Why You Need a Will
As we usher in the year 2016, it is imperative that one of our New Year's Resolutions will be to better protect our families by creating an ideal and comprehensive estate plan. Although every situation is unique and merits individual assessment, an overwhelming majority will benefit greatly from a simple Will.
Many people think that a Will is necessary only for those who want to set up Trusts or save on estate taxes. While those are important benefits for some, the primary reason for executing a Will, however, is to leave your property to those you care about in the manner and proportion of your choosing.
If you die without a Will, in most instances your assets will be distributed to your next of kin by a court appointed "administrator" pursuant to intestacy laws -the statutory state laws that govern the disposition of assets after death. For example, if you die without a Will in New York, and are survived by a spouse and descendants, your spouse is entitled to the first $50,000 and one-half of the balance of the property, and your descendants share the rest in equal portions. If you are survived by a spouse but no descendants, then the spouse takes all. If you are survived by a parent or parents, but no spouse or descendants, your parent or parents receive your entire estate. If you are survived by siblings (or descendants of either parent), but none of the closer relatives, the siblings take all. And so on. If you want to "opt out" of this statutory mandate, you may do so via a properly drafted and properly executed Will.
Another basic reason to have a Will is if you die without a will and leave minor children. If any of your children is under 18 years of age at your death, a court appointed guardian will be required to manage your minor child's share of your assets. The appointment of your spouse as the guardian of the property is not guaranteed. The guardian may even have to post a bond on which premiums have to be paid. Furthermore, if any portion of your assets is needed to pay for your child's education, clothing or living costs, prior approval of the court is necessary. The guardian must file an annual accounting of income and expenses. Yet another burden for the guardian is that the range of investments available for the funds held by the guardian may be limited and the funds may not grow at an acceptable pace. These problems can be avoided with a Will.
If you and your spouse die at or about the same time, you would need a provision not only for a guardian of the property of any child under 18, but also name a guardian of the person for each minor child. A guardian of the person is given custody and is responsible for the care of your child until they are no longer minors. While the designation in your Will is subject to the review and confirmation by the court, your requests are usually given deference. Thus, a properly drafted Will can provide guidance to the court on your desire for an appropriate guardian.
A Will also determines who will oversee the administration and distribution of your estate assets. In the Will, you will name the person(s) you would like to administer and distribute your property. An executor can be a relative, a friend, or a professional such as your lawyer or a bank or trust company. The choice of such an administrator is yours only if you make a Will. The value you attribute to qualified individuals who help with your affairs during life is the same as after you die.
What is the best way to make a Will? Although some are turning to the Internet to print downloadable forms, thus option is very likely to result in errors and create a plan that is not best suited for your personal needs. You might miss an essential element of a comprehensive estate plan or any number of opportunities to maximize the efficient distribution of your assets to your chosen beneficiaries. Moreover, you may not end up with a valid Will as Will formalities are governed by State law and are extremely stringent in New York. An invalid Will can result in your assets distributed pursuant to intestacy as described above. Seeking the guidance of a qualified attorney can resolve these issues.
Creating an ideal plan and Will involves knowledge and expert advice. For example, are you aware that property held jointly with another may not be distributed by Will? Or that life insurance may or may not be distributed by Will depending on who is named as a beneficiary? Or that the same can be said of retirement accounts, pension plans and other assets? Or that a spouse has a right to a car and certain other items, as well as to a large share of your property no matter what your Will may direct? The ideal estate plan recognizes that your Will is only part of your total plan for the distribution of your property.
Prior to making a Will, you should also know hoe estate and income taxes affect you and your assets. The federal and New York tax laws change as a result of tax reforms. You may be unaware that you can choose which h of your beneficiaries pay the estate taxes. Failing to do so will result in the State apportioning the tax burden in a manner not in congruence with your intent. If you plan properly with the guidance of a trusted attorney, you may be able to reduce or eliminate the tax burned on your estate and leave more to your beneficiaries.
Call my office today to gain clarity on the estate plan that will work for you and peace of mind: 347-699-5529.