Answers to common questions about wills
While no one likes to think about death, it is inevitable. Therefore, you need to consider how to provide for your family or heirs when you are no longer around. A will is usually the best way to do that. With that in mind, the following might answer some common questions about wills and what happens if you do not have one.
What is a will?
It is a legal document that does a number of things, such as:
- Dispose of your assets after your death
- Appoint your minor children's guardian, if your spouse has already died, to look after the children’s property and the children themselves;
- Appoint an executor to administer your estate and see that your wishes are carried out;
- Establish trusts for people such as your surviving spouse and children and appoint a trustee to administer each trust.
Why should I have a will?
Because if you do not, these are some of the things that happen:
- State law governs who inherits your assets. Your property is usually split between your surviving spouse and children and never held in trust. If you don't have a spouse or children, your property generally goes to your parents or your siblings – and never to a "significant other" or charity.
- If your spouse is alive and your minor children get a share of your property, the court must appoint a guardian (usually your surviving spouse) to manage their property under strict court supervision. Once your children are 18, they get the property outright.
- If your spouse has already died and you have minor children, the court – not you – chooses the guardian of your children's property and the person with whom they will live;
- Your estate may pay more tax than necessary, since the state does your planning for you. Only property passing to your spouse or charity is tax-free.
How do I get a will?
We suggest you consult a lawyer and not rely on books, computer programs or forms, Here are additional tips regarding obtaining a will:
- If your estate is relatively modest, it is best to ask your friends and neighbors to recommend a good local attorney.
- If your estate is more substantial, you may want to contact your financial institution to see if they can provide attorney recommendations.
What should I do to prepare to meet with a lawyer?
- Prepare an organized list of your assets and their approximate values. Focus on where the assets are (out of state?), what they are (community property?), and how they are owned (individually, jointly, passing automatically at your death to the other owner?).
- Be sure to include assets like insurance, retirement benefits and IRAs. Although like joint property they pass outside of your will, your lawyer still needs to know about them.
- Choose your beneficiaries and decide if you want them to have the property outright or in trust.
- Choose a guardian for your minor children, an executor, and a trustee if need be.
Is a Will all I need?
Your lawyer will be able to advise you about this. But briefly, a Will controls the disposition only of "probate assets," which are generally assets you owned only in your name alone. However, there are many other ways assets can pass at death, such as (i) joint ownership; (ii) beneficiary designation (e.g., retirement plans and life insurance); (iii) operation of law (e.g., community property); (iv) via power of appointment, etc. Therefore, in an addition to having a Will to address your probate assets, you should also determine whether you have non-probate assets that would require different documentation.
Should I already have a will, do I ever need another one?
You might, if the tax laws have changed or major events have occurred, such as:
- You have just gotten married;
- You have started a family;
- Your beneficiaries have died;
- You have gotten divorced;
- You have moved to another state;
- Your assets have changed significantly.
Once you have worked with an attorney to create your will, talk with your family. Let them know the main points, who the executor is, and where they can locate a copy of the will.
What's next? Life changes
Any information presented about tax considerations affecting your financial transactions or arrangements is not intended as tax advice and cannot be relied on to avoid any tax penalties. Neither Merrill Edge™ nor its Financial Solutions Advisors provide tax, accounting or legal advice. You should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with your personal tax expert for this advice.
1 The information contained herein is for informational purposes, and is not legal advice or a substitute for legal counsel.
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