The answer to that is probably, YES! Generally, if you are worth over $10,000 in assets and cash then you need a will. A will takes all of the guesswork out of what you really want your assets to do when you part this life. And let’s be honest, do you really want some over-worked judge figuring out how to divide up your stuff? I will try to answer some common questions based on my limited knowledge about wills. My suggestion is that you use an attorney that specializes in estate planning to help you draft your will. You don’t need an attorney to write a will and notarize it, but this is something that you want to do right, and they can help you consider the tax ramifications.
Who needs a will?
Generally, anyone with assets over $10,000 and/or anyone with minor children in their custody. Your will can also appoint custody of your children to someone that you know and trust. That person will also manage the money and assets that you leave your children until they are of legal age.
What happens if I die without a will?
Bad things. Your estate will be divided up by the court and they have full control over what happens to your stuff and your children! Now that is scary.
What are the tax implications?
This is the part that I won’t even get into, because I know there are plenty of people out there that specialize in helping you minimize your probate and estate taxes. I know that if everything is getting transferred over to your suriving spouse, there are no estate taxes. These taxes kick in when the assets start getting inherited by the children and grandchildren. There is a standard deduction of $2 million dollars before the 46% estate tax kicks in, so this allows several way to reduce your tax bill. Generally, if your estate is worth less than $2 million or your spouse survives you, then your estate tax will be next to nothing. It gets complicated the richer you are. I would read up more about this online and speak with a qualified attorney if you have a very large net worth or are single.
What is a living trust?
A trust exists when one person (often called the grantor or the settlor) gives property to another person (called the trustee) to hold and manage for one or more other persons (called the beneficiaries). Although no statute or regulation defines the phrase “living trust,” it generally describes a trust that the grantor can amend (change) or revoke (cancel) during his or her lifetime. Through the terms of the living trust, the grantor keeps all the benefits of any property placed into it for the rest of his or her life. The grantor also can be the trusteee, but the grantor’s spouse or a trust company also often serves as trustee. A living trust can be funded with any property such as bank and brokerage accounts, stocks and bonds, a home and other real estate. Some living trusts may not be funded initially, but rather at a later time or at the grantor’s death. An attorney can help advise when a trust should be funded and with what property. The terms of a trust are described in writing in a document often called the declaration of trust or trust agreement. This document is signed by both the grantor and the trustee. (Taken from the Ohio State Bar Association Law Facts Website.)
The point of all of this is not to become a legal expert on all of the details of wills and trust. The point is to be more aware of how important it is to HAVE a will. Sound financial planning must always involve formulating a plan for your money when its in your possession and when you part your ways with it. Unfortunately, we can’t take money to heaven, but I don’t think you’ll need it in heaven, anyway!