What Does a Will Do And Do I Need a Will?

Do you want control over whats happens to your property upon death or would you rather leave it up to the probate court of your state?

If you chose to give the state control you may want to be familiar with State-By-State Probate Laws as this determines how your assets will be handled.

Do You Need A Will?

Many experts suggest its always better to have a will, but I would like to categorize individuals that a will may be much more beneficial for and why.

Are you Married? Do you Have Kids?

If yes, a will may be beneficial to be sure your spouse receives your assets upon death. The same goes for your children if your spouse predeceases you. Typically probate courts will follow the blood line, but this will create less room for error.

Naming Guardian of Your Children

One of the most important things you can do is to name the guardian of your children. If you don't name a legal guardian before you die the court will decide. Keep in mind the courts are not required to automatically grant custody to aunts, uncles, or other relatives.

Naming An Executor of Your Estate (Personal Representative)

States may use an administrator (if assigned by the court), executor (if named by will), or they may refer to them commonly as the Personal Representative of the estate. This will be another important part of your will as it is a crucial decision when it comes to choosing your executor (or personal representative).

The executor locates and proves the will, locates witnesses to the will, and receives Letters of Testamentary from court which authorizes the executor.

The personal representative appointed by the court if decedent dies intestate (without a will) receives Letters of Appointment which authorizes the administrator to act for the estate.

Duties of a PR are to locate and assemble property, safeguard/manage/invest property, advertise in newspapers, locate and communicate with potential beneficiaries, pay the expenses of decedent, pay debts and taxes, and distribute assets to beneficiaries according to will or laws of intestacy.

Choosing the Right Executor (Personal Representative) for Your Estate

Poor estate management results in increased costs. It is important to avoid any potential conflicts of interest the PR may have. An example is a PR that may be too close to family problems or conflicts and that changes how the estate is managed.

Being an executor is hard work, and the person chosen should be capable and willing of performing.

Do You Have Any Wealth?

If you are single and have built any amounts of wealth (positive net worth) it is important that you dictate to whom your assets will go. This may be done already with the listing of beneficiaries on retirement accounts, transfer on death for savings/checking accounts, but it will be useful in understanding your wishes for your property or anything else that would otherwise flow through the estate (cars, personal residences, collections, etc.)

Wills for Nontraditional Relationships

Nontraditional relationships include: unmarried same-sex relationships, communal relationships, and cohabitation (not legally married but living together).

Nontraditional relationships can have many gift and estate tax disadvantages. There is no marital deduction available, and also no intestacy rights for the non spouse partner.

Intestacy laws never transfer assets to non-relative, non spouse individuals. What this means is without a will you won't be receiving your partners assets if part of a nontraditional relationship.

Nontraditional Relationships May Take More Than A Will

Unmarried couples should have a will or create a trust to avoid adverse consequences for their assets. Creating a will for nontraditional couples may not be the sure fire way to achieve your needs due to potential will contests.

Other important options for nontraditional relationships are:

• Making lifetime gifts to partner using the annual exclusion.

• Titling property as JTWROS to avoid probate.

• Name your non-spouse partner beneficiary on retirement funds, and life insurance/annuities.

• Use POD/TOD for bank and checking accounts.

• Can utilize a revocable living trust and name the partner as the beneficiary.

• Plan for health care by executing durable powers of attorney and living wills.

• Give your surviving partner the power to make funeral decisions and donate organs. Plan for children.

• Adoption to ensure desired custodial arrangements are recognized. Children born outside of marriage should specifically be acknowledged in estate planning documents.

• Make use of any necessary Trusts. See my article on Estate Planning Trusts.

• Also see: Cohabitation Agreements which are similar to a prenuptial arrangement for nontraditional couples.

None of the Above?

Are you single, broke, childless, and going to be rich soon!!? Well for now you may not need a will.

As stated above a will directs distribution of assets, names the guardian of your children, and the executor of your estate. If you have no assets or children then you don't have anything to worry about!

Keep in mind as you start to develop your Millionaire Mindset and amass your wealth, become married, or have children you'll want to create a will.

Thank you for your time

Also See: What Everyone Should Know About Deferral and Minimization of Estate Taxes

Also See: What Everyone Building or Protecting Wealth Should Know About Estate Planning Trusts