Wills

  1. What if you don’t have a Will?
    If you die without a Will, you die “intestate”, and the intestacy rules will dictate who will handle your affairs and who will receive your assets. In other words, if you don’t draft a Will, the state has one for you! Often, the time delay, administration, and costs associated with dying intestate reduce the amount of money the beneficiaries will ultimately receive (and they may not even be the same beneficiaries you had in mind)!
  2. What a Will Can Do
    • Choose your own beneficiaries: In many cases, the state laws are not consistent with your wishes regarding beneficiaries. For example, in many states, if a resident dies without a Will, the law says the surviving spouse is entitled to half the estate. The surviving spouse also gets certain other allowances. The children receive the other half. Most people assume their surviving spouse will get all their assets. This is simply not the case and often results in unpleasant family situations for the survivors.
    • Executor: An Executor, also known as a Personal Representative, is the person you name in your Will to pay your taxes and debts, collect and manage your property, and distribute your assets in accordance with your will on your death. The Executor will file your Will with the Court, manage your assets during the probate process, handle the day to day details of your estate (credit cards, car leases, mortgage, etc.), and set up an estate bank account as well as many other duties. In your Will, you can state the fee, if any, you will pay the Executor.
      • Some factors to consider when choosing an Executor:
        • Someone willing to do the job! It’s an honor, but also a lot of work. Just because you name an Executor in your Will doesn’t mean he or she has to take the job. If the Executor you appoint declines the job and you have not selected a back up Executor in your Will, the court will appoint one for you.
        • Name someone you trust!
        • The Executor should have excellent organizational skills and be task oriented.
        • The Executor does not need to be exceptional with finances, but it does help. At the very least, the Executor should be able to work with the proper people (financial advisor, accountant, attorney, etc.) to settle your estate.
        • Some people select someone who is going to inherit a lot of their property, believing that the Executor will have a personal interest in settling the estate quickly and at minimal cost. Others prefer an outsider, such as a professional or a bank, believing that a professional will do a better job and be more accountable.
    • Guardians: In a Will, you can select who you want to raise your children in the event of your death. If you die without a Will or with a Will that does not name a guardian, anyone interested in taking care of your children can ask a judge for guardianship. The judge will then decide, without having your input, who will get to raise your children.
      • Some factors to consider when choosing Guardians are:
        • Someone who is up for the job! Do they share your values and beliefs?
        • Do they live close by? Remember, if this goes into effect, it means you’re dead! Do you want your children to have to go through the trauma of moving, switching schools, and making new friends?
        • Are they old enough to handle the responsibility?
        • Are they too old? Often, it can be a “mistake” to select your own parents. Your children will have already gone through the trauma of losing you; they may likely go through it again with your parents.
        • How many kids do your prospective guardians already have? Are they close in age to your children? Will the prospective guardian have time to raise your kids?
        • Are you going to be able to provide enough assets to raise your kids? If not, do the prospective guardians have enough money to raise them
    • Testamentary Trust: A testamentary trust is a trust you can set up in 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 say that your children are to receive principal and income for their health and education until they are 25, at which point the balance of the trust will be distributed to them.
    • Testamentary Trustee: A testamentary trustee is the person or company you select to hold the money, invest it, and distribute it in accordance with the terms of your testamentary trust.
  3. What a Will Does Not Do
    A Will does not avoid probate!
    A Will in and of itself does not reduce or eliminate estate taxes! Special estate tax planning can be included in either a will or trust to reduce taxes.