The importance of a will: Your financial last rites

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By: NathanielCopeland
on 27th Oct,2012

The clear majority of people spend their lives working, building assets and creating wealth. Such a distribution may not always be favorable.
The importance of a will: Your financial last rites

The clear majority of people spend their lives working, building assets and creating wealth. The reasons might be many; from living the high life to taking care of the family. In all the years spent worrying about the year's performance incentive and buying a new car, people tend to get lost in the buzz and completely forget the fact that they are mere mortals, here today gone tomorrow.

Have you ever wondered what would happen to all that you had spent your life acquiring? The investments, the cars, the house and everything else that you own will completely cease to matter to you when you die but to the survivors, your wife and your children, having undisputed access to those assets could mean the difference between poverty and financial security.

All the assets and belongings that a person leaves behind after death are collectively termed as the deceased's estate. In the absence of the deceased's will, the estate would come under the protection of the Probate court which will then distribute it according to a set formula. Such a distribution may not always be favorable. Families have been torn apart from squabbling over a car and entire estates have been squandered away by prolonged legal battles.

In the sole interest of your loved ones you should spend some time to create a will which would divide and redistribute your assets in the event of your death. A will is nothing more than a legal document through which you can legally execute your wishes as far as distributing your wealth, position and your assets are concerned.

Why is a will important?

As mentioned before, the sole idea behind creating a will is to enforce the distribution of your property as you had wished and intended. It also facilitates the smooth transition of assets from the deceased to the survivors without leaving much room for third parties legally contending for a claim. Estate distribution covering minor children or even children from a previous marriage can be easily factored into a will. A will can also be used to disburse a portion of your assets towards charity in case the deceased so intends.

What cannot be covered under a will?

Although most types of assets open for distribution post death can be included in a will, there are some non-probate assets which cannot be covered by it. Community property, life insurance benefits, jointly held assets wherein the other holder is not directly related to the deceased, retirement assets and investment accounts which are marked “transferable on death” are just a few of the examples. Consulting an estate planner or a probate lawyer is therefore essential in the process of creating a will.

What happens in the absence of a will?

Unlike the popular myth which says that the estate of people dying intestate is taken over by the government, the law actually oversees the distribution of your assets according to some hard and fast rules from which they diverge very little. The general course of action is for the probate court to split up your estate and transfer half over to the children and the other half to the spouse. Sounds fair but there are some unforeseeable problems inherent of this which most people miss. To split the assets evenly between the spouse and the children, the court would need to sell certain things within the estate like the house. Selling the house would of course have a negative impact on the spouse, especially if she is of an advanced age. There are even more complex scenarios wherein there are minor children involved and their share of the assets are looked after by a court appointed trustee/representative.

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