The Importance of Having a Will
With a Last Will and Testament in place, families can avoid lots of problems regarding an estate.
By Donald B. Formoso
Many are under the impression that only the wealthy benefit from estate planning. Although high-income individuals can gain an advantage from complex tax planning techniques, a basic estate plan can benefit everyone, and is more affordable than might be anticipated.
A Last Will and Testament can address a number of issues. Primarily, a Will is used to pass assets from one generation to the next based on the owner's wishes. Without a Will, probate assets are subject to the Pennsylvania Intestacy Law. In other words, the law decides to whom the assets will pass. This usually has unintended consequences for surviving family members. Since children are entitled to a share of a parent's estate under the Intestacy Law, the surviving spouse can be deprived of much-needed funds, and it can result in unexpected death taxes.
Some assets, however, are not distributed according to a Will. Jointly-owned property, such as real estate or bank accounts, usually pass to the surviving owner. Additionally, accounts with beneficiary designations, such as life insurance and retirement accounts, are paid to a designated individual. Nevertheless, it is a good idea to coordinate these items when crafting an estate plan.
A Will can also address several other matters. For instance, those who have minor children may have a preference as to which family member or friend would serve as the child's guardian. While it is beneficial to discuss this with the prospective guardian, verbal agreements are insufficient. Appointing a guardian in a Will, on the other hand, solidifies the parents' wishes. Moreover, a Will can designate who is to safeguard the minor's assets and determine when they are to be distributed, either in the form of a trust or a custodianship, ultimately decreasing the family's financial and administrative burdens.
In recent years, many Pennsylvanians have fallen prey to salespeople offering Living Trusts, who convince their customers that this product decreases or eliminates death taxes. This is false, and a Living Trust oftentimes makes matters unnecessarily complex and expensive. These "trust kits" can cost thousands of dollars, while a basic estate plan, along with the advice of an attorney, can be obtained for a fraction of the cost.
While it may be unpleasant to think about these issues, an estate plan provides peace of mind for the entire family. A Will, in conjunction with a Power of Attorney and Living Will, diminishes the burden faced by family members when they are at their most vulnerable.