| 10 Reasons to Have a Will | |
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THIS INFORMATION IS NOT A SUBSTITUTE FOR THE ADVICE OF AN ATTORNEY.
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| 10. Your assets do not pass to the right people. | |
| If you do not specify who inherits
your assets in a Will, the intestacy laws will govern. In some states,
if your assets pass by intestacy and you have children, your spouse
receives the first $30,000 of your personal property and either a
one-third or one-half interest in your remaining property. The rest will
be distributed to your children. Accordingly, if you have a child who
has not spoken to you in years, that child will get an equal share of
the remaining one-half or one-third of your estate. If you do not have
any children but your parents survive you, your spouse will end up
sharing your assets with his or her in-laws. In North Carolina, your
spouse gets the first $50,000 of your personal property, and anything
above that amount will be split evenly between your parents and spouse. Similarly, if you have a Will but it is out of date, your Will may not sufficiently provide for those you now consider to be your beneficiaries. |
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| 9. The IRS may become a beneficiary of your estate. | |
| Intestacy distributions do not incorporate any tax planning. As a result, more assets than necessary may be diverted from
your heirs into the federal and state treasury. For example, under current law, if you die without
leaving a surviving spouse, the federal and state estate taxes on a $2 million estate in the year 2000 would be
$560,250. There are many commonly used techniques that could reduce your overall estate tax bill
that could be implemented with the help of an estate planner. With proper planning, the amounts going
to the government rather than your heirs could be significantly reduced. |
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| 8. If you own a family business, it could pass to individuals who do not get along. | |
| If your assets pass by intestacy, or if you have acquired a family business since you
had your Will drawn, your family business could be divided in an inappropriate way. For example, your
second spouse may end up sharing the family business with your children from a prior marriage. In
fact, the children from the prior marriage could end up controlling the family business that had been run
by you and your second spouse,
leaving your spouse with no control over the asset that could be his or
her primary source of support. |
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| 7. The court has to be involved in family finances. | |
| In a Will, you are able to confer specific powers on your Executor and Trustee in addition to those granted by statute, such
as the ability to serve as fiduciary without posting bond or filing certain accountings or to sell real
estate without a court proceeding. If a person does not have a Will, or the Will they have does not confer these
specific powers, many things cannot be done throughout the estate administration without going to
court. For example, if a person dies without a Will or that person's Will does not give the Executor the
express power to sell real estate, the personal representative of the estate will have to go through a judicial
sale to sell any real property in the estate to pay debts, expenses and taxes of the estate. Such proceedings
are bothersome and expensive.
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| 6. The court will appoint the guardian of your minor children without your input. | |
| If you die without a will, the court will
appoint the guardian of your minor children without any input from you.
A recommendation by a parent as to a guardian for his or her minor
children can serve as a "strong guide" to the clerk in
appointing a guardian for those minor children. In addition, a person
may recommend in his or her Will that the guardian not be required to
post bond.
If you have a Will, but it was drawn many years ago, the person you
recommended in your Will to serve as guardian of your minor children may
no longer be the appropriate person to serve as guardian, or may not be
capable of serving as guardian. |
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| 5. Your children may receive distributions at too young an age. | |
| If you die without a Will, once your assets are divided
according to the intestacy laws and your children reach age 18, the
funds are theirs to use as they want. Children at age 18 may not use
such funds wisely. Instead of using such funds for a
mortgage or college tuition, they could buy a sports car or support a
bad habit or girlfriend/boyfriend. In a Will, you can establish a trust
that provides for distributions at ages that are more appropriate than
age 18.
Similarly, if you have a Will that was drawn several years ago, the trust provisions for your children established years ago may not be appropriate based on their current situations.
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| 4. Your administrator may end up chasing beneficiaries to pay taxes. | |
| Wills typically specify which portion of the estate will
bear the burden of estate taxes and enables the Executor to gather
assets to pay those taxes. Often, the Will provides that the residue of
the estate bears the tax burden, which results in the taxes being paid
out of this pot of money before distributions to the residuary takers
are
made. If you die without a Will, taxes can be allocated proportionately
to the assets inherited.
Assets that are not distributed pursuant to your Will, such as life insurance and retirement benefits, are still part of your estate and, thus, can generate estate taxes. As a result, the administrator of an interstate decedent will be forced to retrieve funds from the beneficiaries of such assets to pay estate taxes.
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| 3. Your assets could end up with your child’s ex-spouse or creditor. | |
| Without a Will, your children inherit their share of your
assets outright at age 18, as mentioned above. A Will allows a person to
leave assets to children in trust rather than outright. Such a trust can
provide a distribution scheme that would prevent a child's share of your
assets passing to their ex-spouse or to a creditor. |
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| 2. Equal distributions to children can be inequitable. | |
| If you die without a Will, and leave behind two children
and no spouse, those two children will share equally in your estate.
What if one of your children is 32 and a surgeon, and one of your
children is 19 and has just begun college? Even though you have already
put one child through college and medical school, that child will share
equally with the child that is just beginning college, which is probably
an inequitable result. This scenario could also happen with a Will that
is greatly outdated.
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| 1. The last thing you say to your loved ones is "I Don't Care." | |
| One of the last things your family may
remember about you is how your estate is settled. If you leave an estate
that is extremely difficult to administer and that results in
inequitable or inappropriate distributions because you did not have a
Will or you did not update your Will as needed, you may be indicating to
your family that they were not worth the trouble of planning ahead for
their future. In conclusion, estate planning is something that people generally find to be painful to get started, but often feel a sense of comfort once it is done. Be forewarned that most estate plans involve issues other than drawing a Will, such as procuring life insurance, getting an attorney-in-fact in place, having certain health care documents, possibly establishing trusts and re-titling assets, and reviewing retirement benefits. In addition, estate planning is an on-going process. If your family situation changes, your financial picture changes, or there are significant changes in the law, you need to revisit your estate plan and possibly consult with your estate planner about making some changes to your plan. But don't let that scare you into not starting the process at all. As you can see from the "10 Bad Things" above, you don't want to suffer the consequences of not having a Will. Two Final Considerations: A power of attorney is a document in which you give someone the legal authority to act for you. A Living Will has three purposes: It gives your doctor your instructions about life sustaining procedures, artificial nourishment and organ donation.
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This information is not a substitute for the advice of an attorney. copyright 2002. all rights reserved. |
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