Rothman Gordon: Back to Basics Estate Planning: Why A Will

Back to Basics Estate Planning: Why A Will - Part I

A basic estate plan generally includes a Will, Powers of Attorney, and a Living Will. In our "back to basics" series, we will start with the center piece of the estate plan - the Will. The first question that is always asked is "Do I need a Will?" The answer is an emphatic "Yes" if you have heirs or charities that you care to protect.

This article and the ones that will follow will discuss why you need a Will and what happens if you do not have one. The topics that we will cover will be:

Who will receive your Probate Assets if you die intestate (without a Will).
Who will serve as the administrator of your estate if you die intestate (this could be a large number of individuals).
Will your administrator need to post a bond for the faithful performance of his or her duties as executor, and what is the amount of the bond?
Will the administrator need to go to court more often if I do not have a Will? For example, if the administrator needs to sell my home, will he or she need to obtain the court's permission?
If I have my minor children who will inherit my estate, when will the minors receive their inheritance and who supervises the use of the funds while they are minors?

Before we answer these (and other) questions, let's define some basic terms - Probate Assets and Non-Probate Assets. Probate Assets are assets that you own in your individual name at the time of your death (bank accounts, stocks, bonds, mutual funds, real estate, etc.). Probate Assets pass to the beneficiaries named in your will.

Non-Probate Assets pass outside of your will by beneficiary designation or by operation of law. Non-Probate Assets that pass by beneficiary designation are generally retirement assets (401k's, IRA's, etc.) and life insurance. When you complete a beneficiary designation form, the individual(s) that you name will receive these benefits without even looking at your Will.

Non-Probate Assets that pass by operation of law are jointly owned assets. If property is owned jointly with a spouse or others, the co-owner will normally receive the property without the need for a Will.

Many married couples own property (particularly the principal residence) jointly. This is referred to as a tenancy by entireties. Upon death of one spouse, the joint property passes to the surviving spouse.

"Why A Will - Part II" will discuss what happens to jointly owned property if both husband and wife die in a common disaster, what happens if you do not name a beneficiary of a retirement assets or life insurance policy, and who receives your property if you die intestate (without a Will).

Articles are not intended to be comprehensive. Readers should not act upon any information herein without seeking specific legal advice from the Firm's attorneys.

We are required by Treasury Regulations to advise that this writing is not intended as a reliance opinion and cannot be used for purposes of avoiding IRS penalties.