Published in Forbes, December 2016
Earlier this year, the world lost pop music icon Prince. He left behind an incredible legacy—but no instructions about how his estate should be handled after his passing. Prince died without a will, and it could take years for his family and the courts to sort out his posthumous affairs.
A will is an extremely important legal document: upon your passing, your will communicates to family and other interested parties your intentions as to the raising of your kids and the distribution of everything you own (or have rights to). But the majority of Americans do not have a will (source: Gallup). This past month added a new wrinkle: a new client of ours who knows a will is necessary, but has decided to wait and see if our President-elect will make good on his campaign promise to repeal the estate tax before establishing one. Often lovingly referred to as “the death tax,” proposals to repeal the estate tax have been around for decades. Although there is the potential for tax planning within a will, especially for estates greater than $5.45 million (double that for married couples), a will is critical for many non-tax reasons.
1. Administration of your affairs:
Your will informs your family as to whom you want to take charge of fulfilling important final responsibilities. This document designates one or multiple executors who will be responsible for accounting for all of your assets and debts, working with the probate courts and submitting any required governmental filings. Ultimately, your executor is responsible for distributing your assets according to your wishes. You may want to have certain assets placed in trust for the benefit of your children, and perhaps for the benefit of your spouse. Your will designates the trustee(s) who will be responsible for administrating these trusts.
2. Guardianship for children:
Your will designates who should become the guardian of your minor children. If there is a surviving parent the guardian may be obvious; however in rare tragedies, both spouses can pass in a common accident, and your guardian designation can prevent uncertainty and a less-than-optimal outcome. You also may wish to leave a monetary stipend for prospective guardians.
3. Specific bequests:
Your will can provide for your specific bequests. You may wish for certain family and friends to receive bequests – financial gifts or perhaps family keepsakes. This may avoid family discord over differing interpretations as to who should get what. Stating your specific bequests eliminates this uncertainty. Often bequests are made to charities you wish to support.