By Mo Vidwans
I have always proposed strongly that everyone should have a Will, the only document that expresses your desires and wishes after you are gone. There are other instruments that can be used too but a Will is the easiest, most common and is not very expensive. Unfortunately, there are so many people that spend a lifetime, earning and saving for the future yet do not take even the simplest steps to determine how the assets they have worked for so hard will eventually be managed and distributed to loved ones and others. As I have written before, half the population in these United States does not even have a Will.
Although all this is true, the real problem could be that they believe they know things about Wills that are simply not true. Here I am examining several supposed facts about Wills and other estate plans that I have come across. Given below are some of those ill-conceived thoughts.
Only the wealthy need Wills
Incorrect. If you have any assets at all, even if your assets are modest, you need a Will.
The law usually distributes the property of a deceased person the same way he or she would have
Incorrect again. State laws step in the picture and they distribute property according to what is on the books and the laws passed. Spouses and children may receive equal amounts regardless of need and no provision is made for distribution to friends and charity.
Couples who own property jointly don’t need Wills
Joint ownership can be sensible and help reduce the expense and delay of probate but both spouses typically need individual Wills to distribute property that is not jointly owned.
Only those with children and others who depend on them need Wills
Not true. Even people with no children or dependents need Wills if they want to determine who eventually receives their property.
State laws about Wills are the same throughout the United States
Not so. Estate settlement and government laws vary by State. That is why your Will should be reviewed by an Attorney in the State where you live.
Will is the only way to leave property to others
Not completely true. Even though there are many other ways and instruments at our disposal to transfer property at the end of our lifetime a Will remains an important part of a complete estate plan.
A Will is always valid regardless of its content
That is not correct. This is not the case if a person is defrauded or is subject to what the law refers to as undue influence by another.
You must be at least 21 to make a valid Will
The person must of legal age to make a Will. The legal age varies from State to State; some have it at 18 as the minimum age.
A person can completely disinherit a spouse
Incorrect. Although a Will may attempt this, the surviving spouse may file a claim for a “marital share” a minimum amount guaranteed under the laws of most States.
One spouse always has the same rights to the other spouse’s estate
In many States, the rights will depend on several factors including whether the rights were acquired before or after the marriage.
Once a Will is made nothing can change it except a completely new Will
Not true. A codicil (amendment) added to an existing Will can alter its provisions. It can be changed in other ways.
Witnesses must be told the content of the Will
This is not required at all. They only need to know that they are witnessing a person’s Will and that they are witnessing the signature of that person whose Will it is.
A Will is the most effective way to leave life insurance proceeds and assets held in qualified retirement plans
Incorrect. Usually, the proceeds of a life insurance policy or the remainder of retirement plans are distributed according to the terms of the beneficiary form.
Because most people have estates smaller than amounts subject to state and federal taxes, it is a waste of time to consider planning to minimize these taxes
Not so. It is true that under federal tax law changes, larger amounts can be left to heirs free of gift or estate tax. Keep in mind that the value of your home, savings and other investment assets will keep on increasing in the future. In some cases, state inheritance or estate taxes apply at much lower level than federal taxes.
A personal representative (or trustee) need not be named for a small estate
Incorrect. A personal representative should always be named. Necessary decisions are always best made by someone you know and trust rather than a court appointed representative who may be unknown to you.
You should not name your husband or wife to administer your estate
That is not true. If the spouse will be healthy and willing to take the responsibility, then that is the answer. Unfortunately, you have no way to know if that will be the case. That is why it is necessary to name another younger person or professional administrator to act if necessary.
A good Will rarely needs revision
Absolutely not true. Even the best Will may need to change depending on the circumstances, your wealth and health, the trustees assigned and needs of the loved ones. Tax laws change every so often, so can your charitable wishes. People change their Will substantially generally about 3 to 5 times over their lifetime.
Mo Vidwans is an independent, board certified financial planner. For details visit www.vidwansfinancial.com, call 984-888-0355 or write to email@example.com.