What is a Will and why do we all need one?
A Will is a written document that provides instructions for the disposition of a decedent’s (dead person’s) property. The Will is also the document in which a person names a guardian for her children in case she dies while they are still minors. The term “Last Will and Testament” is simply a more complicated name for a Will.
If a person dies with a Will, which is called dying “testate,” the probate court determines if the Will is valid, hears any objections to the Will, orders that creditors be paid and supervises the process to assure that the Executor distributes the remaining property in accordance with the terms and conditions of the Will.
If a person dies without a Will, which is called dying “intestate,” the probate court appoints a person to receive all claims against the estate; pay creditors; distribute all remaining probate property in accordance with the laws of the state; and determine the guardian for the decedent’s minor children.
The major difference between dying testate and dying intestate is that an intestate estate is distributed to beneficiaries in accordance with the distribution plan established by state law; a testate estate is distributed in accordance with the instructions provided by the decedent in his or her Will.
So if you die without a valid Will, your property is distributed according to state law and the courts will decide who raises your children. Let’s repeat that because it is important and people really don’t seem to think through the ramifications of not having a Will. If you don’t have a Will, your property will be distributed according to state law and the courts will decide who raises your children.
In addition to property that people can pass by Will (“probate property”), most people also have “non-probate” assets. Non-probate assets don’t go through the probate process because the ownership arrangement you have dictates who will receive the property at your death. Thus, non-probate assets are unaffected by the existence of a Will because the assets pass at death by operation of law regardless of whether a Will exists and irrespective of what it may provide.
Non-probate property typically includes life insurance, pension or profit sharing plans, IRAs, living trusts, and certain joint property. With such assets, the property passes according to the terms of the policy, plan, and/or trust or to the surviving joint owner, and not in accordance with your Will. For example, if you have a life insurance policy or an IRA that names your husband as a beneficiary, the proceeds of the policy will pass directly to your husband regardless of what your Will says.
Therefore, it is usually not enough just to execute a Will. To ensure that your non-probate assets are distributed the way you want them to be, you should make sure that the appropriate documents are completed correctly, including the beneficiary designations on your life insurance policies and retirement accounts. You should check these every few years to make sure that they are accurate and reflect your current wishes.
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