Wills for Estate Planning

What is a will and why is it important?
Who's Who In Your Will
What happens if you die without a will?
Creating Your Will

A Legacy for Your Loved Ones

A common reason many people save and invest throughout their lifetimes is to leave a financial legacy or resource to family members, friends or charitable organizations. Although providing monetary support to beneficiaries is an important goal for many people, few take the essential steps to plan for the transfer of their assets upon their death.

Preparing for transfer of your wealth in a manner that meets your intentions and preserves the value of your legacy is called estate planning. Estate planning is not just for the very wealthy. If you own assets such as personal property (furniture, jewelry, clothes, automobiles), investments (cash, savings, securities), real estate, employee benefits (group insurance, retirement or profit-sharing plans) and other items such as the proceeds of a lawsuit, then you have an estate.

Did you know that without proper planning over half of the value of your estate could be lost due to federal estate taxes at your death? Do you want the IRS to be your single largest beneficiary? If not, there are many tools you can use to create an estate plan for your own financial situation and assure that your hard-earned assets go to those you choose.

One of the most common tools found in many estate plans is a will.

What is a will and why is it important?

Simply put, a will is a legal document designed to handle the following:

Its primary goal is to transfer property and financial assets to beneficiaries.
It enables you to give written direction and authorization for others to act on your behalf after you die.
It lets you name a guardian to care for your minor children if you die or become incapable of caring for them.
It enables you to name an executor, the person or institution responsible for overseeing the settlement of your affairs.
And you can set up a trust within your will to help minimize or avoid federal estate taxes.

Who's Who in Your Will

All you really need to do to start writing, or rewriting, your will is to conduct a thorough inventory of what you own and a establish a clear idea of how you want your assets distributed at your death. Name those who will act on your behalf after you are gone. For example:

The executor manages the settlement of your estate, collects and distributes your assets to your heirs according to your intentions, pays any bills that may arise and settles any legal or tax issues. Whomever you name as an executor should be competent to make important legal and financial decisions regarding your estate.
Your beneficiaries are the individuals you name in your will to inherit your property and assets. Beneficiaries may be spouses, children, grandchildren, other family members or personal friends. Charities and other organizations can also be named as beneficiaries.

In certain states, state law may override the directions of your will in order to provide financial support for surviving spouses or children. An estate planning attorney in your state of residence should be familiar with any specific laws in your state pertaining to the distribution of property and assets to surviving spouses and children after your death.
A guardian should be appointed in a will for those with children under age 18 or 21, depending on your state of residence. Your children's guardian will assume custody of your children in the event that both parents are deceased and make the decisions that affect your children's daily lives.
A trustee may also be named in a will to oversee the administration of a trust, if you choose to establish one with your will.

What happens if you die without a will?

The legal term for dying without a will is to die "intestate," and the distribution of your property will be based on the laws of intestacy of the state in which you reside at the time of death.

In the absence of a will, the Probate Court will appoint an administrator for your estate. Your estate must pay for the probate process which can last from several months to several years. After a complicated and possibly lengthy procedure, all of your assets will be distributed according to the state's formula. (Some assets, such as funds in 401(k) plans, IRAs and annuities, do not pass through the probate process.) The probate process is also a matter of public record.

Due to the length of time it may take for your estate to be settled, the financial security of your family may be impacted. In addition, by not being able to take advantage of tax benefits through proper estate planning, your estate could have to pay more federal and state taxes than necessary — leaving less for your loved ones.

Creating Your Will

Although you are not required to use an attorney to prepare your will, you must follow some very precise rules to make sure that the will is valid. While there are many print, software and Internet resources to help you draft your will, it is generally worth the time and expense to prepare your will with the assistance of an attorney who is experienced with the estate planning laws of your state of residence.

If you currently have a will, you've taken a wise step. But you should periodically review and update your will to reflect changes in your primary property and your wishes, as well as tax laws. If you amend your will, or prepare a new one, you should destroy copies of all of your prior wills.

Dearborn & Creggs Can Help

Dearborn & Creggs financial representatives are here to help you every step of the way and can assist you and your other professional advisors, such as your attorney and accountant, in carefully structuring a will.

Regardless of what you own, it is important that you be able to pass it on to the people or organizations you wish, in the manner that you wish. The key to making this happen is through proper estate planning. Take the time and opportunity now to create a will to protect your assets — and your beneficiaries.