Estate Planning 101: All about Wills

A Will (Testate) is a legal document that directs the disposition of property owned by an individual at the time of death.  It may be revised or amended by a codicil at any point prior to death.  It must be signed and witnessed usually by two or more people.

All wills have an “Executor”, which is appointed by the decedent prior to death.  The “Beneficiaries” are the individuals who would receive the assets as outlined in the legal document.

All wills are subject to probate, in layman terms that means that a court preceding must take place prior to any assets being dispersed.  There are some advantages and advantages of going through probate:

 

 

Advantages:

  • Minimizes the possibility of future claims against the estate by heirs and creditors

Disadvantages:

  • It delays distributions (meaning, it will be a while before any money or other assets are dispersed)
  • Increased costs of estate administration (court costs, executor’s fees and lawyer fees)
  • All information is available to the public (everyone will know your business)

Wills are important but there are other ways to distribute your assets to individuals of your choosing without your personal business being displayed for all eyes to see. You can avoid the probate process by having your assets pass under the following:

Ways to avoid Probate:

  • Contracts –Pensions, IRA and Life Insurance Policies, etc. are contracts.  Whomever you select as the beneficiary will be the recipient.  A will does not counter act this; however, there is one caveat to this.  If the decedent selects himself as the beneficiary then it is subject to probate.
  • Trusts – You can put your assets into an irrevocable or revocable Trust.
  • Operations of Law – Assets that are in a joint tenancy by the entirety or joint tenancy with rights to survivorship.
  • Other Will Substitutes – Bank accounts that are payable upon death or a Deed in Escrow avoid the probate process.

Types of Wills:

  • Traditional– A typed legal document (witnessed and signed) that gives direction as to how assets will be distributed after the decedent’s death. (accepted by all states)
  • Holographic– A handwritten will (valid only in some states without the formality of witnesses)
  • Nuncupative– An oral will (probably won’t cut it in most states)

There are many consequences to not having a will.  If you die without one, you would have died “Intestate”.  I would not recommend this, especially if your assets are not tied to a contract, or sitting in a trust or other will substitutes.  Not having a one causes a lot of unnecessary heart ache and stress on your loved ones.  Your assets might end up going to the one family member or individual you didn’t want them to go to….God forbids it es cheats to the state.  But that is exactly what can happen if you don’t have a will.  Don’t let this happen to you.

Do you have a will?

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