Estate planning is a sensitive subject because people do not wish to discuss the issue of death. However, without a properly devised will, consider the following consequences:
Ã¢Â?Â¢ Loved ones you intend to devise do not receive your property
Ã¢Â?Â¢ Family members you wish to exclude do receive your property
Ã¢Â?Â¢ Improper guardianship is imposed by the probate courts
Ã¢Â?Â¢ The estate receives the maximum taxation
Devising a will is the most common way for a person to ensure their inheritance is properly conveyed. By drafting a valid will, property is transferred within a year, guardians are appointed for the children, and the estate may not receive the highest possible tax. However, despite these advantages only 30% of Americans devise wills.
If a person passes away without a valid will, property is left intestate. A probate court will then settle distribution issues. Unpaid debts and death expenses are paid first, proceeded by distribution to surviving relatives. If there are no surviving spouses or heirs, the property is distributed to other relatives. If there are no surviving relatives, the estate goes to the local government.
Since state intestacy laws only recognize relatives, close friends and charities are excluded from the estate. Even worse, relatives ones intended to exclude will receive a share in the estate.
Let’s assume there is no valid will, but the immediate family receives the property via intestate. Not only will they pay the maximum tax levied against the estate, but they may also face distribution problems. Without a valid will, only a fraction of the estate will go to the spouse, while the remaining estate is issued to the children at the time they reach majority. The surviving parent may need to get court permission to spend or invest the money, thus wasting time and money. Such circumstances require the surviving spouse to post bond to ensure they will be responsible of managing state grants for the children. Furthermore, the spouse may have to make yearly reports of how the money is managed until the children reach majority and can then receive. Then remains the possibility the children may not be financially responsible to receive the lump sum granted by the state.
Suppose both spouses passed away simultaneously. Without a valid will, the probate court may appoint minor guardianship to someone the estate holder may not have intended. Regardless the deceased’s wishes, the family could end up in court fighting over custody, or the heirs may end up with foster parents.
However, suppose one of the spouses lives. If they decide to remarry after the death of their former spouse, without a valid will, their new spouse may be entitled to an interest in the asset from the estate. More importantly, even though they may have entitlement to the estate, the new spouse will not be legally required to use the assets for the benefit of the former spouse’s children.