Why You Need a Will
Created: January 4, 2012
Written by Mary McCarthy
The laws aren't as simple as you think they are.
In a survey performed by Harris Interactive in 2008, it was determined that 58% of all adults lack a last will and testament. Many individuals believe that everything will just be left to their spouse, or they do not have enough assets to justify a will. Or that they can write a simple note on their deathbed and their wishes will be followed. Ohio doesn't recognize handwritten wills which do not follow the strict formalities, such as witnesses. If you die without a will, your assets will be distributed according to Ohio's laws. The result is you may be unhappy with the way that your assets are distributed.
For example, consider a married couple with children where one parent dies without a will. In the State of Ohio, if you are married and both are parents to all the children, the surviving spouse will receive all the assets. However, if you are a blended family, e.g. a second marriage with children from the first marriage, and you both have one child together, the surviving spouse will not receive all of the deceased spouse's assets. Rather, the surviving spouse will receive 50% of the deceased spouse's assets, and the deceased spouse's children will receive a proportionate share of the remaining assets (depending on the number of children). If the surviving spouse if not a parent to any of the children, then the surviving spouse will get an even smaller cut. Finally, if the couple is not married to each other but living together, the intestacy laws are brutal. Your live-in partner of 15 years may have been wonderful, but upon your death could get nothing and be forced from your shared home. Instead, your family received all of your assets, and that treasured piece of jewelry could end up with your disliked brother. All of these scenarios are very real, and may not be exactly how a person wanted their assets distributed. However, without a will this is what will happen.
Conversely, many people believe that if they hold everything as joint tenants with survivorship rights, they have done sufficient planning. While this may work for some individuals, it can be a disaster for others. With joint tenancy, the original owner of the asset loses their control over the asset. For example, take a parcel of land owned by a father. He transfers that land to himself and his daughter as joint tenants. Later, in need of money, the father enters into an agreement to sell that land for a significant and unexpected profit. However, the daughter refuses to sign the agreement or deed to convey the land. As a result, the father cannot sell the land, nor get the money he needed.
Also with joint tenancy, it can be a gamble that the planning will work, and there will be no adverse tax consequences to deal with. For example, a woman can place a piece of property worth $250,000 into joint tenancy with her nephew. She would like her nephew and his family to inherit the land after her death. However, the nephew dies, and two short weeks later the woman also dies. Because she was the last to die, the woman's family will now inherit the land, and the nephew's family will get nothing - which is precisely the opposite of what the woman intended. Moreover, prior to the nephew's death, because the woman transferred half the property to the nephew without any money exchanged, she will owe gift tax on half the value of the land. Every person is permitted to give up to $13,000 a year tax free. So, she will owe taxes on $112,000 [($250,000/2) - $13,000.00] - which will now be taken out of her estate, although her nephew and his family did not actually ever receive the property.
Finally, a will is necessary if you have minor children. This is the only way to ensure that your children will have the guardian who is appropriate in your opinion. Otherwise, the court will appoint a guardian in your place, and it may be a very different person than the individual you would choose.
Having a will is required to ensure that your wishes are followed, whether that means your responsible sister looks after your children, your second wife and children receive the right assets, or your niece gets that snow globe she has always wanted. A state's laws are particular and strictly enforced as to wills. It is important to talk to a lawyer who if familiar with those laws so your wishes are carried out as you desire.