A will is a legal document that spells out your wishes regarding the care of your children, as well as the distribution of your assets after your death. Failure to prepare a will typically leaves decisions about your estate in the hands of judges or state officials and may also cause family strife.
The most common and simple reason to make a will is to decide who will get your property when you die. Without a will (or other plan, like a living trust), your state laws determine how your property will be distributed -- usually to your closest relatives, like your spouse, children or parents.
A will could also help your elderly parents avoid losing government benefits if you die before them. If they're beneficiaries of your life insurance policy, a large payout from it could wind up putting a stop to their government benefits unless you put a key provision in your will.
Deciding between a will or a trust is a personal choice, and some experts recommend having both. A will is typically less expensive and easier to set up than a trust, an expensive and often complex legal document.
There are four main requirements to the formation of a valid will: The will must have been executed with testamentary intent; The testator must have had testamentary capacity: The will must have been executed free of fraud, duress, undue influence or mistake; and.
Types of Property You Can't Include When Making a Will
If you die without a will, the probate court will refer to local “intestate succession” laws to decide who will receive your property. The order of succession usually prioritizes your surviving spouse or domestic partner, followed by your children, then parents, siblings, and extended family members.
Whom should I not name as beneficiary? Minors, disabled people and, in certain cases, your estate or spouse. Avoid leaving assets to minors outright. If you do, a court will appoint someone to look after the funds, a cumbersome and often expensive process.
More specifically, each person becomes the owner of half of their community property, but also half of their collective debt, according to California inheritance laws. The only property that doesn't become community property automatically are gifts and inheritances that one spouse receives.
If someone dies without a will, the money in his or her bank account will still pass to the named beneficiary or POD for the account. ... The executor has to use the funds in the account to pay any of the estate's creditors and then distributes the money according to local inheritance laws.
Drawbacks of a Living Trust
One of the main reasons people put their house in a trust is because assets in a trust do not go through probate after you die, while everything you bequeath through your will does go through probate. ... Using a trust to pass on your house can also transfer ownership faster than probate would have.
Assets that should not be used to fund your living trust include:
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