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Estate Planning
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Do You Really Need a Will?
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There is no general legal requirement that you prepare a will. If you die without a will, the laws of intestacy will determine how your assets are distributed. These laws provide that, after expenses of administering your estate, expenses of your final illness and funeral, taxes and statutory family allowances, your remaining assets will be divided up between your surviving spouse and children, or other heirs. If you have no surviving relatives when you die, the laws of intestacy will pass your property to the state, even though you might prefer that your property go to a close friend, a loved one or organizations you hold in esteem.
Minor Children
If you have a minor child and your death leaves no surviving parent obligated to assume responsibility for the child’s care, the court will appoint a guardian for him or her. Although the court will want to act in your child’s best interest, there is no assurance it will choose the person you might name in a will with guardianship provisions. However, if you prepare a will with guardianship provisions you can specify who you want to serve in that capacity, and also name a second person to serve in case the first person is unable to do so. If you prepare a will you can also make a portion of your assets available to the guardian you have chosen, to use for your child’s benefit, and provide for distribution of those assets to your child when he or she reaches the age of majority.
Jointly Owned Property
If you own property with another person as “joint tenants with right of survivorship”, you do not need a will to transfer your interest to the other owner. However, a will allows you to provide for the situation in which both owners die in a common accident. It also allows you to provide for disposition of the property if you are the last surviving owner. Property you own jointly with another person can become subject to the claims of creditors of that person. Joint tenancy status can also give rise to unintended estate tax consequences.
Is Your Will Up To Date?
Your will remains in effect until it is changed or revoked. Provisions you have made under one set of circumstances may no longer reflect your wishes after a marriage or divorce, or a birth or death in your family. Your will may no longer function effectively if there has been a change in the kind or value of the property you own, or if the person you have named as personal representative or guardian has died, moved away, is no longer able to serve, or is no longer the person you would want to function in that capacity. Also, your will may no longer be effective if you relocate to another state.
Death and Taxes
These two basic certainties can combine with disastrous consequences for your assets and your plans for their disposition upon your death, if you are unprepared. While the federal estate tax may not affect many estates under current law (see the chart in the "Trusts" section), state estate taxes and income taxes can still have a significant impact. The time for dealing with these possibilities is obviously before you die, as there is little your heirs can accomplish after your death.
Trusts
Charitable Giving
Retirement Benefits
Another Estate Tax Reduction Idea
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