A commonly asked question is “what is a Will?” A Will (also called a Last Will and Testament) is a legal document where you name who will inherit your property after your death. When you create a Will, you get to decide who inherits your property – not the laws of your state. Most people pick individuals and/or charities to inherit their property. The people or charities you pick to inherit your property are your called beneficiaries or heirs.
As discussed above, a Will names the beneficiaries who will inherit your property. In addition, a Will serves a number of other important functions:
Guardian: This is a big one. If you have children under the age of 18 you must name a guardian for your children in your Will. A Will is the only place an Arizona resident can name a guardian for his or her children. The guardian or guardians you name will be responsible for raising and caring for your children, same as a parent. This means that a guardian will have parental responsibilities regarding the minor children’s support, care and education. Like a parent, a guardian will also make decisions regarding the children’s medical care. If you do not name a separate conservator in your Will, a guardian may also manage the minor children’s financial affairs. Often people chose the same person to be both guardian and conservator, but the guardian and conservator are not required to be the same person.
Conservator: You may also name a conservator for your minor children in your Will. A conservator is responsible for managing the minor children’s finances. This includes managing any assets or property belonging to the minor children and using the assets to pay for the minor children’s care, support and education. You can pick the same person as your guardian, but it is not required.
Personal Representative: You should also name a personal representative in your Will. A personal representative is responsible for administering your estate after death, including opening a probate if necessary, gathering your assets, distributing property to your beneficiaries, completing your last tax return and paying taxes and debts of your estate.
As you can see, a Will serves a number of important functions. However, you may be surprised that only 35% of American adults have wills. So what happens to the people who never create a Will?
If you die without a will (called dying “intestate”) you will have no say over what are ultimately the most decisions of your life. You will not be able to decide who should care for your minor children. Instead, this will be left up to the probate court – which could result in a lengthy and expensive battle with your children at the center. You also won’t get to pick who inherits your assets or manages your estate. Instead, your assets will pass via your state’s laws of intestate succession. This will put your family in the difficult and potentially costly situation of having to sort out who gets what. This could be especially problematic if your loved ones disagree about who should get what.
The story of rock and roll legend Jimi Hendrix is a perfect example of the nightmare that can happen when someone doesn’t create a Will. Jimi Hendrix died in 1970 without a Will. For the next 30 years a battle raged over his estimated $80 million estate and spawned numerous lawsuits. After Hendrix’ father took over the estate, things got even messier. Despite Hendrix fathering two children out of wedlock, Hendrix’ father denied the children any claims on the estate and instead named himself the sole heir. Things got even worse when Hendrix’ father died. At that point Hendrix’ brother and sister got into a nasty fight, each spending millions of dollars to control the multi-million dollar estate. Today, somebody that Jimi Hendrix barely knew is controlling his legacy. This is probably not the situation Hendrix envisioned.
Everyone over the age of 18 should create a Will. Regardless of the value of a person’s estate, the best practice it always create a distribution plan for assets during a person’s life to minimize the potential for difficult family fights. Also, anyone who has children under the age of 18 should create a Will as soon as possible so that they can name a guardian for their minor children.
The good news is that you can spare your loved ones from the costly and emotionally draining process of trying to sort out your estate by making a Will. With a Will, you rest assured that your final wishes will be followed. YOU will make the decisions on who should care for your minor children – not the court. YOU will pick who manages your estate – not the court. And YOU will decide what happens to your property – not the state. With a Will, you can be sure your children are left in the best possible care with someone you know and trust. In addition, you will greatly reduce the potential for nasty family fights when your wishes are clearly spelled out in a Will.
A Will is just one piece of a comprehensive estate plan. An estate plan includes not only a Will, but also Powers of Attorney. These Powers of Attorney will govern who should make your healthcare decisions or access your finances to pay your bills should you become incapacitated. A comprehensive estate plan may also include a Trust. While a Trust may help you avoid probate and lay out your plan to distribute your assets, a Trust is NOT a substitute for a Will. You cannot name a guardian for your minor children in your Trust. To learn more about Wills, Trusts and Powers of Attorney, check out our flat fee estate plans and please feel free to call us at (480) 699-7992.
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