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Think Your Estate Is Not Large Enough For Planning?

Think Again

You need a will. Everyone does.

Whether you have a large or small estate, a will is an essential document. A thoughtful and well-planned will is critical to ensure that your intentions are carried out.

Note: A trust can serve the same purpose as a will. Frequently, a will directs all assets to a trust as a central collecting point. Check with your legal advisor on what is best for you and your circumstances.

If you don’t take the opportunity to express your wishes, your state of residence will do it for you. Each state has its own laws that govern the disposition of property when someone dies without a valid will. In each case, the laws simply represent the state’s best guess of how someone with surviving heirs would want his or her assets distributed.

Planning Pointers

If you are single, it is unlikely that the state’s plan is exactly what you would have chosen. If you want to direct assets to nonrelatives or to charities, those choices will not be fulfilled. State laws provide only for relatives.

This could hold special significance if you are single and have no children. You may want more of your assets to go to dear friends, a favorite niece or nephew, or a valued charitable organization. Without a will, state law may dictate that your assets go to other relatives you did not intend to benefit.

If you have children, a will also provides you the opportunity to make extremely important provisions about their future should you die while they are minors. You can indicate the person or persons you would want to serve as both the guardian of the child and as the person responsible for managing any property passing to the child. While courts may not be absolutely bound by your wishes, they typically place greater weight on the expressed wishes of the parents.

For the charitably minded, if you are looking for a way to express your generosity, providing for a favorite cause in your will is a great way to address philanthropic objectives. A will ensures that your charitable wishes are in place without locking yourself into an irrevocable commitment.

Making a percentage bequest can avoid unintended consequences in some situations. For example, someone may make a charitable provision for a specific sum – say $100,000 – at a time when his or her assets are $500,000, with the balance directed to a spouse. If that person’s assets later decrease to $150,000 at his or her death, the spouse would get less than originally intended – in this case $150,000 instead of $400,000.

On the other hand, if the charitable provision had been stated as a percentage – say 20 percent – the charitable gift would have declined in proportion to the decrease in the value of the estate. This would leave $50,000 more for the spouse: $200,000 as opposed to $150,000.

Remember that your will should be a dynamic document. You need to review it any time there is a major change in your life circumstances, such as marriage, divorce, birth of a child or death of a spouse.

Article appears as originally published in the Ohio Jewish Chronicle Thursday, February 9, 2017.

Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.

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