Where there’s a will, there’s a way

newsroom@tri-statedefender.com | 4/25/2012, 11 p.m.

 Charles Sims Jr., CFP

When U.S. congressman and former entertainer Sonny Bono died in a skiing accident in 1998, he died intestate – without a valid will. More than a decade later, his heirs were still contesting his estate. Other famous people who died intestate include Abraham Lincoln, Pablo Picasso and Howard Hughes.

This situation is not unusual; only 35 percent of Americans have a will. If you have a will, you’ve taken an important step to help ensure that your assets are distributed as you wish, but it’s also important to update your will regularly as circumstances change.

If you don’t have a will, you’re risking unwanted outcomes and potential problems for your heirs. Although it’s natural to feel uncomfortable about estate planning, a will might make a big difference for those you love.

Making your own choices

A will enables you to specify not only which assets you want to give and to whom, but also who you want to administer your estate. It may be the most appropriate way to designate guardians for minor children or for adult children with special needs. Any parent of children who need care should have a will, regardless of financial assets.

If you die without a valid will, the state may decide how your assets will be distributed. Typically, assets would go to the spouse and children, but state laws vary widely, and there are different distribution formulas. When the deceased dies intestate and leaves no spouse or children, the situation becomes more complicated.

Having a will does not avoid probate, the legal process by which assets are distributed. However, a will might make probate more efficient and less expensive.

A will is a good start in estate planning. Here are some other documents to consider:

• Beneficiary designations for life insurance policies, IRAs, 401(k) plans, and similar accounts generally supersede a will, so it’s important to keep them up-to-date.
• A living will specifies your wishes for medical care in the event that you become incapable of making or communicating those wishes.
• A power of attorney authorizes someone of your choosing to make financial or medical decisions on your behalf.
• A trust enables you to specify how assets are distributed after your death and may help avoid probate and estate taxes. Even if you have a trust, you should have a will. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate-planning professional and your legal and tax advisors before implementing such strategies.

It may be difficult to think about estate planning issues while trying to manage the many challenges of daily life. However, documenting your preferences now could make a big difference for your heirs and help ensure that your legacy is handled according to your wishes.

(Charles Sims Jr. is President/ CEO of The Sims Financial Group. Contact him at 901-682-2410 or visit www.SimsFinancialGroup.com. The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.)