By Jackie Jacobs
Not long ago, I was told about a local community member who recently passed away without a will, leaving an estate of over $4 million. It’s not an uncommon story. More than 60 percent of all Americans die without leaving a will.
The relatives of the decedent learned a hard lesson. If you die without a “Last Will and Testament,” your state of residence takes over. This means that a complete stranger is appointed to settle your affairs. Without any thought or knowledge of your wishes, the state-appointed administrator divides your property according to state law. Without consideration for your wishes, the state law of distribution treats all heirs according to a predetermined formula. For example, your spouse or children may receive a smaller share than you wish, or a distant relative might receive what you would like to leave to a close friend or favorite charity.
When the state settles your affairs there are a few things you can count on:
Having a will ensures that your assets are distributed more quickly and to the right people. If you don’t have a will, nobody’s going to know what’s important to you – getting back to that “Last Will and Testament” idea. If you take the time to create and update a will, you can make statements about the people and organizations you care about and ensure that they get what you want them to have.
Another drawback of having the state settle your affairs is that no charitable giving is possible. Unless you have a will, you cannot give any money to your favorite charitable, religious or educational institutions. Perhaps you’ve been supporting a charity for 20 or 30 years. If you die without a will, the state doesn’t know and doesn’t care, and your favorite cause is left behind.
Here are some guidelines to start the process of preparing your will:
After a lifetime of paying taxes, at the time of your death, the government taxes you yet again. For estates over $5.45 million, the federal estate tax rate climbs as high as 40 percent. However, charitable gifts made through your will are completely free of estate tax. By making a charitable gift, you also help support the causes you believe in after you are gone. There are no limits on the amount you can bequeath to charity. Some individuals leave as little as $50 in their will, while others leave their entire estates – all free of estate taxes.
If you wish to provide for a favorite tax-exempt charity in your will, you must do one of the following:
You may also name a charity as a contingent beneficiary if someone named in your will is no longer living.
You may also designate a favorite charity as the beneficiary of assets that often pass outside of a will, such as IRAs, qualified retirement plans, life insurance or assets held in trust. Contact your attorney or plan representatives about how to make these beneficiary designations.
Remember the hard lesson that 60 percent of all Americans apparently never mastered…if you haven’t prepared a will, the state in which you live has made one for you that may not distribute your estate according to your wishes. For your protection and the security of your heirs and favorite charities, consult an attorney about making out your will.
Article appears as originally published in the Ohio Jewish Chronicle, Thursday, March 17, 2016.
Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.