A Will is the basic building block of your estate plan. It is a dynamic document which allows you to memorialize your wishes about who you want to administer your estate as well as how you want your property divided after your passing. Below are just a few examples of what a Will can do for you.
A personal representative, also frequently called an executor, is the person who is in charge of administering your estate after you die. In your Will, you can choose who you trust to serve in this role. This is a very important decision that a Will empowers you to make. Without an Estate Plan, each state has a statute with a ranking of individuals who are eligible to serve based on how they are related to you. Within this ranking, each class of individuals often includes more than one person. Individuals within the same class, your surviving children for example, can often disagree over who should serve in this role. Regrettably, such friction can often lead to expensive litigation. Creating a Will helps avoid this possibility. It gives you the power to select who you want to serve in this important role. Moreover, you have the right to name an alternate personal representative to serve in the event that your primary selection is unable or unwilling to serve. This helps better ensure that people you trust are managing your wishes after your death.
Having a Will gives you greater freedom to decide who will and will not inherit from your estate. If you die without a Will, your estate is divided pursuant to a rigid statutory framework. Further, each individual’s share is predetermined by the statutory formula. For example, assume you are survived by your two children. Typically, under the statute, each would receive one-half of your estate. However, perhaps one of your children is under more financial stress than the other. Alternatively, maybe you are estranged from one of your children. Having a Will helps you address these variables by giving you the freedom to select who shall inherit and how much they shall inherit.
Being able to determine how your property is to be divided can be especially important if you have valuable family heirlooms or personal items with high sentimental value. A Will allows you to give these items to any individual you want. This can help remove another frequent source of litigation surrounding one’s estate.
Another difference between the statutory approach and having a Will, is that a Will allows you to give to charities. You may have a collection of artwork you wish to give to a certain museum. Alternatively, you may wish to give a cash bequest to your college or a non-profit whose mission you wish to support. In addition to having such gifts help perform a public good, your estate can also receive certain tax benefits as well. Under the statutory framework, these types of entities are not eligible to receive a portion of your estate.
If you die without a Will, and a beneficiary of yours is under the age of eighteen, their inheritance has to be supervised by a court appointed guardian. While it may seem counterintuitive, often the law does not allow a parent to automatically handle their minor child’s inheritance. A parent may still need to be appointed by a judge as their guardian. Further, any withdraws from the minor’s account typically must be approved by a Court. Lastly, once the child turns eighteen, the funds pass directly to them. As most eighteen year olds are not as fiscally responsible as an adult, this too can be far from what one wants for their child.
You can place provisions in your Will which avoids this type of judicial scrutiny. Additionally, you can create a Trust for younger beneficiaries stating at what age(s) and under what circumstances they can enjoy their share of their inheritance.
These are but a few short examples of what a Will can do for you. In sum, it gives you the freedom to provide for your loved ones after your death. More importantly, rather than the a system of state laws determining what happens to your estate – you get to decide.