Established in 1973
126 S. Northwest Hwy
Barrington, IL 60010
Most individuals fail to appreciate the full importance of a will, especially where they feel their estate is too small to justify the time and expense of preparing one. Even those individuals who recognize the need for a will often don’t have one, perhaps due to procrastination or a subconscious refusal to accept one’s own mortality.
Five basic reasons for preparing a will are:
1. To Choose Donees
The intestate succession laws of the state in which an individual resides will determine how his or her property is distributed after death in the absence of a valid will. For example, most of the property of an unmarried, childless decedent who dies intestate (i.e., without a will) generally will be distributed to his or her parents (or siblings if there are no parents); the property of a married individual with children who dies intestate will generally be distributed one-third to the spouse and two-thirds to the children. These distributions may be contrary to the desires of the individual. In effect, by failing to prepare a will, the individual has abdicated the selection of beneficiaries to the state. In addition, a will allows the individual to determine not only who will receive the property, but how much each beneficiary will receive.
The individual may also want to contribute property to a qualified charity. A will is needed to accomplish this kind of testamentary transfer. Such charitable transfers are also valuable because they can provide an estate tax deduction.
2. To Minimize Taxes
Many individuals feel they do not need a will because their taxable estate does not exceed the maximum amount allowed to pass free of federal estate tax ($2,000,000 for deaths occurring in 2006). However, the taxable estate is often larger than anticipated because of “hidden resources” that are often overlooked because they are illiquid or untouchable, e.g., life insurance policies naming the individual as the insured, qualified retirement plan benefits and IRAs. These hidden resources can cause an estate to balloon to an amount that subjects it to federal estate tax. More importantly, in many states an estate becomes subject to state estate tax or inheritance tax at a point well below the $2,000,000 mark. A will, properly prepared, can alleviate the tax burden for many estates.
3) To Appoint a Guardian
A will can be used to name a guardian for minor children of the individual in the event of the death of the individual and/or spouse. While naming a guardian does not bind either the named guardian or the court, it does indicate the decedent’s wishes, which courts generally try to accommodate.
4) To Name an Executor
Without a will, an individual cannot choose someone whom he or she trusts to carry out the administration of the estate. If the individual does not specifically name an executor in his or her will, the court will appoint an administrator to handle the estate. Obviously there is an advantage in selecting as executor someone whom the testator trusts.
5) To Establish Domicile
You should establish domicile in a particular state, for tax or other reasons. If you move frequently or have homes in more than one state, each state in which you resided could claim you were a domiciliary of that state at the time of death, possibly subjecting your estate to multiple probate proceedings and overlapping claims for state death or inheritance taxes. To minimize the risk of this multiple taxation (which has been held valid by the U.S. Supreme Court), you should execute a will that clearly indicates the intended state of domicile.