Many people mistakenly think that they do not need a last will and testament when they die. You may think that your valuables will naturally pass to your next of kin without very much fanfare or strife. You may think that you do not have enough assets to warrant the need of a will.
You would be wrong. It is not a popular topic around the dinner table to discuss your last days on Earth, but dying without a will can not only cost your heirs time and money, but it can also prevent your final wishes from being carried out correctly.
What Is A Last Will And Testament?
Having a last will and testament may not be one of the most pleasant things to think about, but having one can save your family a lot of needless heartache and pain. By having a will, you take the guesswork out of your final wishes.
What is a last will and testament? It may not be one of the most pleasant things to talk about, but it can save your family a lot of needless heartaches. Here’s why you need to have a will in your estate plan.
Do Not Leave It Up For The Courts To Decide
If you do not have a last will and testament, you are leaving it up to the courts to decide who will receive your property or possibly who will get to raise your children. When it comes to these issues, each state has a slightly different set of rules that they follow.
In most cases, if you were to die without a will, your estate most likely will pass to your spouse if you have one. If you do not have a spouse, then your assets typically pass to your children or to your surviving parents equally if you have no children that survived you.
This can be a problem for many people who may be closer to one parent or the other because of a divorce or other circumstances. It starts to get really hairy if you do not have a surviving spouse, children, or parents.
The next in line are your grandparents in most cases who have to fight it out with your other family members. And, finally, if you die without a will and without an apparent heir, your entire estate can literally go into your state’s coffers.
You Name The Executor You Want
If you die without a will, the probate court has to name an administrator that will handle paying your creditors and distributing the rest of your assets to your heirs. Like most things, if the probate court has to pick who will be your estate’s administrator, there is always the chance that you would not have approved of that person if you had been alive.
One of the best ways to avoid this trouble is by having a will. When you have a last will and testament, you will name an executor who will carry out all of your final wishes, pay your bills, and distribute your assets as you wanted.
Having a will enables you to appoint your executor and an alternate. This is important. It allows you to decide who will be in charge of dividing up your estate upon your death. It allows you a great degree of control. You can also name an alternate (or two) if your original choice is not available (through death, incapacity, etc.).
You Decide How Property Is Distributed
With a will, you get to decide how your property is distributed after you die. If you die without a will then the administration process can take a long time.
This can cause unnecessary delays, family squabbles, and uncertainty about the disposition of valuable property. The will provides a framework to determine who gets what and when.
Provides A Guardian For Your Children
One of the most important aspects of a will allows you to designate who will be the guardian for your children. This can ensure that your children are cared for by the person that you want and not who the court deems the most appropriate. Your wishes and the court’s wishes may not be one and the same.
There would be no way to know that unless you had a last will and testament directing who should care for your children in the event that you die. This is one of the biggest reasons that everyone who has children should have a will despite not having a lot of assets.
Far too many people think that it would be obvious who would care for their children should they die. Many fail to consider the possibility of dying simultaneously with their spouse. Who will care for their children then? Which set of grandparents?
It is not obvious in most cases, and there may be contesting in court who will become the children’s guardian. That is why these decisions need to be spelled out clearly in your last will and testament.
If you die unexpectedly, you have, in writing, a clear plan for who will take care of your minor children. If there is no will the court will choose among family or even a state appointed guardian. A will gives you the power to choose or at least say who you do not want to look after your children.
Waives a Bond Courts Require
Having a last will and testament allows you to waive the bond that some courts require. Most states require that executors provide a bond (a type of insurance policy) to protect against wrongdoing in the administration of the estate.
This can be very time consuming and expensive. A will can provide the waiving of the bond for a more streamlined process in an already difficult time.
A Will Helps to Make Gifts and Contributions
Establish your legacy and donate a portion of your assets through your will. You can gift up to $14,000.00 per person with no tax liability. This is a convenient way to provide value to your heirs and decrease the overall taxes toy our estate if it falls outside of the current tax exemption (which is $5,450,000.00 as of 2016).
What happens if you die without a will?
When an elderly family member dies, there’s generally a last will and testament that helps loved ones navigate the complicated processes of dividing and distributing cash, property and other possessions amongst themselves. When a younger person dies, there may or may not be a will, depending on how much they consciously prepared for the future.
Assuming there’s a will, the testator (person who wrote the will) can designate individuals and charities as beneficiaries who will each receive a set amount of assets from the deceased’s estate, based on how they wanted to distribute their property. When there is no will, it’s up to state intestacy rules and laws to determine how the deceased’s assets will be distributed.
Here’s what will happen if you die without a legal will:
Debts After Death
Debts are rarely transferred to the beneficiaries upon the borrower’s death (unless a beneficiary was a co-signer on a credit card or loan, for instance). When debts remain after an individual’s death, the estate is responsible for covering them; if a loved one still has an outstanding mortgage loan for their home, then beneficiaries may choose to sell it or take on the payments themselves.
If the deceased is someone’s spouse and the family lives in a community property state, then credit card debt may be repaid by community property (assets the two individuals accumulated during the marriage) but the surviving spouse’s personal assets cannot be confiscated if they’re not considered “community property” under the state law. In this latter instance, creditors may be out of luck if the deceased’s estate cannot cover all of their remaining debts.
Basic Intestacy Rules & Laws
So what happens if you or a loved one passes away without a will? Perhaps they verbally discussed what they would want to do with their assets or privately wrote their own will, but in many states, these would not be legally binding as witnesses and/or an affidavit confirming the authenticity of the testator’s signature may be required for the will to be considered valid under state law.
If you do not meet the requirements for a last will and testament, then your death will be considered “intestate.” When this occurs, it’s up for the state in which you lived to determine how your property, bank accounts, retirement/investment accounts and other possessions will be divvied up (except for real estate you own in other states; those states may have different intestacy laws).
Intestacy laws are primarily executed at the state level and depend a great deal on your family status at the time of your death. Where you single, married or divorced? Did you have children? If so, were they your biological children, adopted children, or stepchildren?
For single, childless individuals, parents are typically the recipients of the deceased’s estate (if both parents are still alive), while some states distribute some of the estate to siblings and stepsiblings if one or both parents are already dead. If you were married at the time of death and living in a community property state, then most/all of your estate will go to your surviving spouse and children (in a separate property state, your spouse may share your estate with your parents and/or surviving siblings).
Cohabitation and Common Law Marriages
Unfortunately for cohabiting, unmarried partners, the nonexistence of a legal will typically means the surviving partner receives nothing under most states’ intestacy laws, which tend to recognize only legal/biological relations like marriage, domestic partnerships, and blood relatives. If you’re cohabiting with a partner, then setting up an estate plan to ensure they’ll be financially secured even if you die unexpectedly should be a major priority for you two.
On the subject of common law marriages, only eight U.S. states currently recognize common law marriages and even then, each state has its own legal restrictions for what constitutes a common law marriage (romantic couples living together for several years without getting formally/legally married is a general guideline, but it’s much more complex than this).
Per Stirpes vs. Per Capita Regulations
These rules refer to how an estate is divided among children and grandchildren when there’s no last will and testament laying out how the deceased wanted their assets distributed. In per stirpes cases, beneficiaries all inherit an equal share of the estate, while in per capita cases, only surviving children receive an inheritance.
For example, if a grandmother with three of her own children and six grandchildren (two per child) passes away, a per stirpes state would divide the estate up equally among the first-generation children, even if one or two of her children died before her. In a per capita state, only the surviving first-generation child(ren) would receive an inheritance, so grandchildren whose parents died before their grandparents would receive no inheritance at all in a state with per capita intestacy laws.
You Need a Last Will and Testament
Creating a last will and testament can seem like an existential nightmare – nobody enjoys thinking about and having to plan for their future demise, after all. However, planning early and following the legal requirements for creating a legitimate will can significantly reduce the legal confusion and financial burdens on your loved ones in the unlikely event of your early death.
You can create a will online for less than $100 or meet with an attorney to plan out your last will and testament (if you have a lot of property, assets or other possessions, this is likely a better solution). Regardless of which option you choose, it’s preferable to dying intestate and leaving your post-death matters in the hands of the state instead of your family members.
Having a last will and testament may not be one of the most pleasant things to think about, but having one can save your family a lot of needless heartache and pain. By having a will, you take the guesswork out of your final wishes. In most cases, there will be no mistaking what you want to happen after your death with respect to your possessions and children.
Do you have a last will and testament? What are you waiting for to begin? I’d love to hear your thoughts in the comment section below.
Disclaimer – Of course, I’m not a lawyer or a finanical planner specializing in estate planning. You should seek out the advice of qualified professionals.