- An expression of who you want to receive your assets and what
- Identify beneficiaries
- Identify assets or percentages to be bequeathed
- Directs how debts, expenses and taxes are paid
Traditionally, estate planning has involved creating a will. A will is a legally binding document that addresses how your assets will be distributed at your death and also names an executor who will assist with the administration of your estate. Settlement of your estate may be supervised by the probate court. This process depending on the nature of your estate can last as quick as 6 months for a simple estate or up to 1-2 years for more complex estates.
A will is a flexible tool that can be changed at any time as long as you are mentally competent.
In addition to naming distribution of the estate, your will can:
- Designate a trust to be established for family members after assets go through probate. (This type of trust is known as a testamentary trust not to be confused with a Living Trust.)
- Nominates a guardian.
- Direct how debts, taxes and expenses are to be paid.
Some Advantages of a Will
- Disputes can be settled through a probate court.
- A Will is generally less expensive to prepare than a Trust.
- The probate process can lessen the time allowed creditors to make claims against the estate.
- Probated estates can select a fiscal year rather than a calendar year for income tax purposes.
Some Disadvantages of a Will
- Probate – All estates with $100,000 in assets or real estate must go through probate
- Different state laws apply in every state assets exist
- Hire an attorney in each state to help with probate process
- Does not provide for incapacity
- Allows beneficiary contest
- No tax advantages
- Lack of privacy
- No control of assets given to a minor
- Lack of Privacy – Your files can be accessed through the records office.
- Time – Probate can take 2 months to 2 years or more until distribution is administered.
- Costs – Probate and legal fees can range anywhere from 2 to 10% of your gross estate.
- Incapacity – If you should become incapacitated, a will does not make any provisions for your care or fianancial well – being.