It’s a bad idea for anyone to die without an estate plan in place, as it leaves a great deal up to the courts to decide. Most people would prefer to choose their beneficiaries and a trusted executor to carry out their wishes. If you die without a will, you cannot choose these important people.
You also cannot use your estate plan to achieve goals to reduce or eliminate income, estate, or inheritance taxes. Basically, without a will, you have no control over who gets what of your hard-earned assets at death.
It’s important to have a Will so that your family, friends and business associates don’t spend the next decade fighting in court, and possibly in person…with fists. The fights can get even uglier if you have young kids, or lots of money and property, or both.
Example of why picking a guardian is so important: If you don’t want your irresponsible brother raising your kids, and you don’t make it clear in your Will, and he’s the closest relative your kids have if you die, then the courts will most likely give him your kids. If you want your responsible cousin to be the guardian, and put it in your Will–then there’s nothing your brother can do about it.
CAVEAT: This is a very detailed post and you’ve got two options: read till the end or stop here. If you’re bored already, here’s a summary about creating a will.
Step 1: List all you have (assets, properties, debts, credits etc with details of their locations and documents.
Step 2: List your beneficiaries (who you want to benefit from your will).
Step 3: Detail what you want each beneficiary to receive and the conditions or modalities.
Step 4: List your executors (trusted friends or family who would help you make sure everyone receives their due).
Step 5: Appoint a Guardian if your children are minors
Step 6: Make it Legal. Get witnesses to sign and a lawyer to help you execute and store it.
Step 7: Let your family know you have a will and where they can find it if you pass.
Now to the details…….
Decisions You Have To Make on Who Gets Your Stuff? You can leave your stuff to anyone you want. A beneficiary can be a family member or members, friends, pets (via a human guardian), strangers, organizations, or institutions. By identifying who gets what, you’ll relieve some of the stress your family will have to face when settling your estate. If not,the courts will have to make these decisions.
We’re sure your family is incredible, but money can make people weird. Especially since they’re going through a tough time without you around. Isn’t it better for them to be able to blame any decisions they don’t agree with on you rather than taking it out on each other?
The Only People Who Get Nothing Are…
The people who serve as witnesses to the signing of the Will. Legally, anyone who witnessed the signing of a Will can’t be named as a beneficiary. So make sure your brother or best friend isn’t a witness, unless you don’t want to give them anything. Then the joke’s on them!
The Person Responsible For Making Sure Everything You Want Gets Done. This is an “Executor” because they have to “execute” everything in your Will. Makes sense, right? The person you name as your executor is responsible for paying any debts or taxes on behalf of your estate and making sure that the people who are supposed to inherit your assets actually get them.
Who’s Taking Care of Your Kids and Dependents?
Choosing a guardian is usually the toughest decision to make when creating a Will. Who’s going to raise your kids if you die? If you’re married it’s probably your spouse. If you’re divorced, it’s probably your ex-spouse. If you don’t have a spouse or your ex-spouse isn’t an option, then you’ve got some thinking to do. Most people have godparents, but that could just be an honorary title you gave someone to make them feel better. It doesn’t mean you want them actually raising your kids. Odds are you already know who you want to serve as guardian but you have to make it legal.
Who Handles the Money and Assets You Leave For Your Kids? Enter the Guardian of the Estate, who’s tasked with managing your child’s financial well-being. There may be a significant amount of money involved, especially if you have life insurance, and it’s this person’s duty to always keep your kid’s best interest in mind when making financial decisions.
We already established that a court will name a guardian if you don’t. Well, that same guardian will most likely get all the money and assets as well. So if you don’t care enough about your kids to name a guardian, at least think of those sad, lonely piles of money getting into the wrong hands.
It ain’t easy being an estate guardian but being fiscally responsible is paramount. Apart from managing the assets, he or she also has to make an inventory of the assets for the court, file annual reports detailing the value, income, investments and expenses of the estate.
Just Because You Trust Someone To Raise Your Kids, Doesn’t Mean You Trust Them with Money. You can choose different people to serve as a guardian of a person and an estate guardian. Why?
Example: Let’s say your sister is great with kids but horrible with money. And your brother is great with money but horrible with kids. See, now it’s all starting to make sense…
If you opt for different estate/person guardians for whatever reason, make sure they can collaborate effectively and work together on the child’s behalf. Whenever the person-guardian needs funds for the kid, he or she needs to hit up the estate-guardian for the money. On paper this makes sense, but you won’t be around to manage the personal dynamics if things go south. So, choose wisely and let them know beforehand so it’s not a shock. Plus, if you sense any tension then you can choose different people.
If You Die With A Will
Think of your will as an eager flower that’s not allowed to bloom until a probate court gives it permission. But once it does it’s a thing of beauty. So beautiful we crafted the next section into a three act play:
Act 1: Your executor presents the will to probate court.
Act 2: The probate proceedings can take anywhere from 3 months to 3 years, depending on your state’s laws and the complexity of your estate. In short, get comfy. You can’t distribute property, sell assets or pay off debts until the court grants approval.
Act 3: The court validates the Will. Victory! Now the executor can get to work and start handing out assets to the beneficiaries.
If You Die Without A Will
The short of it: The court gives your closest surviving relatives everything, including assets and custody over minor children. (Also known as “succession laws.”) Your estate will still have to go through the probate process, and “intestacy laws” kick in to determine who gets what.
Your Will, Your Say: What You Can Put In It.
You can create a Will as basic or elaborate as you want. If you want to keep it simple you can split all your money, assets, property, investments, dragons (just making sure you’re still awake) evenly between all your beneficiaries. If you want to make sure some people get more, and others get less than more, this is how you make sure your property is given to the people you want the way you want it.
In the second part of this post we talk about putting your family in check, what property youcan put in your Will and what you cannot.
If you are reading this, then you surely needed to get a will yesterday. Send us an email firstname.lastname@example.org