Saving for Major Milestones
A will is a legal document that transfers your property after you die, and names the people who will settle your estate, care for your children who are minors and administer any trusts the will establishes.
With rare exceptions, a will has to be a formal, written document that meets the legal requirements of the state where it’s executed, or prepared. In some circumstances, a hand-written will, known as a holograph, passes muster. In very rare cases—usually, a deathbed situation—an oral will, known as a nuncupative will, may be considered valid.
But why take a chance? Making a will is one situation where doing the right thing is easy and inexpensive.
If you die intestate, that is without a will, you’ll have lost control over what happens to your property. And your estate will probably end up paying a lot more to settle your affairs—meaning that less will be available for your heirs. Any estate, large or small, can be settled faster if you’ve made a will naming the people, charities, or other institutions you want to inherit your property.
If you’re married and die intestate, your property will go to your spouse and any children you have. Each state has a specific formula for dividing the estate, some giving a greater percentage to the spouse and others favoring the children. If you’ve been married more than once, or have children from different marriages, the rules for dividing your property could produce results you wouldn’t be happy about.
If you’re not married, your relatives—the ones the court decides on—inherit. Chances are that what you intended to leave to friends or to charitable, religious, or educational institutions will go instead to a distant relative, perhaps even one you weren’t very fond of. The bottom line is that if you’re unmarried, childless, and without property, you can justify waiting to make a will. Otherwise, you can’t.
Any property that is transferred by will is subject to probate, the legal process of proving, or verifying, your will through the courts. Because the process can be slow, costly, and sometimes perverse, probate has a bad reputation.
However, you can’t avoid probate even if you don’t make a will. The only thing you accomplish is to give the probate court—sometimes called surrogate’s court or orphan’s court—more authority over your affairs, since the court will appoint an administrator to handle your estate.
A clear, unambiguous will has the best chance of surviving the probate process without the hassle or extra expense. And the more property you have already transferred directly to your beneficiaries, the more you reduce potential problems.
In recent years, some people have opted for a living trust to transfer the bulk of their property outside the probate process. But you still need a will to leave property that isn’t covered by the trust and to name an executor for your estate and a guardian for any minor children.
You can’t leave jointly owned property to someone other than your joint owner. If you have a joint bank account with one of your children and own your house jointly with another, that property is theirs when you die—whether or not the properties are of equal value. If your will states that your children should share your estate equally, but all your property is jointly held, your wishes can’t be carried out. In fact, if one child generously equalizes her share of a $300,000 inheritance with her sibling, she’ll be making a potentially taxable gift of $150,000.
If you die without a will and have no relatives, your estate is escheated, or turned over, to the state where you live. That’s probably how your friends will feel. More than half of all Americans die intestate, including many who leave a large estate and minor children. A small percentage of wills are invalid for one reason or another.
You can divide your estate pretty much as you wish, though there are some things you can’t do if you want your will to survive a court challenge.
Illustration: Cristi Cash
Article Source: https://soopercu.learnbanzai.com/articles/wills
Please contact the estate planner/legal counsel for guidance.
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