Nobody likes to think about what could happen should they die, but death is an inevitability. Not preparing for the end could make life hard for the loved ones you leave behind, and that’s why it’s important to put together a strong will. But do you know what details need to be a part of your will?
What Considerations Need to Be Addressed When Drafting a Will?
- Assets – A key part of all wills is the distribution of assets. If this detail is not properly handled before your passing, then the probate courts will take up the distribution. This could lead to a prolonged court case, and if any of your survivors disagree about where your assets should go, a legal battle could result. It’s better to handle details like this, before the court must intervene.
- Property Outside of Probate – Certain property transfer automatically to spouses, joint tenants and co-owners who have a right of survivorship once you pass. However, there are a few assets that will not be apportioned by probate or your will. Payable upon death accounts, IRAs, annuities and insurance proceeds go directly to the beneficiaries named in their policies. You should account for these when making your will, and make sure they are up to date, since your will cannot affect how they are distributed.
- Gifts and Residuary – If you plan to leave certain items or even money to specific recipients, there are a few details you need to remember. After your expenses and creditors have been paid, these specific bequests will be distributed first. If there will be residual assets after these appropriations, then you can also specify who these remnants will go to. But remember that these residual gifts could change depending on how much of your estate is left, so if you leave nephews and nieces a specific amount, but your brothers and sisters residual inheritance, then your brothers and sisters could get less than you were originally planning.
- Taxes – On a federal level, estate taxes don’t kick in unless your estate is worth over $5 million. However, Pennsylvania does levy inheritance tax on most property save for retirement funds and life insurance. Currently, inheritances received by charities and spouses are taxed at zero percent, your children are taxed 4.5 percent of their inheritance, siblings are taxed 12 percent, and all other beneficiaries are taxed 15 percent.
There are even more details that you may not have considered when it comes time to draft a will. That’s why working with an experienced estate attorney is a must for anyone looking out for the future of their family.