Why You Shouldn’t Die Without a Will
Wills are the most basic element of estate planning. A will is a legal document that explains how you want your property and assets distributed after you die. It allows you to say who you want to carry out your wishes and gives you a chance to nominate a guardian for your minor children. A will gives you the last word upon your death Despite the control a will gives a person, about half of all Americans die without one. If you have questions about whether or why you need a will, an experienced estate planning attorney can help.
When you die without a will, you die intestate. If you die intestate the laws in the state where you live control distribution of your assets. The state may appoint a lawyer to oversee the distribution of your estate and that lawyer will be paid out your estate’s assets. The state may even claim your property if you have no apparent heirs. If you do have heirs, they may be forced to pay sizable taxes in order to keep the property you have left behind. The state will also appoint a guardian for your children without any input from you.
Usually, estate matters are handled in state probate court. When you die intestate, the first thing the state will do is appoint an administrator. This administrator is often required to pay certain fees and post a bond. These costs are charged back to your estate. If your family cannot decide who should be appointed as the administrator, the court may appoint an attorney who will charge your estate for their time. Once the administrator is appointed, they will look to the state laws for guidance on the distribution of your assets. Because you have not expressed your wishes, the state will substitute its own judgment about distribution of assets to the following people:
- Your spouse: Most states provide that a certain sum be set-aside for the surviving spouse and/or children. This amount is usually taken “off the top” before any claims by creditors, beneficiaries and other heirs are paid, but it is generally a modest amount. Many states also give the surviving spouse an interest in any real estate owned by the decedent.
- Your children: If you have children, many states will award them the remaining portion of the estate. If you were a single parent, your children will inherit your entire estate. Your children could end up with a large sum of money even if they are infants. A court appointed guardian usually supervises this money until your children reach the age of eighteen. Thus, at age eighteen your child might suddenly have a large sum of money at their disposal to spend however they like.
- Your parents and siblings: If you are unmarried and have no children, your estate will go to your parent(s) or, if they have both died, to your brothers and sisters. Similarly, if you are married but have no children, the portion of your estate remaining after your spouse receives his/her share will go to your parents, or if they have both died, to your brothers and sisters.
Many people mistakenly believe that having a will requires their heirs to go through the expense of probate and therefore do not make a will hoping to avoid probate and estate taxes. Some individuals also believe they can avoid probate and estate taxes by using will substitutes. Common will substitutes include the following:
- Gift of assets, property or cash
- IRA or other pension plans with a designated beneficiary
- Life insurance
- Joint checking/savings
- Jointly owned house
- Property assignments
Using a will substitutes may allow you to reduce the size of your probate estate. However, these substitutes will not reduce the size of your taxable estate. For example, if you own your house jointly with right of survivor to your cousin, your cousin will take control of the house upon your death, but will not necessarily avoid probate and all estate taxes on your house.
In fact, assets controlled by other will substitutes may be frozen by the state to ensure payment of state, death, or other taxes. Moreover, property or bank accounts owned jointly with the right of survivorship are wholly owned by the survivor upon your death. Once you die, the survivor has the absolute right to do what he/she wants with the property. Regardless of any “understanding” you had prior to your death, your cousin does not have to sell your jointly owned house and give a your portion of the proceeds to your Aunt as you requested.
There are no real substitutes for a will drafted as the cornerstone of an estate plan. A will created by an experienced wills and trusts attorney will help you make sure that you, and not the state, controls the distribution of your assets and the care and maintenance of those you love upon your death.
DISCLAIMER: This site and any information contained herein in intended for informational purposes only and should not be construes as legal advice. Seek competent legal counsel for advice on any legal matter.