Many people think that preparing a will is too expensive and too much bother. The alternative, though, is to allow state law to make all of the decisions for you, whether you would have chosen the same results or not.
More than 60 percent of Americans have no will. They are giving up benefits for their family or others by not planning ahead.
Simple wills often cost very little in comparison to what they are protecting and can eliminate certain fees that would otherwise be required.
For example, an executor must post a bond unless the will does not require it. With a will, the bond cost can be eliminated. Most simple wills cost less than the bond, saving assets for more appropriate uses.
The process of preparing a will starts with listing what you own, including real estate, personal property, stocks, savings and checking accounts, business interests, retirement funds, etc. Warning - the total may be surprising!
To make your executor's job easier, you could compile a three-ring notebook containing the list of assets and properties you own, copies of all important financial and legal documents, and information about their locations.
The taxation of estate assets is also a consideration. If a person dies in 2013, his or her estate will owe federal estate taxes at a rate of 40 percent on amounts above $5,250,000. In 2014, the amount increases to $5,340,000.
With married couples, after both spouses pass away, any of the available tax-free amount not used by the first spouse's estate can be applied to the other's. In addition, West Virginia has no estate tax.
Fortunately, the taxes owed can be lowered or eliminated through timely estate planning.
There are two unlimited deductions that may benefit your estate. They are the marital and charitable deductions. Gifts to spouses and charities are tax-free in any amount. They do not use any of the $5.25 million tax exemption. You can also set up a charitable trust in your will or revocable trust to provide income to family members that will lower estate taxes, give loved ones security, and help the charity you choose.
Deborah Miller, JD is general manager of Senior Director of Planned Giving and West Virginia University Foundation, Inc.