According to a Gallup Poll earlier this year, only 44% of Americans say they have a will. Unfortunately, from new parents, to one of the world’s biggest music stars, many people believe they don’t need a will; don’t understand why it’s so important; or simply do not take the time to meet with an estate attorney to prepare one.
Wills serve a critical function in giving you control over your assets after your death. They have numerous benefits, including the following:
- Designating beneficiaries. Many people assume that even if they die without a will, all of their assets will pass to their spouse. However, that is not the case. Under New York laws of intestacy (which apply when there is no will), if someone who dies without a will is survived by a spouse and children, the spouse only inherits half of the estate (plus $50,000). The remainder goes to children outright. If you don’t have a spouse or children, the intestacy laws establish which of your close relatives will receive your estate. However, if you don’t have surviving relatives or your closest relatives are more remote than first cousins, your assets are instead turned over to the New York State comptroller. A professionally drafted will can help prevent any of these unintended consequences by specifying who inherits from your estate, and how much they inherit – including non-family members if those are your wishes.
- Controlling when beneficiaries receive assets. Sometimes you may not want an heir to inherit your assets outright at your death. For example, wills often provide that assets which are to be inherited by a minor be held in trust for the minor’s benefit. The will can also establish the time periods when the minor will receive unrestricted access to the funds. In other words, the assets can be given out over a period of years instead of all at once when the minor reaches adulthood. This helps protect your beneficiaries from themselves – even the most responsible minors may not benefit from unrestrained access to funds at a young age.
- Restricting access to assets. In some cases, you may want to limit a beneficiary’s control over assets. Beneficiaries with disabilities, special needs, creditor issues, or who have difficulties in managing money can be protected.
- Guardian selection. A will allows you to nominate someone to serve as guardian of your minor children in the event their other parent predeceases you or where both parents die simultaneously (the “same plane” scenario). This is one of the most important reasons for parents of minor children to have a will.
- Tax planning. If the size of an estate is significant enough to have exposure to estate tax, tax planning is essential. Boilerplate wills do not offer the same individualized tax analysis which you can get from an experienced estate planning attorney. An attorney can advise you on steps to minimize taxes (such as the use of testamentary disclaimers and bypass trusts). A properly drafted will can also preserve flexibility to make decisions based on the tax laws which exist when you die – not what they are now! This is crucial in an ever-changing tax environment.
- Charitable giving. Individuals who wish to leave assets to charitable beneficiaries need to have a will. An attorney can help recommend lifetime and post-death charitable giving strategies.
- Comprehensive planning. A will should be a part of overall estate plan, including a review of life insurance, beneficiary designations on retirement accounts, power of attorney, trusts, etc. Your estate plan should be reviewed periodically to consider any changing circumstances in your family or financial situation. This is another area where an attorney can provide tremendous value in analyzing your unique needs and determining whether you would benefit from additional estate planning.
A will is an important tool for ensuring your wishes are followed after your death and your estate and family members are protected. If you need a will or estate plan, contact Neufeld & O’Leary for a consultation. You can also read more about our trust and estate planning practice here.
This post does not constitute legal advice or establish an attorney-client relationship.