Brown & Associates - Attorneys & Counselors at Law, P.L.L.C.

THE NEED AND IMPORTANCE OF HAVING A WILL
(1/13/02)

As I've said many times in the past, one of the most important pieces of any estate plan is your Will. With a Will, you are in control of the disposition of your property at your death. If you die without a Will, the state will determine who gets what, regardless of what you intended.

I've heard about State Intestacy Laws. How do they work?

The first thing to know is that these laws may produce results that are far different than what you might think. In most states, if you die without a Will and have a surviving spouse and children, only one third to one half of your probate estate will pass to your spouse. The rest will go to your children.

This probably isn't the desired result. Usually, especially if your children are still quite young, you will want everything to go to your spouse so he or she can care for and properly raise your children after you are gone.

Even if your children are grown, you might not want their share to be divided equally between them. For example, you may have put two of your three children through school. The youngest is just now starting college and will need more support to make it through. If everything is divided equally among them, the older two will have received a windfall, while the youngest may be left wanting.

There are probably some family heirlooms or items of sentimental value that you want to pass to a particular person. Without a Will, this won't happen. Everyone is treated equally and anyone other than your spouse or children will not receive anything from your estate.

Even worse, if you don't have a spouse and children, some unknown distant relatives could well wind up with the bounty of your efforts. Everyone and everything you cared about-close friends, co-workers, church and charities-could wind up out in the cold, clearly not what you would have wished to have happen.

With a Will you can avoid these unplanned and unacceptable results. You direct who gets what and when.

Are there any other potential problems?

If your property passes by intestacy, you could wind up with an estate tax disaster. Any property that passes to your surviving spouse will not be subject to estate tax. Anything that passes to anyone else is subject to the estate tax rules. For 2002, the amount that you can pass to someone exempt from the unified estate and gift tax is $1 million. If your estate is distributed under state intestacy laws, far too much of it might wind up in the pockets of beneficiaries other than your spouse, resulting in the depletion of your estate by the imposition of estate tax.

With a Will (or trust), there are many ways that you can pass property to others while minimizing estate taxes. Some of these strategies involve the use of trusts, either separate inter vivos trusts or ones created under your Will. Your Will can also specify how the estate taxes are to be paid, so that the beneficiaries of your estate bear their appropriate responsibility for this burden.

What should I do about my Minor Children?

Obviously, if you have minor children, you will want to use your Will to appoint someone you know and trust to act as their guardian. If you are married and the children are from your current spouse, he or she will be primary guardian for the children. If you are single or if your children are from a previous relationship, this could become a matter of some critical concern. Your current spouse might not want to be saddled with the responsibility of raising your children, especially after you are gone, if the marriage has been of short duration, or if there is open hostility between the children and their stepparent.

In your Will, you can specify that the guardian will serve without bond. Without a Will, the probate court will normally appoint the guardian for you. The court-appointed guardian will hold and manage the children's property while they are minors, and this might not be the person you would have picked. Plus, the expense to the estate will probably be greater than necessary.

What about selecting a personal representative?

This is another critical function that is up for grabs if you die without a Will. If you have a Will, though, you can name the executor or personal representative of your choice and be sure that person knows what you want and is willing to see your desires carried out.

You can also name co executors or alternative executors. That way, you have two people or institutions looking over each other's shoulders as they gather together your assets and pay your creditors, taxes and any expenses of your final illness or administration of your estate. This may mean selling off some of your property in order to cover these costs.

They will also be responsible for distributing your property and money in accordance with the terms of your Will. Without a Will, the person appointed by the court to administer your estate may be someone you don't like or don't want doing this for you. For example, it could be that bossy older brother that neither you nor your children can stand. He just happens to be your next of kin and the one the court feels is best suited to serve.

Also, with a Will, you can waive the requirement for posting a bond, which will decrease the cost to the estate.

Even if you have a Will or trust, remember that circumstances change and the instrument that was perfect last year may not be adequate today. Always check with your attorney every 3-5 years to make sure your wishes will be carried out after you are gone.

To return to the Strategic Planning Articles click here.