The Importance of Creating a Last Will and Testament
Many people make the mistake of assuming that estate planning is only important if you have a substantial estate to leave behind to beneficiaries. Nothing could be farther from the truth. Although an elaborate estate plan may not be necessary if your estate assets are modest, there are a variety of reasons why a basic Last Will and Testament should be executed anyway.
Probate — Probate is the legal process by which a decedent’s estate is inventoried, valued, and the assets ultimately transferred to beneficiaries. Probate can be a lengthy process and may incur significant fees. In some states, a small estate may be eligible for a less formal process that will save the estate time and expense; however, if the decedent failed to execute a Will, formal probate is typically required in order to determine who the legal heirs are to the estate.
Intestate Succession Laws — If you fail to execute a Will, the state laws of intestate succession will determine what happens to your assets. Friends, charities and distant relatives that were important to you will receive nothing from your estate if you give up control to the state.
Tax Consequences — If your estate assets are significant, a comprehensive estate plan is necessary to avoid the often high rate of estate taxes levied on an estate upon the death of the decedent. While a Will alone will not prevent your estate from incurring estate taxes, it is the foundation for an estate plan that can include tools aimed at minimizing your tax burden.
Fees and Expenses — By not leaving a Will, additional expenses will be incurred by your estate. Costs involved in locating and notifying heirs, locating and valuing assets, and defending any claims or challenges to your estate can reduce the value of your estate, leaving less for your heirs.
Guardianship of Minor Children — If you have minor children, your Will is the only chance you have to nominate someone as guardian in the event of your death. Although the court will ultimately decide who is appointed as guardian, your wishes will carry significant weight in the decision.
TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.