This one is very simple. Not having a will is a very bad idea for many reasons. Let's discuss the important reasons why you need to have a will and how to stay in control of the division of your estate after you die.
You Decide How Your Estate is Divided
If you fail to have a will, you give up control on how your estate is divided. You leave it up to the intestacy laws of your state. I often talk to married couples with children in my state, South Carolina. They think, “I don't need a will; everything will go straight to my spouse.” WRONG! In South Carolina, a person who dies without a will leaves half to a spouse and half to children. I have a young widow client whose husband died (before she became my client) and they had a two year old daughter. They had a house. The two year old daughter owns a quarter of a house now because there was no will. The daughter's quarter share in that house will have to be monitored and calculated until she turns eighteen; the girl's interest in the house cannot be waived or signed away by her until she turns eighteen. (She does not have to waive her share, though.) The widow cannot take out an equity line on the house without court approval and without putting the daughter's one-fourth share into an escrow account for her benefit.
Having a will is also helpful for family heirlooms, personal belongings. You write down in your will who gets your personal property. Then it is clear who gets what so your family does not waste time and energy fighting each other on who is going to get what. You decide who is the guardian for the minor children.
Do you want to leave it up to a judge who does not know you to decide who will take care of your children? Or even worse, do you want to trigger a fight between other family members on this question? Decide yourself, get a will and save everyone else headache and heartache. The same thing applies to the money that you leave your children. You decide who the trustee of your children's money will be (it does not have to be the same person as the guardian) and at what age(s) your children will get the money without the trustee; the trustee can also be a bank. Some children can handle money fine at 18. Most cannot. Many of my clients have multiple answers to this question. Give them some money at 25, some at 30. Your children have a better chance of not “blowing it” if you decide to delay the point where your children inherit directly from you. Still yet, I had another will client who had a vulnerable adult for a son. He had the intelligence of a 4th grader and would never be able to handle money intelligently. This woman had her daughter, the man's sister, take care of his share of the money. This was a problem solved with having the will. You decide who will handle your estate after your die.
You will be dead, of course. You decide when you write your will who will handle the affairs of your estate after you die. In South Carolina, this person is called the Personal Representative or Executor. A person will usually pick a close member, almost always a spouse or child. For people who do not have close relatives they trust, they can pick a bank to handle it. You decide whether the real property can be sold and under what parameters. You decide whether the Personal Representative has to post a bond or can waive it. You decide to save taxes.
If your estate is above a certain level, you may be subject to estate taxes, federal and state. There is no estate tax when you transfer assets to your spouse. However, if you are transferring assets to anyone else, you may have estate tax liability for estates worth as little as $1 million beginning in 2011. Proper estate planning prior to your death may save some or all of these estate taxes. This could be something as simple as tweaking the ownership of your life insurance so that it does not count toward your estate's worth. You could also decide to give some of your estate away to charity and save on estate taxes. You could give away some of your assets to your loved ones before you die (up to $12,000 per year to anyone, unlimited for education or medical expenses). Be prepared.
Getting a will done is not expensive. It is far more expensive to not have a will. I joke that there are not seven deadly sins; there are eight. The eighth is procrastination. I had a married couple who approached me to do their wills. They had put off getting their wills done because the wife was suffering from cancer. She had gone out of state for treatment. I sent her the documents, but she was still not sure how exactly she wanted to write her will. Because of her family background, she was torn between leaving something for her children (who had been out of touch with her and were greedy) or leaving everything to her husband. Finally, she came back to town and I presided over the signing of her will just one week before she passed away. Not having this will would have been disaster for her husband because of the children and the intestacy laws of South Carolina. They did not care for the husband; they owned property together including the house they lived in! The children would have gotten ¼ of the marital home and forced its sale, forcing the husband from his home. Getting this dying woman's will done at the last minute saved the husband from a nightmare he would not have been able to recover from.
The moral of the story is to get a will done. You are doing a great disservice to your loved ones not to have one.
