What Does a Will Do
What Does a Will Do
In answer to the question “what does a will do”, the simple explanation is that a will provides the legal guidance for the distribution of assets, personal effects, and other instructions upon the death of an individual. Preparing a will is an incredibly important endeavor, as it is the only way that you can be certain that your estate is handled as you would prefer. Absent a will, the courts will make the final decisions regarding the distribution of your assets and personal effects. As important as a will is, over 70% of adults in the US do not have one. While it is best to work with an attorney in preparing a will, there are many alternatives that can be much cheaper and should still provide for the legal transfers of assets as prescribed in the document.
Does everyone need a will?
As you ask “what does a will do” no doubt you are also interested in whether you actually need one yourself. The quick answer is yes. Even if you do not have significant assets, you still need a will. Should you pass away without a will you will be Intestate (deceased with no will). Under these circumstances, the probate court will be the final arbiter on the distribution of your property according to the laws of the state in which you reside. The point of a will is not simply to distribute large sums of money for the wealthy, but to make sure that the things that are important to you are distributed to your loved ones as you wish. A will ensures that the assets (even if they are not incredibly valuable) go to your family as you had planned. There are even circumstances for those without immediate family where the state could ultimately claim the estate, which of course, is the worst possible scenario.
Further, if you have dependent children, it becomes even more critical to prepare a will. Should you die without specific instruction for the care of your children the court will ultimately appoint their guardian, and it is absolutely irresponsible for you to allow that to happen. If for no other reason than to insure your children are placed where you believe they will thrive, you should have a will.
What are the components of a Will
Generally speaking, a will is made up of the following components:
- Your legal name and address
- Names and addresses of beneficiaries (Spouse, children, and other beneficiaries like other family member, friends, or charities)
- Names and address of alternative beneficiaries (in the event one of the primary beneficiary dies before you)
- Name and address of the executor of the will (along with a backup should the named executor be unavailable)
- The named guardian for dependent minors (if you have any)
- Alternative guardian if the primary guardian is unable or unwilling to accept the children
- The terms of inheritance (what each beneficiary is to receive)
- The terms for minor children’s inheritance (What age they take control of the inheritance)
- Burial/funeral requests and instructions (including with payment instructions)
- Your signature swearing that they will represents your wishes witness to your signature
- Notarization (A stamped and witnessed seal by a Notary Public)
- Explaining the guardian’s responsibility
Under normal circumstances, a surviving parent would assume the role of guardian (Caretaker) of minor children after the death of a parent. However, it is incredibly important to name a guardian for your minor children in the unlikely event that both parents are killed or a surviving parent is incapacitated at or near the same time. A guardian should be of minimum legal age (18 in most areas) and willing to assume this responsibility. It is certainly best to have the conversation with potential guardians before you add them to your will. It is also wise to name alternative guardians in case the primary guardian is ultimately unwilling or unable to take on the responsibility. As with primary guardian, you should have the conversation with the potential alternate guardians to be sure they would accept the responsibility should it become necessary. Above all, make this arrangement in advance otherwise your legacy to your children would be a judge deciding who will care for them until they turn 18. That is not a proposition any parent would relish.
How often should I update my will?
While your will should always be current, there is no particular schedule you should follow. Generally speaking, your will should be updated after major life events. For example, if you spouse passed away before you, there would certainly be a need to update your will. Similarly if your executor was unable to handle the responsibilities set out in your will, there would be a need to update. Additionally, as you acquire assets, you will periodically want to review your will to see if you have adequately covered the distribution of those assets. Just review your will periodically and be sure that it reflects your wishes and needs. While periodic updates will be needed, you must remember to destroy the old will to avoid confusion and difficulty upon your death. You do not want the courts to determine which will represent your final wishes.
What is an Executor and what are the responsibilities
An Executor is the person named to manage and oversee the division of your assets as spelled out in your Will. Generally speaking, a spouse partners, relative, adult child, or close friend is selected to act as the Executor.
Should you fail to name an Executor, a Probate judge will appoint someone, who will then distribute your assets as designated in your will. However, the Executor will file the Will with the court, where the Probate Judge will determine the validity of the Will. If the Will is deemed valid, your assets will be distributed as instructed. If however, the Probate Judge finds that the Will is invalid, your assets will be distributed as prescribed under the laws of your state.
Among the duties normally assumed by the Executor are:
- Settlement of any outstanding debts, and taxes
- Notifying Government Agencies and other stakeholder organizations of your death
- Cancelling services to which you subscribe (Cable, credit cards, subscriptions, etc.)
- Completing the tasks outlined in the Will, including the asset distribution
Where should you store your Will?
If you have prepared a Will and you “hide” it for safe keeping, you may very well defeat the purpose entirely. While you do want to keep your Will in a safe place, it should be stored such that it will not be difficult for survivors to find. You may also want to make a second copy and have a close family member keep it in a separate residence. Of course if you choose to store you Will of premises (like in a safe deposit box), make sure that both the Executor and family members know it is there. In the end, you simply want to be sure that your Will is available upon your passing.
What should I know about Estate Taxes?
As you might expect, the assets included in your will may be subject to taxation. In planning your will, take into account the following:
- State and Federal inheritance and Death taxes
- Federal income taxes above and beyond inheritance taxes
- State income taxes on death benefits and distributions
If you have a relatively large estate, it would make sense for you to explore options that will minimize the tax exposure for your beneficiaries. Though the use of trusts, gifts while you are still living, and insurance as a backstop for taxes, you can reduce the burden dramatically. Of course you should meet with your attorney and financial planner as you explore these options. Estate planning for taxes, is certainly not a do it yourself proposition.
None of us want to think about the end of our lives, but the creation of a will is a vital step for any adult. It is both the responsible thing to do for your family, and a way to make your death (hopefully many years from now) much easier for all of your loved ones. This simple document can mean the difference in a protracted court engagement that may ultimately divide your assets in a way that you would never have approved of, and a simple procedure in which your desires are represented. At the end of the day, this provides peace of mind for both you and your family.
Notice: This article is not intended to provide legal or financial advice. The reader should seek that advice and guidance of an attorney and/or financial advisor when developing a Will.