Most people have probably heard advice from someone that they should have a will. When pressed for reasons why, those giving the advice may have trouble coming up with something more than, “for tax purposes” or “to avoid probate.” Here’s a summary of the benefits of having a will and keeping it current.
- Naming Your Executor – You can name the person you want to handle your affairs after you pass away. This includes paying your bills, canceling credit cards and notifying banks and other business relationships of your death.
- Minimizing Family Stress – Your family and heirs may experience a lot of stress in what will probably be an already emotional time for them. Laying out your directives in a will helps minimize their responsibilities in that difficult time.
- Direct the Distribution of Your Assets – Your will can specify how you want your assets distributed after all your bills are paid.
- Care of Minor Children – You can express your wishes regarding the care of your minor children. Many times the person who would be the best custodian of your children is someone different than the person who should manage the finances for your minor children. A will allows you to specify specific roles for childcare.
- Prevent the Court From Deciding for You – Without a will, a condition called intestate, the court decides how to divide your estate without your input. The probate process will take longer if you do not have a will and most likely will be more costly.
- Estate Taxes – Having a will provides an opportunity to minimize estate taxes.
- Excluding Potential Heirs – A will also permits you to disinherit one or more people who would otherwise inherit if you were to die without a will.
- Legally Binding – A will is legally binding and will help avoid arguments regarding your intentions.
- Protect Your Business – You can use a will as a means to protect your business from those who would want to interfere with your intentions for the business.
- Contributions to Charity – A will is a good way to provide for a favorite charity.
- Avoid Inconsistency in Inheritance Laws – Inheritance laws are inconsistent from time to time and from state to state. Spelling out the details of your intentions helps avoid conflicts resulting from inconsistency in state laws.
- Pets – You can provide a caretaker for your pet(s).
- Backup for Living Trust – If you have a living trust, your will can provide a backup for the trust in the event that not all of your assets were appropriately titled in your trust.
Two Related Issues to Consider
A will specifies your wishes for assets after death. While you are considering a will, it may make sense for you also to consider a Medical Directive and a Power of Attorney.
- Medical Directive (Also Called a Living Will) – This document specifies how you would prefer to handle end of life decisions. In many cases, people are unable to make medical decisions for themselves in their last weeks or days. A Medical Directive permits you to appoint a person to make decisions on your behalf related to medical care. Your medical directive can also specify what kinds of extraordinary medical efforts you wish to include or exclude from your care.
- Power of Attorney – Establishing a Power of Attorney allows you to name someone who can manage your financial affairs and property-related decisions on your behalf. Typically, the individual you name will assist you in handling financial affairs when you are, for some reason, unable to do so.
Remember that TDT can help you in making these decisions. Please contact us for any assistance you may need in your estate planning.
Vicki Beckey, CPA, CFF, CSEP and head of TDT’s estate department, provides some thoughts on understanding estate and gift tax issues