There are many reasons why people do not do Wills, and not many of those reasons are very good. Many of us simply avoid thinking about it, and then we do we tell ourselves there will be time to do one later. Maybe when I have more assets I will do a will is another one. I am not ready to think about those things; I am not sure what is involved; I am too young; I am too busy. You can probably think of others.
Most of reasons for not doing a Will are really not very solid, but there are many reason good reasons to do one. Here are just 5 good reasons to do a Will, and I will throw in some bonuses.
1. Beneficiaries – to choose the beneficiaries of your estate. Without a Will, the beneficiaries will be your heirs as determined by state statute, not by you.
2. Distribution of Estate – to choose how much of your estate is distributed to which beneficiaries and how it will be distributed to them. Without a Will, state statue determines who gets your estate and in what proportions. State statute also does not provide any protections for the assets distributed to your heirs; the assets will be delivered to them outright, with no guidance or oversight.
3. Guardian – to choose who will raise your children and who will oversee the assets left to them. Without a Will, the choice will be left to the State and/or anyone who volunteers and is approved by the court to be responsible for your minor children. It could be just about anyone, though family usually step forward. If you have no family is willing to take them, then they will become wards of the State.
4. Executor – to choose who will handle the administration of your estate. Without a Will, whoever steps forward and is approved by the court (if the estate is subject to probate) will handle your estate, or worse. I often see opportunistic family members rush in and take control and do things without authority. Documents are destroyed or lost; property goes missing; bank accounts are drained. Having a Will does not necessarily insure against opportunistic family members, but you can appoint the people you trust to have the authority and control.
5. Children – to provide some supervision over the assets that are left to minor children. Without a Will, your children will receive the assets outright when they reach legal adulthood (18). A Will allows you to keep the assets protected and provide oversight and management for the benefit of your children’s needs until they reach an age when you have confidence they will be able to handle what you have left to them responsibly. You can make sure the assets are used for things like college instead of youthful indiscretions.
Bonus – Avoid Taxes & Probate – I am sure this got your attention, but actually a Will does not avoid taxes or probate.
Taxes – The good news is that the federal estate tax does not kick in unless a decedent’s estate exceeds $5.43M in 2015, and the amount will increase as times goes on by a cost of living factor, unless Congress overhauls the IRS Code). The focus of Congress in recent years has been on other things, not on estate taxes. The last action taken by Congress in 2012 continued the $5M exemption with yearly inflation adjustments. Many if not most states also have state inheritance or death taxes. In Illinois, the threshold is $4M. If you have an estate over that amount, there are things that can be done to keep the money out of the government’s hands (if that is your goal) and channel it elsewhere, and that estate tax planning begins with a Will.
Probate – You might believe that a Will voids probate, but it does not. A Will simply puts you in the driver’s seat, so to speak, rather than having your estate vehicle guided by the default map provided by the Probate Act. With a Will you choose where your estate goes, who handles it, who will be the guardian of your children (if both parents are gone), who will receive the assets you leave behind and how they will receive them. A Will allows you to choose who oversees the assets while your children are still minors, how the assets are used for your children’s benefit, and how and when your children will have access to them. A Will can also be used to waive the requirement of a surety bond and save the estate the cost of surety to cover 150% of the value of the personal property in the estate.
If you want to avoid probate, there are other methods that can be used, but that is a topic for a different day.
Kevin G. Drendel Drendel & Jansons Law Group 111 Flinn Street Batavia, IL 60510 (630) 406-5440 (630) 406-6179 fax [email protected] foxvalleyestateplanning.com