Why It’s Important to Have a Will

Your Will: Be sure your final wished are carried out

Last Will and Testament:  No one likes to think about the end of life, but it’s important to do so and be prepared for our afterlife; not just in heaven, but what we leave behind here on earth. When we create a last will and testament, more commonly known as “a will”, we’re telling the world who we’d like to have our assets after we’re gone. If we die without a will, the state determines who gets what.

Creating a will gives you sole discretion over the distribution of your assets. It lets you decide how your belongings, such as cars or family heirlooms, should be distributed. If you have a business or investments, your will can direct the smooth transition of those assets. 

Laws vary from state to state, but in general, if you die and leave a spouse and kids, your assets will be split between your surviving mate and children. If you’re single with no children, then the state is likely to decide who among your blood relatives will inherit your estate. Creating a will is especially important for people with young children, because wills are the best way to transfer guardianship of minors.

A will is also useful if you have a trust. A trust is a legal vehicle that lets you put conditions on how your assets are distributed after you die and it often lets you minimize gift and estate taxes. But you still need a will since most trusts deal only with specific assets such as life insurance or a piece of property, but not the sum total of your holdings.

Even if you have a revocable living trust in which you can put the bulk of your assets, you still need what’s known as a pour-over will. In addition to letting you name a guardian for your children, a pour-over will ensures that all the assets you intended to put into the trust are put there even if you fail to retitle some of them before your death.

Lastly, if you’re charitably inclined, a will lets you direct your assets to the charity of your choice. Likewise, if you wish to leave your assets to an institution or an organization, a will can see that your wishes are carried out.

If you have a will, be sure to update it

If you already have a will prepared, you’re better prepared than many others. But have you looked over your will in a while? Do you remember what it says, where you put it, or who your beneficiaries are? It’s good practice to review your will once a year. Why? Because our lives change in many ways, including the following:

  • Relationships – Have any of your relationships changed?
    Perhaps you have new people in your life; a marriage or birth brought in a new family member? Or maybe your favorite cousin has fallen out of favor. Is there a new charity you’ve become a benefactor for or a new church group you belong to? What about the older people you know; those you’ve selected as guardian of your children. Are they still of sound physical and mental shape to act as guardian. These are just a few questions to consider.
     
  • Assets
    Think about your assets; not just the money in your bank or investment portfolio, but the items of your estate that you may wish to bequeath to family or friends. Have they increased or decreased in value? Do you even still have them? If not, you’ll want to adjust your will.
     
  • Your location
    If you’ve moved out of state, you’ll want to make sure that the legal issues regarding your will are still valid in the state where you’re now residing. Legal issues vary by state; estate laws included.
     
  • Taxes
    Federal and state tax laws are continually changing. Make sure to consider the latest laws with consideration of your will and elder laws.

 

Use this checklist of factors to consider when reviewing your will:

  • Birth or adoption of a child/grandchild
  • Marriage/divorce
  • Death of someone named in your will
  • Whether children have reached the age of eighteen
  • A change in the circumstances of your executor, guardians, trustees, etc.
  • If you would like to provide for a charitable or other organization
  • An increase or decrease in the value of your estate
  • If you started a business
  • A change in tax laws
  • You are approaching the age at which you are required to begin taking distributions from your IRA, 401(k) or other qualified plan
  • If you’ve moved out of state

If you have questions about your will, be sure to seek the counsel of an attorney who specialized in wills.

 

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BLOG Date: June 3, 2014
Writer: Ryan Allen