Why Is It Important to Have a Will?
A will is an important part of your estate plan, even if your estate is a small one. A will provides an opportunity to minimize estate taxes. Approximately 60% of Americans are estimated to not have a will.1 If you die without a will, you are considered to be intestate, and state law dictates who receives your assets upon your death and who will look after your minor children. These decisions may be against your wishes and leave loved ones in financial hardship.
Your will should be reviewed regularly, particularly upon any major changes that occur during your lifetime, such as the birth of a child or changes in tax laws.
What is a Will?
It is a legal document that lets you direct how your assets will be transferred when you die and it becomes effective only after your death. In addition to determining who gets what, it allows you to name an executor for your estate and to designate a guardian for your minor children.
5 Benefits of a Will:
1. Preparedness for the unexpected: in the event that something happens to you, a will ensures that your legacy and your wishes are prepared for your family.
2. You decide where your assets go: without a will, the state decides how your assets are distributed. A will ensures your assets are distributed per your wishes.
3. Protection for your children: if you have minor children, you can designate guardians for them. This ensures your children will be cared for by the people you choose.
4. Assign your executor: this makes it simple for your family, and allows you to determine who will distribute the assets from your estate.
5. Simplify things for your loved ones: losing a loved one is a difficult time, and a will may help the surviving family ensure that the loved one’s wishes are met and the estate is distributed in a timely manner.
There are many types of wills that may help communicate your financial or healthcare wishes upon death. The most common form of will is the simple will, also known as an “I Love You Will”. In a simple will, all assets owned by the first to die pass to the survivor. Simple wills may allow you to name a guardian for your children, distribute property, and name an executor of your estate. A simple will does not provide any estate tax considerations and must pass through probate. This type of will goes into effect upon your passing. A simple will is most commonly utilized by married spouses with uncomplicated estates of modest value.
Separately, a living will allows you to state your wishes about certain types of medical care and life prolonging procedures. The document only takes effect if you cannot communicate your own health care decisions. The benefit of a living will is that you do not put your family in the position of having to make difficult decisions and you also ensure your health care wishes are carried out.
A will may be an extremely beneficial part of 1planning your legacy. As there are many different types of wills, understanding your goals and objectives will play an important role in figuring out what documents are right for you. 2Please contact your advisor at Heck Capital to learn more about our legacy planning services.
Authored by Michael Bogard, CFA on October 3, 2019
About the Author: Michael Bogard, CFA is a Business Development / Client Relationships Senior Associate at Heck Capital Advisors. Michael earned the right to use the Chartered Financial Analyst® (CFA®) designation after completing the program, fulfilling the work experience requirements, and gaining acceptance as a member of the CFA Institute. The Chartered Financial Analyst® (CFA®) charter gives a strong understanding of advanced investment analysis and real-world portfolio management skills. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
3Heck Capital is an independent, Registered Investment Advisory Firm providing comprehensive investment management, personalized advice, and strategic financial guidance since the 1950s. We serve goal-driven individuals, families, established institutions, non-profit organizations, and foundations/endowments; striving to help our clients achieve their investment objectives, helping to simplify their financial lives, with the goal to create lasting legacies.
1Trust Advisor, “Benefits of a Will,” 2017.