Contents
Estate Planning Basics
How Estate Taxes Work
Wills and Estate Planning
How to Write a Will
Planning Directives
Probate
Estate Planning and Trusts
Types of Trusts
Life Insurance
Charitable Giving
General Gifting
Long-Term Care Planning
Business Succession Planning
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Wills and Estate Planning
A will is a document used to direct where your real property and cash-equivalent assets go when you die.
- Real property: Your home, land, and any other real estate you own.
- Cash-equivalent assets: Assets that can be readily liquidated (turned into cash), such as stocks, bonds, CDs, and mutual funds not held in retirement accounts. Assets that are not cash-equivalent include life insurance and annuities (investments offered by insurance companies that pay income at set intervals).
What Wills Don’t Cover
The best way to clarify misconceptions about what wills cover is by pointing out what wills do not cover. Wills do not direct what happens to:
- Personal property: Cars, boats, jewelry, clothes, and furniture. To direct personal property to specific heirs you’ll likely have to prepare letters of instruction (see Planning Directives). Some states allow you to direct personal property to heirs in your will, so check your state’s regulations to confirm.
- Assets with named beneficiaries: When you sign up for financial products, such as insurance, annuities, company pension plans, or individual retirement accounts (IRAs), you’re asked to name a beneficiary for that policy. (You can change the beneficiary by contacting the company that issues the policy.)
- Assets inside most trusts: You don’t legally own assets in a trust, so you can’t will those assets (see Estate Planning and Trusts).
“Default” Wills
Every state has a “default” will that applies to people who die intestate, meaning without a will. This default will directs the distribution of assets not already allocated to named beneficiaries or held jointly with someone else. Once the state steps in, your preferred heirs may get no say in the matter. States’ “default” wills typically distribute assets in the following order of priority:
- To your spouse and children
- To your parents and siblings
- To your grandparents, aunts, uncles, nieces, nephews, and cousins
- To the state if the relatives listed above can’t be found
If you die without a will, the state also determines the legal guardians of any minor children or disabled dependents you may have. Along the way, your estate’s assets will be used to pay the court costs required to settle your estate, and the end result may be the depletion of your assets in addition to a total disregard for your wishes.
To avoid this type of scenario, make sure to have
a lawyer prepare an official will and associated directives for you. These documents will ensure that your wishes
get carried out in compliance with current state and
federal laws.
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