There are many reasons to create a Will. Overall, it makes it must easier and cheaper to handle your affairs after you pass away. Here are some specific reasons for a Will:
General Benefits of Having a Will
- It ensures a clear WRITTEN clear plan for the distribution of assets after your death. Provides proof of plan.
- You get to choose who serves as executor, trustee and guardian
- A clear plan can help avoid infighting amongst surviving family members
- It is important means of ensuring that money will go to whom you wish it to go rather than according to state law.
- It eliminates need for Insurance bond for Trustees and Guardians
- This could result in savings of approximately $500 for every $100,000 that the estate is valued at depending upon your State.
Having a Will Makes the Estate Administration Process Easier
One of the many reasons to create a Will is that it usually makes the Estate Administration process easier.
- Absent unusual situations, it is usually fairly easy for the Executor that you name to probate your Will.
- Probate is the process of having the local Courts approve of you Will.
- Probate is usually the first step in any Estate Administration process (unless you prepare your estate plan in a manner in which to avoid probate).
- Even if you do not have a Will, your heirs must often still most go through the estate administration process.
- The process to administer an estate without a Will is usually referred to as an Intestate Administration.
- However, if you do not create a Will, an Intestate Administration is usually far more complex and more expensive in most jurisdictions. (For example, see the Mercer County Surrogate requirements for an Intestate Administration.)
Establish trusts for your Children/Grandchildren
Other reasons to Create a Will are because it allows for both discretion over distribution and control over timing of distributions. This is important if you are leaving money to minor children or grandchildren.
- You can set up trusts for your heirs rather than leaving them money outright. Common Trust solutions include:
- Tiered distributions – traditional means of giving money to children at different ages. It is common to leave children half the money at age 25 and the other half at 30. (Keep in mind that this when they receive the play money. Assets can usually be used for your children’s health, education, maintenance and support until the final distribution.)
- Dynasty trusts – stays in family blood forever if funded with enough money.
- You can create special trusts for special needs children or problem children. These trusts are typically known as discretionary trusts, and the Trustee usually has unfettered discretion as to when to distribute money out
Older Wills typically do not offer as much flexibility as the modern Wills. Accordingly, even if you have a Will in place, there are many reasons to create a new Will.
- A Modern Will should allow for a great deal of flexibility because of the ever-changing tax laws.
- Regardless of whether the value of your estate goes up or down, the Will should contain formulas to take into account the current state of the tax laws and future anticipated changes.
- Your Will should also have the ability to take into account State Tax laws in conjunction with Federal Tax Laws
- Trustee provisions – Many problems occur when beneficiaries are stuck with trustees whom they cannot remove. A modern Will should have the ability for trusted beneficiaries to replace trustees and appoint independent trustees to allow for invasion of principal to beneficiaries in a way that will not produce adverse tax consequences.
- Post mortem planning – A Will should allow for the surviving spouse or an independent executor to do planning after the death of the testator including tax planning.
- Limited Powers of Appointment – You can allow the surviving spouse to appoint the balance of a trust among your children as he or she sees fit. (This is especially useful when children have varied income levels.)
- Granting of a General Power of Appointment for tax purposes.
- Side letters – Under New Jersey law, a testator may revise the provisions regarding disposition of tangible personal properties without redoing the entire will. (E.g. You can easily change your mind about who you want to leave your golf clubs to without redoing your Will.)
- Combining trusts – A well drafted will (and trust) should allow you to combine two or more trusts with similar terms to save time and money.
Minimization of Tax Consequences
One of the final reasons to create a Will is that it allows you to do tax planning.
- Establishing trusts allows couples to make full use of both spouses’ tax exemptions.
- Anyone who plans to distribute to non-lineal descendants, up or down, must plan to minimize inheritance taxes.
- Establishment of multiple trusts for minimization of Generation Skipping Transfer Tax (GST tax)
Creating A Will
The Estate Planning attorneys at The Pollock Firm LLC have over two decades of experience helping clients to create custom Wills. Please call if you would like to schedule an appointment to discuss your specific needs.