You may have heard that it’s important to make a will. And it’s true—for many people, having a will is a very good idea. For example, if you have minor children, you should absolutely have a will in place that names someone to take care of your children if you die. A will also help you make arrangements for other life circumstances.
Things That You Can Do With a Will
• Decide who gets your stuff when you die. The most common and simple reason to make a will is to decide who will get your property when you die. Without a will (or other plan, like a living trust), your state laws determine how your property will be distributed usually to your closest relatives, like your spouse, children or parents. Learn more about what happens if you die without a will.
• Name an executor. After you die, someone needs to help wrap up your estate. You can use your will to name an executor (or personal representative, in some states) to take on this task. Without a will, a court will appoint someone to do this job.
• Name a guardian to take care of your children. A will is the only place to nominate a guardian to care for your children. If you don’t need a will for any other reason, but you have minor children for whom you want to name guardians, you should make a will. If you die without a will, a court will decide who should care for your kids.
• Name a property manager to take care of you children’s property. Property left to children, either by you or anyone else, must be managed by an adult. When you leave property to your children (through a will, trust, or life insurance or other beneficiary designation) you can leave instructions about how that property should be managed – usually, either through a trust or through UTMA. Separately, you can use your will to name a property manager who will take care of any property that is left without a named guardian.
• Provide a caretaker for your pet. You can use your will to name a trusted caretaker for your pet. You can also leave money to that person to help him or her care for your pet. Using a will isn’t the only way to plan for your pet’s care, but it is usually the simplest option.
• Provide a backup for your living trust or other estate plan. If you think you don’t need a will because you have a living trust and don’t need to name guardians for children or pets, think again—you might want to make a back-up will. A back up will provides a catch-all for any property that isn’t taken care of by your living trust or other estate planning device. For example, it will take care of any property that you forget to transfer into your living trust that you acquire after you make your living trust, or that is transferred incorrectly to your living trust.
Does Everyone Need a Will?
For most people, having a will is a good idea. The purpose of a will is to give directions about how your property should be distributed, and to name someone to care for your children. But you might not need a will if:
• you don’t have much property
• don’t have kids, and
• you really understand—and agree with—how your state will distribute your property when you die.
• By spelling out exactly how you would like your estate handled in the event of your death, a will provides peace of mind for yourself and your loved ones. Here are the top ten reasons to make a will.
Decide How Your Estate Will Be Distributed
A person who makes a will is known as a testator, and those who die without a valid will are said to have died “intestate.” If you die without a will, your estate is distributed according to your state’s intestacy laws. There is no guarantee that these state laws will align with your wishes. The easiest way to avoid this problem is by drafting a will.
Decide Who Will Take Care of Your Minor Children
A will allows you to decide who will take care of your minor children in the event of your death. If you do not make this decision in a will and the child’s other parent is not living or available, a court will appoint a guardian. The guardian will most likely be selected from among your family members. However, you know your child best and are probably in a better position than a court to make sure your child does not end up in the wrong hands.
Facilitate the Probate Process
• Probate is the legal process wills go through to ensure they are valid. The term also refers more generally to the court-supervised process of distributing an estate.
• Contrary to popular belief, probate is not always lengthy or expensive. This depends greatly on the size and value of your estate. That said, a clearly drafted will can minimize the delay. For example, if a disgruntled family member “contests” the distribution because they believe they deserve a larger share of your estate, your will can quickly settle the dispute.
Minimize Estate Taxes
The process of drafting a will early on provides an opportunity to explore various estate planning tools to minimize your estate taxes. You can also explore ways to reduce the inheritance taxes your loved ones may have to pay when they receive property from your estate. This is particularly useful if you have a very valuable estate that exceeds the federal estate tax exemption.
Decide Who Will Administer Your Estate
The person responsible for administering your estate is known as your personal representative. If you do not appoint this person in a will, a court will appoint one for you. Either way, this person is responsible for things like paying your debts, shuttering your bank accounts, canceling your credit cards, and distributing your estate. Needless to say, this is a position of great trust. A will allows you to appoint someone you know to be responsible and competent. Many people select family members as personal representatives. However, this is not mandatory and may not always be the best option if you are worried about family disputes.
Disinherit Individuals You Do Not Want To Receive Your Property
Again, if you do not leave a will behind, probate courts will distribute your estate according to state intestacy laws. These laws create a hierarchy of inheritance among your surviving relatives (known as your heirs) that may not reflect the most current state of affairs between you and your family members. A will provides an opportunity to specifically include people (known as beneficiaries) who intestacy laws would otherwise leave out. It also allows you to disinherit heirs who would otherwise be included. Make sure your instructions are drafted clearly and unmistakably to help silence family disputes down the road.
Make Gifts and Donations
In addition to distributing your estate to your family, a will also allow you to make donations to charitable causes. Further, gifts up to certain amounts may also reduce your estate tax. When drafting your will, make sure you check for the most up-to-date gift tax exclusions.
You Can Always Update Your Will
Once you draft a will, it can be updated as your life circumstances change. Your most recent valid will is normally the most authoritative. There are many reasons you might need to update your will. Examples include the birth of a new child, the death of a relative, and divorce.
Avoid Legal Challenges
A valid will is a binding document that voices your desires when you are no longer around to speak for yourself. If you’ve read through this entire article, you probably get the gist already. It is worth emphasizing just once more. A well-drafted will reduces the risk of legal challenges.
Tomorrow Is Not Promised
A will is an important document that acts as the foundation of your estate plan. Do not procrastinate. Once you pass away, the opportunity to make a will is gone. The result is often a great deal of stress for your surviving family members in a very emotional time.
A probate is the process of validating a deceased person’s will and placing a value on their assets, paying their final bills and taxes, and distributing the rest to their beneficiaries. Avoiding probate is by far the most common reason why people seek out the advice of an estate planning attorney. While many have never dealt with probate, they still know one thing: they want to avoid it at all costs. This stems from probate horror stories covered by the media or told by neighbors, friends, or business associates. For the vast majority of people, avoiding probate is a very good reason for creating an estate plan and can be easily achieved.
Reduce Estate Taxes
The significant loss of one’s estate to the payment of state and federal estate taxes or state inheritance taxes is a great motivator for many people to put an estate plan together. Through the most basic planning, married couples can reduce or even possibly eliminate estate taxes altogether by setting up AB Trusts or ABC Trusts as part of their wills or revocable living trusts. Also, a variety of advanced estate planning techniques can be used by both married couples and individuals to make the estate or inheritance tax bill less burdensome or completely go away.
Avoid a Mess
Many clients seek the advice of an estate planning attorney after personally experiencing or seeing a close friend or business associate experience a significant waste of time and money due to a loved one’s failure to make an estate plan. Choosing someone to be in charge if you become mentally incapacitated or die—and deciding who will get what, when they will get it, and how they will get it—will go a long way towards avoiding family fights and costly probate court proceedings.
There are generally two main reasons why people put together an estate plan to protect their beneficiaries: To protect minor beneficiaries, or to protect adult beneficiaries from bad decisions, outside influences, creditor problems, and divorcing spouses. If the beneficiary is a minor, most states have laws that require a guardian or conservator to be appointed to oversee the minor’s needs and finances until the minor becomes a legal adult—at age 18 or 21, depending on the laws of the state where the minor lives.
You can prevent family discord and costly legal expenses by taking the time to designate a guardian and trustee for your minor beneficiaries. Or, if the beneficiary is already an adult that’s bad at managing money or has an overbearing spouse or partner who you fear will squander the beneficiary’s inheritance or take it in a divorce, you can create an estate plan that will protect the beneficiary.
Asset protection planning has become a significant reason why many people, including those who already have an estate plan, are meeting with their estate planning attorney. Once you know or suspect that a lawsuit is on the horizon, it’s too late to put a plan in place to protect your assets. Instead, you need to start with a sound financial plan and couple that with a comprehensive estate plan that will, in turn, protect your assets for the benefit of both you during your lifetime and your beneficiaries after your death. You can also provide asset protection for your spouse through the use of AB Trusts or ABC Trusts and your other beneficiaries through the use of lifetime trusts. This can also include electronic assets.
Wills Can Name Specific Inheritors for Specific Property
If you die without a will, state intestacy laws will provide for how the sum total of your property is to be divided among your heirs. But state laws can’t dictate who will get certain specific items of your property. This can lead to many problems. For example, say you intend to pass your grandmother’s wedding ring on to your daughter. If you die without a will saying that’s what you want, your son may feel very strongly that his wife should have it. So even if you don’t have a lot of assets, you may still be interested in making sure that certain items of your property go to the people that you want it to. You can do this with a will.
Wills Name a Guardian for Your Minor Children
If you have children who are not yet adults, you really need a will to:
• name a personal guardian, and
• name a property guardian.
A will can name a personal guardian for your children—someone to take care of your children if you die while they are still minors. If you don’t name a guardian for your children, it will become a matter for the courts. While courts will try to make the best decision for your children, they simply don’t know your children or family circumstances well, and very few people feel comfortable leaving this decision in others’ hands. In addition, your children will likely also need a property guardian to manage any property they inherit. Again, you can do this in your will. If you don’t name a property guardian, the probate court will have to set up a conservatorship to manage your children’s inheritance. That means a judge will decide who manages your children’s money. And when each child turns 18, the child will get all of the money they inherited, whether they can handle it or not. (These days, many people consider 18 to be rather young to handle large inheritances.) With a will, you can decide who will manage your children’s inheritance on their behalf and you can choose the age at which you want it to be distributed to them.
If You Want to Disinherit Someone, You’ll need a Will
If you want to make sure that an estranged relative receives nothing or very little from you, you’ll likely want to make a will in which your exact wishes are clearly stated. For example, if you have three children but don’t want to leave much to one of your children, you can create a will to this effect. If you died without a will and your children inherited your property, it would be divided equally among them. (But note that you often can’t disinherit spouses.)
You Can Name an Executor in Your Will
The person who ushers your property through the probate process is called the personal representative of your estate. You can name a trusted person to this role, called an executor, in your will. If you don’t, the probate court will appoint an administrator.
A Will Makes the Probate Process More Simple
Whether you die with or without a will, your property will have to go through the probate process before it can be distributed to your loved ones. But if you have a will that clearly states your wishes, the probate process will be a little simpler.
Common Misconceptions about Wills
Whether Wills Trigger the Probate Process
A misconception about having a will is the notion that simply having a will causes your heirs to have to go through probate, and that it will be difficult and expensive. While it’s true that probate can be time-consuming and expensive, the probate process will be necessary even if you die without a will; the probate court is still going to oversee the distribution of your assets to your heirs. There is absolutely no reason to think that this process is made easier or less expensive by your not having a will. In fact, as mentioned above, it will probably be more expensive. For one thing, whoever administers your estate will probably have to post a bond that protects the estate if you don’t have a will. (If you do have a will, you can provide that your executor will not have to post a bond.)
If you’d like to avoid probate, there are other ways to avoid probate, for example by creating a living trust.
Whether You Should Make a Will for a Small Estate
Another misconception is that you don’t need a will if you don’t have much property. Even if your estate is small, there are good reasons to have a will, such as the ability to state specifically who gets what. In addition, if you have children who are minors, you should absolutely make a will, regardless of how much property you own.
At What Age You Need a Will
A common way of thinking about wills is that they are needed only when you reach a certain age. Many people ask, “When should you make a will?” But there isn’t really a specific age when a will becomes necessary. If you have young children, you’ll want a will, regardless of how old you are. And because tragedies happen and anyone can die unexpectedly, having a simple will in place can be beneficial, even if you’re not yet at an age when you think much about death. Of course, if you’re elderly or have a serious illness, the task of making a will can be more urgent.
Individuals who are considering drafting a trust or a will may wish to consult with an estate planning lawyer. He or she can explain the advantages of using a trust as well as a will. He or she can make recommendations based on the specific considerations of the client. He or she may even recommend using both documents, such as by using a pour-over will that places any property owned at the time of the testator’s death into the trust.