Will Power The Importance of Writing a Will
Date: Wednesday , August 01, 2012
Recent studies have shown that a majority of Americans do not have a Will. We will uncover some of the reasons why it is imperative to have a will, regardless of your net worth. For those that have done some basic estate planning like creating a Joint Tenancy with rights of survivorship, or accounts that have designated beneficiaries, assets will transfer at death of the joint tenant or owner according to the named joint tenant or beneficiary. Any remaining assets however, will be subject to a process referred to as Probate.
In California and in many other states, Probate is a lengthy legal process by which a decedent's estate is administered by a court-appointed officer, called an Executor or Administrator. At its most basic level, this process involves three steps. The first is to marshal the decedent's assets, the second is to pay any of the decedent's debts and the third is to transfer the decedent's remaining assets to his or her successors. In the event of someone’s death without a trust or a will in place, the intestacy laws of either the decedent's state of residence or the state in which the assets are located will determine who gets what part of the estate. Most states rank heirs in the following way:
1. Spouse, children and other descendants (allocation and division among these family members varies from state to state)
3. Siblings and children of deceased siblings
4. Other relatives
5. The state
A will directs the Probate Court as to how you want your estate distributed. Your will should be customized to serve your objectives; and it need not follow the order defined by your state's intestacy laws. With a will, you can transfer your assets to anyone (be it family or not), and you can divide them as you like. You can also omit heirs if you are not comfortable with them inheriting your assets.
In the event you do not have a well-crafted will in place upon death, it could lead to court battles where your heirs are fighting for their share in your estate. This will not only lengthen the probate process but will also result in heavy legal fees that your estate might have to incur.
A will is revocable and amendable as long as you are alive. In fact, it is a good idea to review your will periodically to account for any changes in your assets or your family. This review becomes especially important upon the occurrence of events such as marriage, divorce or death of existing beneficiaries. Writing a will is especially important for people with young children because a will is how one nominates guardianship of minor children.
Even if you have a will, in many cases, to avoid the probate process altogether, people choose to establish a Revocable Living Trust. This instrument allows most estates to pass to desired beneficiaries without any court involvement whatsoever. A revocable living trust is typically coupled with a certain type of will, called a "pour-over" will. A pour-over will ensures that everything you intended to put in your trust is put there, even if you fail to include them at the time of creating the trust. It is the most common way for those clients in California to arrange for the efficient transfer of their assets to their desired heirs at death.
In addition to a will and a revocable trust, a complete estate plan should include health care proxies and powers of attorney. In California, an Advance Health Care Directive is a nomination of an agent to make health care decisions for you, and a statement of your wishes for the kind of life-sustaining medical treatment you want, or don't want, in the event that you become terminally ill or unable to communicate.
For financial matters, you will also want to create a Durable Power of Attorney. By designating an agent under your Power of Attorney, you are authorizing your agent to manage your financial affairs if you are unable to do so. Your agent is empowered to sign on your behalf and is obligated to be your fiduciary, which means that they must act in your best financial interest at all times and according to your wishes. This Power can come in handy if for some reason you become incapacitated.
If you would like to discuss how a will or a revocable trust fits your specific situation, please contact the author.