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B. Do I need a Will?

B. Do I need a Will?

If you have minor children, definitely. If not, probably so. It depends. Do you know whether your personal wishes are exactly in line with the law dictating who gets what, when people die intestate in your state? If your intent differs from the law, you had better have a Will. Please avoid the following excuses:

“Everybody already knows who’s supposed to get what.” OR

“In my desk drawer there’s a list of my possessions, and the persons to whom they should be given.” OR

“I don’t have much. The kids can just come in and divide it among themselves however they decide.” OR

“I put name tags on the bottom of every nick-knack and piece of furniture, so

they’ll know who gets it.” OR

“Last year I put all my money in a joint account with my oldest daughter. After I die, she knows to split it three ways with her brothers.”

All the common situations above (and any others you might add) are prescriptions for trouble, for various reasons. There is simply no way for anyone to enforce your intended plan if it is not contained in a Will. Families can be forever torn apart, jockeying for position over the distribution of even small amounts of property.

Many people acknowledge the pitfalls – for others – of not having a Will. But their kids, so they say, would respect the parents’ wishes and never stoop to fighting over the estate. Even if these folks are right, what about the kids’ spouses? In-laws (sons and daughters, particularly) can be a problem. Whether it is well intentioned or not, meddling is a specialty with some of these people. Unless you spell out your wishes in a Will, the door may be open, for example, for your pushy son-in-law to have his say about things, or to pressure your daughter. Never mind that the issue is absolutely none of his business!

Do you care who your personal representative will be? Somebody must be given responsibility and the necessary authority to preserve, gather and distribute your assets in accordance with the formula provided by your Will, or by state law, if you die intestate (without a Will).

If you die intestate, the court will choose the person responsible for wrapping up your affairs. This person is called an Administrator, and might not be the person you would have wanted. Sometimes, sadly, family bickering develops over who should be appointed by the judge. Often, a neutral lawyer is appointed, and must be paid with estate funds. So, one important function of the Will is to name this “wrapper upper,” who is called the Executor (or Executrix, if female) of the Will.

The following general property distribution scheme may be helpful to show what happens to the probate estate if one dies without a Will. State laws vary greatly, however, and contain significant details not covered here.

For example, most states provide an allowance to be set aside for the surviving spouse and/or children – whether there is a Will or not. This is usually a fairly modest exemption, free from any claims against the estate or debts of the decedent. These survivors take a specified dollar amount “off the top” of the estate, before the creditors, heirs and beneficiaries line up to receive their shares of what remains, under the Will (if there is one) or the state law of intestate distribution (if there is no Will). These allowances vary greatly among states, and can be significant (e.g., $20,000 in Florida; $60,000 in Ohio). If there is no Will, many states also give the surviving spouse a specified interest in any real estate owned by the decedent (e.g., “one-half,” or, a “life estate”).

What happens if you die without a Will while you are:

1. Married with children: Many people falsely believe that the surviving spouse/parent would take all the deceased spouse’s property, especially if the children are young. That is not the case. In this situation, the law of most states awards one-third to one-half of the decedent’s property to the surviving spouse, and the remainder to the children, regardless of age.

2. Married with no children: Again, there is a popular misconception that the intestate decedent’s surviving spouse would take all. Most states, however, give only one-third to one-half of the estate to the survivor. The remainder generally goes to the decedent’s parent(s), if alive. If both parents are dead, many states split the remainder among the decedent’s brothers and sisters.

3. Single person with children: When a single person with children dies without a Will, state laws uniformly provide that the entire estate goes to the children.

4. Single person with no children: In this situation, again, most state laws favor the decedent’s parent(s) in the distribution of his/her property. If both parents are deceased, many states divide the property among the brothers and sisters.

If there is a Will, the surviving spouse can renounce it and the inheritance it contains (if any), and instead elect to take a share of the estate specifically provided by state law. This is a legal device originally intended for the protection of the wife. Historically, all of a family’s property might be titled solely in the husband’s name. The “elective share” protects a woman (or man) against being “written out” of a spouse’s Will.

For example, a husband might have all the couple’s property in his name alone, and write a Will directing all of it to his children by a previous marriage. The wife could file a petition in probate court to take her “elective share” of the estate under state law. Usually the surviving spouse can take about one third to one half of the estate. That share varies among the states, and so does the definition of “estate” that is used in the calculation. Also, state laws contain a very wide variety of significant details, limits, dollar allowances and exceptions. These are all involved in determining what and how much property the surviving spouse can elect to take from the deceased spouse’s estate, instead of whatever he/she is left in the Will.

When there are minor children, a Will should always be used to name a guardian(s) of their persons and property. Alternates should also be named. This should not be done any other way. Of course, if there is a surviving parent, he/she automatically is guardian, if living in the same household. In a divorce situation, the parent with legal custody of the child(ren) should designate a guardian. Understand, however, that if somebody besides the other parent is named, this designation might not be binding; when a custodial parent dies, the non-custodial parent always has priority in seeking guardianship and custody, unless unfit.

Be aware, too, that the court will probably have to approve the proposed guardian eventually, even if named in a Will (unless he/she is the surviving parent, in the same household). The purpose of the Will in this regard, though, is to guide the court, and to avoid family arguments over who is better qualified.

If you feel it is necessary or appropriate, two guardians can be appointed – one over the child himself, and one (presumably experienced) over the child’s property. Consider carefully, however, the appropriateness of leaving money or other property outright to young children, even if a qualified guardian is available. Guardianship is a cumbersome way to manage financial affairs. Periodic reports and accounting to the court are required, and flexibility is limited by law.

More important, for many, is that guardianship ends at the age of legal adulthood (usually 18, sometimes 21). From then on, any property left to a child is exclusively owned and controlled by him/her. People easily recognize that it is bad to die intestate, unintentionally leaving half (or more) of everything to small children. Sometimes they forget it might be no better to die with a Will, if it allows the same result, i.e., leaving property to minor children. That is often what happens when both parents die prematurely. With or without a Will, those kids grow up to be 18 year old boys and girls, at which time the guardian must turn over the money (or other property).

If significant assets are to be committed immediately at death to the direct benefit of your children (as opposed to their surviving parent), a Trust is the way to go. We will explore later several ways in which the surviving parent (or any mature adult) can also benefit from a Trust. But a Trust is a must to keep your estate from eventually falling into the hands of teenagers, if you have left your children money and die while they are young.

F.Y.I. Guardians are not legally obligated to support the decedent’s children out of their own pockets, and might not be able to, anyway. Public welfare benefits might be available, but it is unwise to rely on them as a first option. So adequate funds, through life insurance or otherwise, should be available to care for your kids.

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