There comes a time when people begin to consider what they will be leaving behind when they die. It’s not uncommon to hear of rifts in families caused by bickering over assets left behind. One of the best ways to avoid this is to write a last will and testament.
What Is a Last Will and Testament?
A last will and testament is a legal document that is used to communicate a person’s final wishes on what should be done with that person’s assets. A last will and testament essentially dictates whether the estate of the decedent shall be passed to another person, or if it shall be donated to charity. A person, through a last will and testament, may also communicate who shall gain custody of descendants. A properly-prepared will also reduces the tax liability that descendants have to pay in order to inherit the assets left behind.
How Does a Last Will and Testament Work?
The person writing a last will and testament is referred to as the “testator”. A last will and testament contains instructions from the testator on what to do with the testator’s estate, assets, and (if the testator has a child who needs care) custody of descendants. A will names a still-living person as the “trustee”, who is responsible for carrying out the wishes of the testator as indicated in the last will and testament.
The probate court is the supervising authority that ensures that the executor carries out the wishes of the executor. When the testator dies, the executor must now carry out the instructions written on the last will and testament.
What a Last Will and Testament Means for Descendants
As mentioned earlier, a last will and testament outlines how a testator’s assets should be distributed when the testator dies. In essence, the testator is able to define who gets what and how much, and ensures that the decedent’s assets are kept away from people they don’t want their assets to be given to (such as estranged relatives). This also means that descendants will no longer need to deal with probate court in order to inherit the assets that the testator intends to leave to them. Descendants will be able inherit the asset without having to spend money on taxes A testator may also choose to give some assets as gifts in order to offset the estate taxes that descendants need to pay.
What Happens When an Individual Dies Without a Will?
When a person dies intestate (without a will), the state shall now oversee the dispensation of the decedent’s assets. This is usually done through a set formula where in half of the decedent’s estate is given to the spouse, and the other half is given to the children. The matter becomes more complicated when the children the decedent leaves behind are minors. This is when the probate court appoints a guardian to look after the children. Dying without a will means that your heirs could spend months in court in order to settle your estate. Besides the estate taxes that your heirs need to pay, they will also have to pay an additional 2% to 4% of the value of the estate being distributed for attorney and court fees.
How Does a Will Differ From a Trust?
While both wills and trusts are legal instruments that are used to bequeath assets to heirs, they differ in terms of the number of parties involved, the period at which they become active, and the involvement of probate court.
- Will only become executable upon the death of the testator while trusts are active from the day they are written.
- Wills deal only with the testator and the successor trustee, while trusts deal with a trustor, trustee, and a beneficiary.
- Finally, with wills, there is no need to go to the probate court, but if there is no will to execute, there are no remedies to minimize the involvement of the court, while with trusts, if a property is not assigned to a beneficiary, a Heggstad Petition may be filed in order to avoid probate court.