There are many reasons why people do not do Wills. There will be time to do one later. I don't have many assets. I am not ready to think about those things. I am not sure what is involved – and many other reasons. We try to focus on the positives: so here are five reasons to do a Will.
1. Beneficiaries – to choose the beneficiaries of your estate. Without a Will, the beneficiaries will be determined by state statute.
2. Distribution of Estate – to choose how much of your estate is distributed to which beneficiaries and how it will be distributed to them. Without a Will, state statue determines who gets your estate and in what the proportions.
3. Guardian – to choose who will raise your children and who will oversee the assets left to them. Without a Will, the choice will be left to the State and/or anyone who volunteers and is approved by the court.
4. Executor – to choose who will handle the administration of your estate. Without a Will, whoever steps forward and is approved by the court (if the estate is subject to probate) will handle your estate.
5. Children – to provide some supervision over the assets that are left to minor children. Without a Will, your children will receive the assets outright when they reach legal adulthood (18). A Will allows you to keep the assets protected and available for your children's needs until they reach an age when you have confidence they will be able to handle what you have left to them responsibly. You can make sure the assets are used for things like college instead of youthful indiscretions.
Bonus – Avoid Taxes & Probate – I am sure this got your attention, but actually a Will does not avoid taxes or probate.
- Taxes – The good news is that the federal estate tax does not kick in unless a decedeant's estate exceeds $5.25M in 2013, and the amount will increase as times goes on (for the time being anyway). The focus of Congress in recent years has been on other things, not on estate taxes. The last action taken by Congress in 2012 continued the $5M exemption with yearly inflation adjustments. Many if not most states also have state inheritance or death taxes. In Illinois, the threshhold is $4M. If you have an estate over that amount, there are things that can be done to keep the money out of the government's hands (if that is your goal) and channel it elsewhere. If your estate is not in that neighborhood, then taxes are not a reason to do a Will (though there are plenty of other reasons to do a Will).
- Probate – A Will also does not avoid probate, as some have assumed. A Will simply puts you in the driver's seat, so to speak, rather than having your estate vehicle guided by the default state statute. With a Will you choose, where your estate goes, who handles it, who will be the guardian of your children (if both parents are gone), who will receive the assets you leave behind and how they will receive them. A Will allows you to choose who oversees the assets while your children are still minors, how the assets are used for your children's benefit, and how and when your children will have access to them.
If you want to avoid probate, there are other methods that can be used, but that is a topic for a different day.