A Tax Fact from The Tax Institute at H&R Block

Today, more than half of American adults do not have a Will. Why? Well, it isn't because they think they won't die at some point. It’s because many people feel that unless they have great wealth, a Will or Trust is not necessary. This is simply not true. In fact, it's so not true, it's worth repeating. You do NOT have to have amassed great wealth to have a Will or Trust. Wills and Trusts ensure that your wishes are carried out, no matter what your economic status. If you die without a Will or Trust, state law will determine how your assets will be distributed and to whom. Is that really what you want for your loved ones? We didn’t think so.

But don't just take our word for it. To put this in perspective, let’s look at some examples that illustrate the advantages of having a Will or Trust, and the disadvantages if you don’t, and then you decide:

Your property
With a Will or Trust, your assets, upon your death, will go to the people whom YOU have chosen; without a Will, your assets will be distributed according to state law and only relatives are eligible and that may include that grumpy distant cousin you haven’t talked to in years.

Your charitable requests
With a Will or Trust, you can designate some or all of your assets to go to charity; if there's no will and no living relatives can be located, your assets will become the property of the state. Ugh.

Your executor or successor trustee
With a Will or Trust, YOU can name a trusted person to handle your estate; without a will, the state will appoint someone, usually a close relative, to administer your estate, however, state law will dictate HOW assets are distributed.

Your minor children
With a Will or Trust, you can name a guardian for your minor children and the guardian DOES NOT have to be a relative. If there’s no Will, the state will appoint a relative as guardian (which could be one you don’t like) and if there are no relatives to act as guardian, your children will be placed in foster care.

Special needs
You can ensure that any special care and financial arrangements will be carried out based on your Will or Trust. For example, provisions for children's education, care and financial stability for disabled family members, and for preventing heirs from spending your money foolishly. Without a Will or Trust, your state of residence will distribute everything according to its laws which are based solely on relationship. Any special needs will be disregarded, and recipients can spend your money however they wish.

Life issues
You may have very specific ideas about how you want to be cared for if you are disabled or gravely ill. You also want your property safeguarded. A Living Trust can include provisions for all of these issues. A Living Will can set forth YOUR preferences regarding resuscitation and other extenuating medical care.

Without these provisions, relatives will make decisions concerning your personal care which may not be to the standard you prefer. Your assets are also unprotected.

Costs
Estate planning can minimize estate taxes, income taxes, and probate. A Grantor Trust can avoid probate as well as prevent Will contests.

But today, trips to the lawyer's office and expensive hourly rates can add up quickly. Those who want to save time and money handling critical personal legal documents may want to try a do-it-yourself solution like WILLPower^®, from H&R Block^®. WILLPower offers an easy step-by-step process, built-in help functions and critical reference materials to enable people to handle sensitive, often difficult documents and decisions from the comfort of their own homes.

Though any do-it-yourself solution alone is not a replacement for actual face time with an attorney, being prepared in advance of the visit, with clear direction as to how your assets, family and personal health care will be handled, will help reduce the billable hours from your attorney.

Storage 
Once you have your Will and/or Grantor Trust completed, you must store the document in an easily accessible location.

Most people choose to store sensitive documents like a Will or Grantor Trust in a safe deposit box. Although this seems like an obvious choice, access may be delayed because safe deposit boxes are often sealed for a period of time after a person’s death. If you choose to keep your Will in your safe deposit box, make sure your Executor will have immediate access to the box upon your death.

Another option is a fireproof storage box or home safe. It is always a good idea to store copies of your documents in a second location.

Whatever option you choose for safety and convenience, make sure you loved ones - and your designated Executor or Trustee – know you have a Will and/or Grantor Trust. You may also want to provide a list showing the location of your valuable records, such as your car title, your tax returns and your bank statements so that your designated person can take appropriate action in case of an emergency.

This Tax Fact is brought to you by The Tax Institute at H&R Block. 

To view other helpful tax information or listen to our Tax Fact podcasts, visit www.digits.hrblock.com

As always . . . everyone’s tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.

This Tax Fact is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.