If you care about what happens to your money, home and other property after you pass away, you need a will. Even if you're young or your estate is modest, you should have a legally valid and up-to-date will. If you have minor children, having a will may be the only legal way to name a guardian for your children.
It’s a good idea to consult with an attorney about getting a will; seeking an attorney's help can ensure your will accomplishes what you intend.
Here, we discuss the benefits of having a will and why a will is vital to your estate plan.
1. Choose Who Gets Your Property
Having a will means you get to choose who will get your property, rather than leave it up to state law. State intestate succession laws, in effect, provide a will for you if you die without one. This “intestate's will” distributes your property to your closest blood relatives in proportions dictated by law. However, the state's distribution may not be what you would have wanted. Intestacy also has other disadvantages, which include the possibility that your estate will owe more taxes than it would if you had created a valid will.
Wills allow you to leave bequests (gifts) to anyone you want. You can leave your property to a surviving spouse, a child, 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 rights with respect to 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.
2. Plan for Your Children’s Future
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. Having a will allows you to name a personal guardian, who takes personal custody of the children, and a property guardian, who manages the children's assets. This can be the same person or different people. The probate court has final approval, but courts will usually approve your choice of guardian unless there are compelling reasons not to.
3. Nominate an Executor
A will allows you to designate a person as your executor to act as your legal representative after your death. A good executor carries out many estate settlement tasks, including locating your will, collecting 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 but will usually approve your choice.
4. Pay or Minimize Taxes and Other Expenses
Without a will, state law determines how estate taxes and other expenses are divided among your heirs. With a will, you can ensure that the specific bequests you make to your beneficiaries are not reduced by taxes and other expenses by directing that these costs be paid from your residuary estate or by selling specific assets.
Additionally, if you don’t have a will and your estate is distributed according to intestacy rules, a portion of the property may be subject to estate taxes.
5. Create a Testamentary Trust
One of the benefits of having a will is that you have the power to create a trust, known as a testamentary trust. Your will sets the terms of the trust, such as who the trustee is, who the beneficiaries are, how the trust is funded, how the distributions should be made, and when the trust terminates. This can be especially important if you have a spouse or minor children who are unable to manage assets or property themselves.
6. 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 were not transferred to the trust while you were alive. This is known as a pourover will because the will "pours over" your estate to your living trust.
Plan for Your Future
A will can help you, your family and the legal processes that go into effect after your passing. Taking care of these things early on will give you peace of mind knowing all of your family and assets will be protected. Contact a Farm Bureau advisor to find out what steps you can take to protect and plan for your future.
From materials prepared by Broadridge Investor Communication Solutions, Inc.