By Peter Mastrantuono
If you die without a will, the state in which you live will dictate how your assets are distributed. For instance, if you live in New Jersey, are married with no children and your parents are still alive, your spouse will inherit the first 25% of your intestate property. Then the remaining 75% is split 75%/25% to the spouse and parents respectively. In North Carolina, the division between spouse and surviving parents is roughly equal shares.
State intestate laws, which govern the distribution of assets for a person who has died without a will, rarely match an individual’s asset distribution wishes, making this perhaps most important reason you should have a will.
The value of having a will extends beyond asset distribution after death.
If you have children, it’s crucial that you have a will designating who you want to take care of your minor children. Without a will, the courts will decide who assumes the guardianship of your children.
Through a will, you also designate the person (executor) who will act for your estate after your death. They will do all the final administrative functions to finalize your affairs, like paying taxes and settling bills. Given the executor’s power over your assets, be careful to pick someone who is honest and trustworthy.
All estates are subject to the probate process, but having a will may speed up the distribution of your assets to your heirs.
A will can additionally be used to disinherit someone. For instance, you may not want a child with a substance abuse problem to receive an inheritance, knowing that money will make his or her abuse problem only worse. If you fail to mention the child in the will, it could be contested as an oversight. Should that challenge prevail, property would go that child. To avoid this, a will can specifically name someone as a party that is not to receive any inheritance.
A will is also employed to ensure that a prescribed share of your estate is distributed to the charity or charities of your choice.
Creating a will doesn’t necessarily require the services of a lawyer. For very simple estates, a basic will may be written using software or other resources as a guide. Handwritten wills are legal in about half the states, but may be subject to greater scrutiny by the courts. If you want to be certain that your will holds up, or you have a more complicated estate or family situation, you may want to engage an attorney to draft your will.
Remember, a will never locks you into a decision. You can always change your mind about the distribution of your assets; you simply need to write a new will. And because life is never static, you should periodically review your will to ensure that it reflects the major changes in your life, such as divorce, remarriage and children.
Peter Mastrantuono is a contributing writer to www.myperfectfinancialadvisor.com, the premier matchmaker between investors and advisors. Peter worked for over 30 years in the wealth management industry, focusing on retirement planning, investing, asset allocation and financial planning.