A will is an important estate planning document that outlines how you want your assets and affairs handled following your death. Key items accomplished with a will include:
- Who will serve as a guardian to your children
- Who will receive your possessions, assets and real estate
What if I die without a will?
If you die without a will, you die “intestate,” and the intestacy rules will dictate who handles your affairs and who receives your assets. In other words, if you don’t have a will in place, the state makes one for you. Frequently, the time, expense and administrative requirements of dying intestate significantly reduce the amount of assets your beneficiaries receive. And the beneficiaries chosen by the state may not even be the ones you intended to inherit your assets.
What does a will do?
A will allows you to:
- Choose your beneficiaries – A will allows you to designate how your assets are passed along to your loved ones. Without a will, the state will decide how to distribute your assets. In many cases, state laws are not consistent with people’s wishes.For example, in many states, if a resident dies without a will the law states the surviving spouse is entitled to half of the estate and certain other allowances. The children are entitled to receive the other half of the estate. Most people assume their surviving spouse will receive all of their assets. The distribution of half to the spouse and half to the children often results in unpleasant family situations for the beneficiaries.
- Choose your executor – An executor is the person chosen to assume responsibility for paying your taxes and debt, collecting and managing your property and distributing your assets in accordance with the terms of your will. The executor also files your will with the court, manages your assets during the probate process, handles the day-to-day details of your estate (bills, mortgage payments, etc.) and establishes an estate bank account. Your will allows you to choose your executor and pay him or her a fee for services.
- Name guardians for your children – A will allows you to name the individual(s) you would like to raise your children in the event of your death. If you die without naming a guardian, anyone interested in taking care of your children can ask a judge for guardianship. The judge will then decide who will raise your children.
- Establish a testamentary trust and a testamentary trustee – A testamentary trust is a trust established within a will that specifies how your money should be used for the benefit of your children or other beneficiaries after you die.For example, a testamentary trust may state that your children are to receive principal and income for their health and education until they reach age 25, at which point the balance of the trust is distributed to them.The testamentary trustee is the person or company you select to hold, invest and distribute your assets in accordance with the terms of your testamentary trust.
What doesn’t a will do?
A will does not:
- Avoid probate
- Reduce or eliminate estate taxes on its own (but special estate tax planning provisions can be included in a will or trust)
If you have any additional questions about drafting or modifying your will, please contact us to schedule a free, no-obligation consultation.