Do you care about what happens to your money, home, and other property after you die? If you answered ‘yes,’ then you’re going to need to do some estate planning. There are a variety of strategies, structures, and documents you can use to achieve your goals—but a will may be the most vital.
Even if you're young or your estate is modest, you should still have a legally valid, up-to-date will. It’s especially important if you have minor children because, in many states, it’s the only legal way for you to name a guardian for them.
Although your will doesn't have to be drafted by an attorney to be valid, it’s always a good idea to seek out an attorney's help to ensure your will is written in a way that will accomplish what you intend.
Wills avoid intestacy
Perhaps the greatest advantage of a will is that it allows you to avoid ‘intestacy.’ That is, with a will you get to decide who receives your property, rather than leaving it up to state law. State intestate succession laws, in effect, act as a de facto will if you die without one. In general terms, your property is distributed to your closest blood relatives in proportions dictated by law. The state's distribution rules, however, may not be what you desire. Intestacy also has other disadvantages; including the possibility your estate will owe more taxes than it would if you had created a valid will.
Wills distribute property according to your wishes
Wills allow you to leave bequests (gifts) to anyone you want. You can leave your property to a surviving spouse, a child, siblings, other relatives, friends, a trust, a charity, or anyone you choose. There are some limits, however, on how you can distribute property using a will. For instance, your spouse may have certain inheritance rights as to a percentage of your property, regardless of the provisions of your will.
Gifts through your will take the form of specific bequests (e.g., an heirloom, jewelry, furniture, or cash), general bequests (e.g., a percentage of your property), or a residuary bequest of what's left after your other gifts.
Wills allow you to nominate a guardian for your minor children
In many states, a will is your only means of stating who you want to act as legal guardian for your minor children if you die. You can name a personal guardian, who would take personal custody of the children, as well as a property guardian, who would be responsible for managing the children's assets. This can be the same person or different people. The probate court has final approval over guardianship, but courts will usually approve your choice absent any compelling reasons not to.
Wills allow you to nominate an executor
A will allows you to designate a person as your executor; to act as your legal representative after your death. An executor carries out many estate settlement tasks, including locating your will, collecting and valuing your assets, paying legitimate creditor claims, paying any taxes owed by your estate, and distributing any remaining assets to your beneficiaries. Like naming a guardian, the probate court has final approval of your executor, but will usually approve your nominee.
Wills specify how to pay estate taxes and other expenses
The way in which estate taxes and other expenses are divided among your heirs is generally determined by state law unless you otherwise directed by the provisions of your will. To ensure that the specific bequests you make to your beneficiaries aren’t reduced by taxes and other expenses, your will can include provisions that these costs be paid from your residuary estate. Or, you can specify which assets should be sold off to cover these costs.
Wills can create a testamentary trust
You can create a trust in your will, known as a testamentary trust, that comes into existence as soon as your will is probated. Your will sets out the terms of the trust, such as who shall act as trustee, who the beneficiaries are, how the trust is funded, how distributions should be made, and when the trust terminates. This can be especially useful if you have a spouse or minor children who may not be able to or adept at managing assets or property on their own.
Wills can fund a living trust
A living trust is a trust that you create during your lifetime. If you have a living trust, your will can transfer any assets that haven’t already been transferred to the trust upon your death. This is known as a pour-over will because the will "pours over" your estate into your living trust.
Wills can help minimize taxes
Your will provides an opportunity to minimize taxes and other costs. For instance, if you draft a will that leaves your entire estate to your U.S. citizen spouse, none of your property will be taxable when you die (assuming your spouse survives you), because it’s fully deductible under the unlimited marital deduction. If your estate is distributed according to intestacy rules, however, a portion of the property may be subject to estate taxes if it’s distributed to heirs other than your U.S. citizen spouse.
Assets disposed of through a will are subject to probate
Probate is the court-supervised process of proving and administering a will. Probate can be expensive and time consuming, and probate records are available to the public. Several factors can affect the length of probate, including the size and complexity of your estate, any challenges to your will or its provisions, creditor claims against your estate, state probate laws, the state court system, and tax issues. Owning property in more than one state can also necessitate multiple probate proceedings (known as ancillary probate). Generally, real estate is probated in the state where it’s located, and personal property is probated in your state of domicile (i.e., residence) at the time of your death.
Provisions of your will can be challenged in court
Although it doesn't happen often, the validity of your will can be challenged, usually by an unhappy beneficiary or a disinherited heir. Some common claims include:
- You lacked testamentary capacity when you signed the will;
- You were unduly influenced by another individual when you drew up the will;
- The will was forged or was otherwise improperly executed; and
- The will was revoked.