At The Whipple Law Group, we talk to people every day about the importance of drafting a Will. But people often ask why they need a Will or believe they don’t have a need for one at all. However, here are five basic reasons why you should prepare a Will:
To Choose Beneficiaries
The laws of the state in which you live determine how your property will be distributed if you die without a valid will. For example, in most states the property of a married person with children who dies intestate (i.e., without a will) may be distributed one-third to his or her spouse and two-thirds to the children. In another state, the spouse may receive ½ and the remaining ½ of the estate is split between the children.
In a situation where an unmarried, childless person dies intestate, their assets will, generally, be distributed to his or her parents (or siblings if there are no parents). These distributions may be contrary to what you want. In effect, by not having a Will, you are allowing the state to choose your beneficiaries. Further, a Will allows you to specify not only who will receive the property, but how much each beneficiary will receive. You may also wish to leave property to a charity after your death, and a Will may be needed to accomplish this goal.
To Minimize Taxes
Many people feel they do not need a will because they believe their taxable estate is below that taxable amount for federal estate tax purposes. However, your taxable estate may be larger than you think. For example, life insurance, qualified retirement plan benefits and IRAs typically pass outside of a will or of estate administration. However, these assets are still part of your federal estate and can cause your estate to go over the threshold amount. Also, in some states an estate becomes subject to state death taxes at a point well below the federal threshold. A properly prepared will is necessary to implement estate tax reduction strategies.
To Appoint a Guardian
Your Will should name a guardian for your minor children in the event of your death and/or the death of your spouse. While naming a guardian does not bind either the named guardian or the court, it does indicate your wishes, which courts generally try to accommodate
To Name an Executor
Without a Will, you cannot appoint someone you trust to carry out the administration of your estate. If you do not specifically name an executor (personal representative) in a Will, a court will appoint someone to handle your estate. It is possible for the court to appoint someone you would not have chosen. Obviously, there is an advantage, as well as peace of mind, in selecting an executor you trust
To Establish Domicile
You may wish to firmly establish domicile (permanent legal residence) in a particular state, for tax or other reasons. If you move frequently or own homes in more than one state, each state in which you reside could try to impose death or inheritance taxes at the time of death, possibly subjecting your estate to multiple probate proceedings. To lessen the risk of this, you should execute a Will that clearly indicates your intended state of domicile.
