Top 5 (non-tax) Reasons you Need a Will
In 2020, an individual can give away $11.58m during life/at death without any estate or gift tax consequences. While this tax affects less than 0.2% of the population, there are compelling non-tax reasons to have a valid Will in place upon your death.
You Have Children.
- Minors cannot legally hold property.
- Establish trusts in your Will to hold children’s property and set the terms to meet your standards, not the state’s default rules!
- Custodial Accounts are often used for minors when no trust planning was done – funds must fully distribute by age 21 under Texas law – may create an unintended windfall at a young age.
You Own Real Property.
- Must show who the new owner is in order to pass “good title” to the next buyer.
- It is especially important to have a Will when family legacy property (e.g. the family ranch) is passed down to multiple owners (even if this property is held in an entity such as a family limited partnership).
- In most cases, a Will is the most efficient procedure for passing your real property at your death.
- Without a Will, your heirs will need to file a Determination of Heirship, a more costly and timely process.
You Have a Blended Family.
- Your children from a prior marriage could end up owning property with your new spouse under the intestate laws (the default rules!).
- You can provide for your new spouse, while also ensuring that your children from a previous marriage are provided for even after the death of your surviving spouse.
- A Will allows you, not the Court, to decide who will administer your estate when you die. Appointing an executor in your Will avoids unnecessary conflict between your children and new spouse.
You Want to Provide for your Partner.
- If you are not legally married, your partner has no rights under the intestate laws in the State of Texas to inherit any of your assets.
- Special drafting is required for co-habiting couples who want to ensure that partners are taken care of after their death.
- Failure to draft a Will could result in unintended consequences, especially if you don’t like the people the legislature has decided will inherit your assets.
You Have Charitable Inclinations.
- Leave assets to a trust that allows your children to receive all of the trust income during their lifetime, then distributes the principal to the charity of your choice at your children’s death.
- Leave assets to a donor advised fund and appoint your children to sit on the advisory committee through your Will – allows for charitable giving and charitable education within the family.
- Make outright donations in your Will through specific bequests.
- Make a contingent gift (e.g. if all of my family dies before me) to the charity of your choice in your Will.
- Charitable giving does have tax benefits as well!