Do not put it off any longer. The vast majority of people do not have a Will. Some people feel that they do not need one because they believe that the distribution of their estate is obvious. Others find it to be too time-consuming to get organized, find a lawyer, arrange appointments and attend meetings during their already busy schedules. Many feel that the lawyers' fees surrounding the creation and maintenance of a Will are too expensive. Whatever your reason may be, you should know that it is less expensive and extremely important that you have an up to date Will. If you die without a Will, the courts will decide how your estate is distributed, and this may not be in the best interests of your loved ones. The Texas Probate Code has provisions for how your estate will be distributed, but we do know that if you have a Will, then the decisions are in your hands.
If you do not have an Up-to-Date Will or Trust:
1. Your assets may not pass to the right people
If you do not specify who inherits your assets in a Will, the intestacy laws will govern. In Texas, with no Will, your spouse, children and maybe some grandchildren will receive parts of your estate. In some states, if your assets pass by intestacy and you have children, your spouse receives the first $30,000 of your personal property and either a one-third or one-half interest in your remaining property. The rest will be distributed to your children. Accordingly, if you have a child who has not spoken to you in years, or a person claiming to be a child, that child could receive a share of your estate. If you do not have any children but your parents survive you, your spouse may end up sharing your assets with his or her in-laws.
Similarly, if you have a Will but it is out of date, your Will may not sufficiently provide for those you now consider to be your beneficiaries.
2. Equal distributions to children can be inequitable
If you die without a Will and leave behind two children and no spouse, those two children will share equally in your estate. What if one of your children is 30 and a surgeon, and one of your children is 19 and has just begun college? Even though you have already put one child through college and medical school, that child will share equally with the child that is just beginning college, which is probably an inequitable result. Changes in the lives of children and your financial conditions can make a Will greatly outdated.
3. Your children may receive distributions at too young an age.
If you die without a Will, and your assets are divided according to the intestacy laws, once your children reach age 18, the funds are theirs to use as they want. Children at age 18 may not use such funds wisely. Instead of using such funds for a mortgage or college tuition, they could buy a sports car or support a bad habit or girlfriend/boyfriend. In a Will, you can establish a trust that provides for distributions at ages that are more appropriate than age 18.
Similarly, if you have a Will that was drawn several years ago, the trust provisions for your children established years ago may not be appropriate based on their current situations.
4. The court has to be involved in family finances
In a Will, you are able to confer specific powers on your Executor and Trustee, in addition to those granted by statute, such as the ability to serve as the fiduciary without posting a bond, file certain accountings, or to sell real estate without a court proceeding. If a person does not have a Will, or the Will they have does not confer these specific powers, many things cannot be done throughout the estate administration without going to court. For example, if a person dies without a Will or that person's Will does not give the Executor the express power to sell real estate, the personal representative of the estate will have to go through a judicial sale to sell any real property in the estate in order to pay debts, expenses and taxes of the estate. Such proceedings are bothersome and expensive.
5. Your assets could end up with your child’s ex-spouse or a creditor
Without a Will, your children inherit their share of your assets outright at age 18, as mentioned above. A Will allows a person to leave assets to children in trust rather than outright. Such a trust can provide a distribution scheme that would prevent a child's share of your assets passing to their ex-spouse or to a creditor.
6. The court will appoint the guardian of your minor children without your input
If you die without a will, the court will appoint the guardian of your minor children without any input from you. However, a recommendation by a parent as to a guardian for his or her minor children can serve as a "strong guide" to the Court in appointing a guardian for those minor children. In addition, a person may recommend in his or her Will that the guardian not be required to post bond.
If you have a Will, but it was drawn many years ago, the person you recommended in your Will to serve as guardian of your minor children may no longer be the appropriate person to serve as guardian, or may not be capable of serving as guardian.
7. If you own a family business, it could pass to individuals who do not get along
If your assets pass by intestacy, or if you have acquired a family business since you had your Will drawn, your family business could be divided in an inappropriate way. For example, your second spouse may end up sharing the family business with your children from a prior marriage. In fact, the children from the prior marriage could end up controlling the family business that had been run by you and your second spouse, leaving your spouse with no control over the asset that could be his or her primary source of support.
8. The IRS may become a beneficiary of your estate
Intestacy distributions do not incorporate any tax planning. As a result, more assets than necessary may be diverted from your heirs into the federal and state treasury. If you die without leaving a surviving spouse, the federal and state estate taxes on a large estate would be substantial. There are many commonly used techniques that could reduce your overall estate tax bill that could be implemented with the help of an estate planner. With proper planning, the amounts going to the government rather than your heirs could be significantly reduced.
9. Your administrator may end up chasing beneficiaries to pay taxes
Wills typically specify which portion of the estate will bear the burden of estate taxes and the Executor is required to gather assets to pay those taxes. Often, the Will provides that the residue of the estate bears the tax burden, which results in the taxes being paid out of this pot of money before distributions to these heirs are made. If you die without a Will, taxes can be allocated proportionately to the assets inherited.
Assets that are not distributed pursuant to your Will, such as life insurance and retirement benefits, are still part of your estate and, thus, can generate estate taxes. As a result, the administrator of an intestate decedent will be forced to retrieve funds from the beneficiaries of such assets to pay estate taxes.
10. The last thing you say to your loved ones is "I Don't Care."
One of the last things your family may remember about you is how your estate is settled. You may leave an estate that is extremely difficult to administer and that results in inequitable or inappropriate distributions because you did not have a Will. If you did not update your Will as needed, you may be indicating to your family that they were not worth the trouble of planning for their future.
Without a Will, you may contribute to misunderstandings and conflicts among family members.
11. Why do I need to make updates?
It is important to review your Will every few years and after any new financial or personal events, such as a significant business arrangement, a wedding, the birth of a child, a divorce or if you move outside of your state, province or country.