A will or “last will and testament” is a legal document that lets you tell the world who should receive which of your assets after your death. It also allows you to name guardians for any dependent children. Without a will, the courts decide what happens to your assets, tax rates, and who is responsible for your kids. Not good!
Wills do have limitations. In particular, the beneficiary designations (the people you name) on financial accounts, insurance policies and other assets take precedence over wills, so it’s important to make sure your beneficiary designations are up to date and reflect your wishes.
For example, say you list your husband as the primary beneficiary on your retirement plan at work, but then you get divorced and marry someone else. If your first husband is listed as the account beneficiary, he will receive those assets at your death – even if your will says otherwise.
A will also allows you to name your executor (also called Personal Representative), the person who will be in charge of your estate. Before you select an executor, make sure you understand the tasks he or she will need to perform, which include distributing your property, filing tax returns and processing claims from creditors. Your executor should be someone you trust completely – and don’t forget to ask if he or she is willing to take on such a big responsibility.
Dying without a will – known as dying “intestate” – means you have no say over who receives your assets, and can leave your heirs and the court system the complex and costly job of wrangling over who should get what – and what the Government gets!.
Your assets go into what’s called “probate” – an expensive and drawn out legal process which determines who inherits your estate, and can take anywhere from a few months to a few years, depending on how complicated the estate is.
It’s a good idea to review your will every year or so to make sure it remains current with your wishes. Also check it after major life changes, including the death of one of your heirs; the birth of a potential new heir; a significant shift in your financial situation; major adjustments to your investment portfolio; real estate purchases and sales; and changes to the tax code.
Meanwhile, make sure to review the beneficiary designations on your 401(k), IRA, pension and insurance policies: Assets in those accounts will typically be transferred automatically to your named beneficiaries when you die, even if your will says otherwise.
For legal advice and more information, please contact the Law Offices of Kravitz & Guerra, P.A. at (+1) 305-372-0222