Financial Planning Friday: What Happens If You Don’t Have A Will?April 29th, 2016 by Anchor Bay Capital's Investment Team
You’ve probably heard in the news lately that rock icon Prince was one in a long list of celebrities who have died without proper estate planning. As news unfolds as to how The Artist’s assets will be handled, it is a good time to discuss why a will is so important. So what happens if you die without a will? Here are a few things to know:
In my mind, one of the most important reasons for having a will is to determine who will care for minor children if both parents are gone. If guardianship has not been determined by a will, then it is left up to the state to determine the guardian. Each family situation is different, so it is important to think about how this would play out in yours. There are many stories of disputes among families to decide who is right for the children. When you consider that your family members and ultimately the judge may have different values than you do, this is not a decision that you should leave to someone else.
Know Your State’s Rules
Each state has its own rules for dying intestate (dying without a will). Trust assets will be distributed according to the trust, Joint tenancy property will automatically go to the joint owner, and community property will go to the surviving spouse, but distribution of individual assets will be decided by the state.
There Are Items That Aren’t Covered By Your Will
Assets that pass by beneficiary such as retirement accounts, life insurance, annuities, etc. are not affected by a will. Whoever is listed on the account or policy as beneficiary would file a claim and receive the value. As you decided on the bequests in your will, it is a good time to review all of your accounts and their beneficiaries and make sure they are up to date. Again you will find many stories of former spouses, old business partners, etc. receiving unexpected inheritances because the beneficiary was never changed.
Other Things You May Not Have Considered:
- There is a cost to your heirs for figuring all of this out. Each state has varying costs of the process to determine who receives your assets. This process is called probate. Even when you have a will, it will have to be probated to determine the validity of the will.
- With a will, you can choose different people as guardians and financial representatives for your minor children.
- Do you have specific instructions for burial or a funeral? You can make your wishes known with your will.
It Is Worth It To Get It Taken Care Of.
Discussing what happens when you die is a conversation that tends to get put off. It is not a “fun” conversation to have, but it is a responsible one. Having a will is an important part of your financial plan to determine how your loved ones will be cared for if you are gone. Our CFP® professionals can assist you in examining the risks you may be exposed to with your current estate plan. An attorney makes it all happen. We are always happy to guide our friends and clients to the right professionals to be taken care of.