A few weeks ago, I wrote a guest post over at Money Q&A titled Four Overlooked Estate Documents You Need. While that post discusses what you need in addition to a will, I never discussed what a will is and what is can and cannot do. I hope that many readers know what a will is and why you need a will. But for those that are unsure, this post is for you.
Why You Need A Will: The Basics
To begin, let us assume you pass away without having a will. What actually happens to your assets? Any asset that is in a joint tenancy account, has a named beneficiary, or is held in a trust will pass along to the intended party. Everything else will enter what is called “probate” and will be distributed according to your state’s intestacy laws.
For most states (though yours may vary so don’t take the following list as gospel) rank heirs as follows:
- Spouse, children, other descendants
- Siblings and children of deceased siblings
- Other kin
- The state
Also, when passing without a will, your state law will determine who will be the administrator of your estate. Preference is given to closely-related heirs. For this reason alone, you can see why you need a will.
What Does a Will Do?
There are a handful of things that a will does. First and foremost, it allows you to leave property (assets) who would not otherwise receive it. This includes domestic partners, stepchildren, in-laws, friends, charities, etc. A will also allows you to divide assets up in unequal parts. For example, if you have two siblings, intestate laws may stipulate that each sibling receive 50% of an asset. With a will, you can designate 75% to one sibling and 25% to the other.
If you have a situation where you do not want a person inheriting your assets, a will can accomplish this as well.
A will allows you to name a guardian for minor children, name a custodian to hold and manage assets that are passing to minors, and allows you to name a personal representative for your estate. Lastly, a will can establish that certain trusts take effect at death.
What Can A Will Not Do?
Of course, even with a will, there are certain things having one will not allow you to do. These include distributing non-probate assets. This means that any assets that have a named beneficiary will still go to that beneficiary, regardless of what a will states. Also, if all of a married coupled assets are held in a joint tenancy account, the will of the first spouse to pass has no effect. Everything in that account will go to the surviving spouse.
A will cannot change statutory rights. This means that you cannot exclude a surviving spouse from inheriting assets unless the spouse consents.
Final Thoughts: Why You Need A Will
Lastly, having a will does not avoid probate. The goal of the will is to allow you to appoint your own representative for your estate and distribute assets as you desire. Without a will, your assets are distributed based on state law. I hope this post made clear the importance of why you need a will.
Readers, do you have a will? Why or why not?