proceedings.
- Family Dynamics: In a perfect world, an “I Love You Will” may be a perfect tool; however, more often than not, family means a lot of love and happiness – but also a lot of baggage. The best way to prevent unintended consequences with respect to the disposition of your assets upon your death is to continually review and update your plan along with changes in your family and personal circumstances. The best protection when you were 22 and unmarried is not the best protection when you are 72 and have great-grandchildren.
- Medicaid (or VA) Benefits: “I Love You Wills” offer zero long-term care protection. All assets received by the surviving spouse will typically be received outright and will be countable for Medicaid and VA purposes, and considered available resources for the purposes of virtually all forms of means-based government benefits.
- Disability of a Beneficiary: In the event that one of your beneficiaries becomes disabled or develops special needs, the outright receipt of funds (pursuant to a simplified Will) will not result in the best protection of your beneficiary.
- Guardians for Minor Children: Simplified Wills typically do not provide for a scenario in which both spouses die or are incapacitated (as part of a common accident), or in close succession (or one spouse dies and the other is incapacitated).
- Accidental Disinheritance / “Will Substitutes”: the Florida Statutes provide some relief in the form of disinheritance of your former spouse named in a Will executed prior to a divorce; however, if you have no back-up beneficiaries, your assets will be distributed in accordance with statutory provisions (in some cases, your Estate will escheat to the State of Florida!)
Additionally, even if your Will states that everything goes to your spouse, if you have named other beneficiaries on so-called “Will Substitutes” (assets with beneficiary designations such as life insurance and retirement accounts), you may inadvertently transfer assets away from your spouse (in most cases, the beneficiary designations will control), potentially leading to litigation with respect to Florida’s “Elective Share”. The costs of litigation will typically be borne by your Estate (and ultimately, your intended beneficiaries).
Essentially, what seems simple during life may result in unintended difficulty after your death. The best protection for your loved ones starts with an Estate Plan that is representative of your individual and unique circumstances. Contact our firm today for a consultation.