Many people believe that when they die, their personal belongings and all of their worldly possessions will automatically go to their next of kin - even if they don't have a will. Unfortunately, they're wrong. In fact, if an individual dies intestate (without a will) the probate courts will determine how to distribute that person's assets. And although the court system may ultimately decide to distribute the individual's assets in a manner that is consistent with his or her wishes, there is no guarantee that this will occur.
There are other downsides to the probate process (and dying without a will) as well. For example, it could take many weeks or months for the courts to compile an accurate list of an individual's assets. It could also take a prolonged period of time to identify and locate potential beneficiaries. Unfortunately, until this process is complete, money may not be distributed, even to legitimate and known beneficiaries!
By drafting a will, an individual ensures that his or her belongings will go to the desired beneficiaries. In addition, although some states may still probate/review wills for their validity, the existence of a will can speed up the court review process considerably. In this article, we'll go over the major benefits of drafting a will.
Wills Can Limit Family Disputes
Courts will allow wills to be contested in very rare circumstances. This usually occurs when there is reason to believe that the will is not totally legitimate - for example, if the person making the will is not of sound mind at the time the will is drafted and was influenced by some opportunistic third party. Although there is no guarantee that a relative won't contest a will or sue to obtain assets not bequeathed to them in the document, a well-written will can limit family arguments.
The key is to be as specific as possible when leaving an asset to a relative. For example, rather than including statements such as "I leave my rare coin collection to my cousin Jack", such a provision should read: "I give my entire rare coin collection, which consists of one 1812 United States "penny" and one 1810 American $1 bill, to my cousin Jack F. Kennedy, 100 Main Street, Anywhere, USA 12345." Again, the idea is to provide as many details as possible about both the asset(s) and the person that should receive the property. Specificity can prevent fighting, so try to lay out your wishes as explicitly as possible.
If you leave a valuable asset to a member of your family, create a follow-up provision stating who will be next in line to receive this asset if your chosen beneficiary dies before you do or is unable to accept the inheritance. Naming a contingent beneficiary is recommended because it will prevent family fights should the initial beneficiary be unable to accept the gift. (For more insight, see Refusing An Inheritance and Disclaiming Inherited Plan Assets.)
Wills Can Outline Personal Preferences/Desires
In addition to bequeathing assets to beneficiaries, a grantor (the deceased) may also outline how he or she would like certain assets to be used in the future. For example, a provision might say something like, "I give my antique 1938 Ford automobile to my son Jeffrey Smith of
, Anywhere, USA 12345. I hope that my son will sell this asset to pay for his education or for a down payment on a new home."
To be clear, such a stipulation is not legally binding. In other words, the son would not be legally mandated to sell the vehicle. However, it is considered by some to be a great venue for an individual to convey his or her final wishes in simple terms for both family members and beneficiaries. These types of provisions may also prove to be extremely valuable to beneficiaries and executors who might otherwise be unprepared to handle the administration of an estate. (For related reading, see Encouraging Good Habits With An Incentive Trust.)
Wills Make Quantifying and Distributing Assets Easier
Without a will, a probate court might send out letters of inquiry to local banks, brokerage firms and other financial institutions to get a better handle on the deceased's financial situation. In addition, relatives may be asked to produce financial paperwork such as brokerage statements, stock certificates, government bonds or other similar documents. The logic behind these efforts is that the court first needs to know all of the assets that exist (or that existed), so that it may distribute them in an equitable manner. A will prevents the need for all that footwork and paperwork because it formally outlines the deceased's assets. It may also quantify what certain assets are worth.
What happens if a certain asset isn't identified by name in a will? How will it be distributed then?
In order to provide for that contingency, the will may contain a clause indicating that "any remaining assets not previously distributed elsewhere shall be paid to my mother Jennifer Smith,
, Anywhere, USA 56789." Such a provision will help to ensure that all an individual's remaining assets (such as assets acquired after the will was drafted) will be distributed. Incidentally, without a will, a court will decide what happens to the asset(s).
Wills Can Name a Guardian for Your Children
Without a will, the state in which you reside will determine who will retain guardianship over your children. While the state might choose someone you approve of, such as a family member, they may also choose an institution or an unrelated party. To avoid this, a will may outline a guardian of your choosing. To parents with young children, this is an invaluable provision that mustn't be overlooked.
Providing for Heirs with Special Needs
Suppose that one of your desired beneficiaries is either too young or too immature to manage an inheritance. In such cases a will may, by provision, place these assets in another vehicle known as a trust (upon your death) for the benefit of that individual. Stipulations can then be put in place (within the trust) which limit when and under which conditions the individual can access the inheritance. (For more insight, see Update Your Beneficiaries and Establishing A Revocable Living Trust.)
For example, a provision might provide for distribution of the assets when the beneficiary reaches the age of 25, or it might allow for the distribution of monies over a period of time. The logic behind such a provision is that the beneficiary will become more financially savvy and more mature over time. Incidentally, provisions may be tailored to care for elderly family members or those with other special needs as well.
Individuals seeking to prevent family infighting, and who want to ensure that their spouses, children and other relatives are properly taken care of after they die would be wise to consider drafting a will. Due to the very legal nature of a will, be sure to consult an attorney prior to drafting or executing the document. An attorney will tailor a plan specific to your circumstances.