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Why You Need a Will
Making Your Intentions Clear
One of the most important components of your overall estate plan, your will is a powerful legal document. Prepared with the assistance of an attorney, a carefully crafted will is your most reliable guarantee that distribution of your assets is conducted according to your wishes. In addition, if your family includes minor children, your will enables you to specify who will assume responsibility for their upbringing as well as the manner in which you wish them to be raised.
A will also is the best means of indicating who should receive items that hold sentimental value. And, it is the most dependable way of communicating any special intentions you have (arrangements for the continuing care of pets, for example).
All in all, your will deserves special attention and careful thought. Yet even individuals who already have a will sometimes underestimate its importance or neglect the periodic check-ups necessary to ensure that it remains up to date and in tune with current intentions.
Why Everyone Needs A Will
You may believe that you don’t need a will. Perhaps you assume that a will is unnecessary since state laws exist that, absent a will, governs the division and distribution of your assets after your death. Or, you may feel that the size of your estate doesn’t warrant a will.
If your decision not to have a will rests on either of these assumptions, you’re making a mistake with potentially far-reaching implications.
Not having a will means that you effectively surrender to the state important decisions affecting the well-being and future security of your heirs. Without a will to make your intentions known, it is likely that your property will be divided in a way not to your liking.
For example: If you have a spouse and minor children, you might suppose that your spouse automatically would have access to all of your assets should anything happen to you. However, if you die intestate (without a will), in most states your assets are simply split in half and divided between your spouse and minor children. If half of the cash assets of your estate are insufficient to pay current bills, your spouse must petition the court for authorization to use part of your children’s half share to meet living expenses of your family. This process can be time-consuming and expensive.
Another example: If you and your spouse should die in a common accident, who would be named conservator of your minor children? If you have not named someone in a will, the state will decide. For single or widowed parents, this alone is an excellent reason to draft a will.
State and federal taxes may affect the amount of money your family actually will receive upon your death. Trust arrangements in a will drafted with the help of an attorney may lower these taxes, an opportunity you forego if you do not have a will.
Finally, your will enables you to identify recipients of special "keepsakes." Items like costume jewelry, an old set of golf clubs, or a photograph album can be meaningful mementos to family members or close friends. It’s best to be specific about who gets what. No matter how often you’ve mentioned your intentions over the years, it is unwise—and even unfair—to rely on your heirs to resolve these matters.
Selecting An Executor
Your will should include the name of your personal representative, usually called an executor, who is charged with carrying out the wishes you express. Many individuals automatically name their spouse or oldest child without giving the matter much thought. The role of the executor, however, is much more demanding than most people realize. A thoughtful selection is essential.
Upon your death, your executor assumes an important legal responsibility that may last several years. An executor must assemble and value estate assets, pay necessary taxes, distribute estate assets to beneficiaries, and supply a full accounting for his or her actions in connection with carrying out the terms of your will.
The executor also may be called upon to handle potentially challenging family relationships. In the case of blended families, for example, resentment and conflict may arise if assets are not divided equally. No matter how awkward or unpleasant, however, the executor is obliged to follow instructions outlined in your will.
Most important, the executor assumes an important fiduciary responsibility. He or she is responsible for the correct financial management of estate assets while the terms of your will are carried out. This may involve the sale of certain assets to pay taxes or even burial expenses. And if your estate includes a small business, for example, the executor is responsible for its ongoing management while your affairs are being settled. In addition, the executor is required by law to post a surety bond equal to the value of your estate.
Complex responsibilities like these may be a lot to ask—even of a family member.
Naming a Professional Executor
Especially if settling your estate is likely to be a complicated or lengthy
affair, you may wish to consider the benefits of a professional executor.
Naming a bank trust department or other professional fiduciary means that
you can rely on an experienced, impartial third party to carry out your
wishes, always working in the best interests of your estate and beneficiaries.
In addition, in many states professional estate settlement removes the necessity of posting a surety bond.
Reviewing Your Existing Will
Your will may be changed as often as you wish. If the change you desire
is relatively simple, an amendment to the document, known as a codicil,
is executed with the aid of an attorney. If you decide to write a new
will altogether, the new document should specifically revoke all prior
wills. (Remember that revoking a will automatically revokes its codicils,
but revoking a codicil does not necessarily revoke a will.)
In addition, you should review your will when any of the following events occur:
a change in marital status;
the birth of a child;
a change in your state of residence;
a significant change in the value or character of your assets;
a change in intended beneficiaries;
the death of a beneficiary;
the death of a conservator, trustee, or personal representative named in your will;
a change in tax laws affecting federal estate tax deductions and calculations;
once every five years.
If you believe a change to your will is necessary you should consult an attorney who is familiar with the probate code of the state in which you live. He or she will know how best to comply with various state requirements.
How To Find Out More
If you’d like additional information about wills, issues surrounding your
estate plan, or other financial services offered by First Community Trust,
we’d be happy to assist.