Reasons that Everyone Needs a Will (Other than to Divvy Assets)
Many times I have heard the following questions from prospective clients: If my things will pass to my spouse and children automatically, why do I need a Will? or My estate is not large enough to be subject to estate taxes, is this even necessary?
There are a few instances where, in fact, your assets will pass to your family, in just the way you intend, even without a Will. These instances include (i) jointly owned property (e.g. a house titled as a married couple or a joint bank account); (ii) assets with a beneficiary designation (e.g. a life insurance policy or a retirement account); and (iii) perhaps, even intestacy (dying without a Will when state law controls).
1.Simultaneous Death. The most obvious answer to why do I still need a Will is the simultaneous death of you and your loved one. If you and your spouse, or child, or other joint account owner die simultaneously, it may be unclear through whose estate the assets will pass. For example, if all assets are titled jointly by spouses who have children from previous marriages, but no children together, and it is deemed that one spouse survives the other in a car crash, if only for a few minutes, then the children of the other spouse could end up with no inheritance.
2. Trusts for Children. Another reason that it is prudent to have a Will is so that you can provide adequately for your specific family situation. You may have your children named as a beneficiary on your life insurance, which is quite common. However, if you die while a child is a minor, then depending on the account, your child would receive the entire proceeds at age 18 or 21. Leaving a child with a large sum of inheritance in retirement accounts and insurance proceeds at age 18 can be very unwise, especially because at that time, you do not know their propensity for spending, their overall maturity, or the likelihood that they will have a lasting marriage, as they are financially unexperienced. Additionally, if one of your children (or any other beneficiary - e.g. a parent or sibling) has special needs, whether that be a mental disability, a drug or alcohol addiction, or a physical handicap, the lump-sum distribution at any age could disqualify that child for public assistance benefits to which the child would otherwise qualify.
3. Designate Personal Representatives. Furthermore, a Will can be used to designate the Personal Representatives (sometimes called executors) of your estate. The Personal Representatives handle the administration of your estate, such as the payment of taxes and administration expenses, the disposition of your remains, and the distribution of your assets to the intended beneficiaries. If you do not designate a Personal Representative under your Will, then (in Maryland) any person (with a few exceptions, such as minors or convicted felons) may serve as your Personal Representative if they so choose. There is, however, a statutory order of priority if more than one person applies to serve as your Personal Representative and you have no Will. The default order starts with your surviving spouse and children, then other beneficiaries named in the Will, and down the line, until priority reaches the largest creditor of your estate, and any other person. MD Code, Estates and Trusts, 5-104.
4. Disposal of Remains. Your Will can also specify your wishes with regard to the disposal of your remains (e.g. burial, cremation, donation to the anatomy board) and whether you intend to be an organ donor. Also, your Will gives your Personal Representative the authority to pay your funeral expenses and the expenses of your burial or cremation from your estate, which they may otherwise have to pay out of pocket, to be repaid by the estate many months later.
5. Designate Guardians. A Will is also used to name guardians of your minor children in the event of the death of both you and your child's other parent, perhaps the most important decision for the health and safety of your child in the event of your death. Designating a guardian for a minor child should be a priority, especially if your child's other parent is not living, incompetent, or legally unfit to be a guardian. Under Maryland Estates and Trusts 13-701, unless prohibited by agreement or court order, the surviving parent of a minor may appoint by will one or more guardians and successor guardians of the person of an unmarried minor. The guardian need not be approved by or qualify in any court. This can avoid a period of uncertainty for the minor child as well as the court costs and attorney expenses of a hearing.
6. Pour Over Wills. Finally, even if you have a trust agreement in place, you still need a Will (called a pour over will) for the above reasons, as trusts do not designate your Personal Representatives or guardians for children, and trusts do not provide for your wishes for the disposal of your remains.
The above list is not exhaustive and every family and every person brings a new set of challenges that could result from intestacy. If you do not have a Will, if your Will is out of date, or if your Will does not reflect your intentions, it is important to schedule a review of your estate plan with your attorney.
Contact Kristy Bayus, Esquire of Pessin Katz Law, P.A. at 410-339-6774 or kbayus@pklaw.com for more information.
Website: http://pklaw.com/pk-law-directory/kbayus/
Disclaimer: Please use this channel at your own discretion. These articles are contributed by our users. We are not responsible or liable for any problems related to the utilization of information of these articles.
View All Contributions
|
