Executing a well is vital to anyone’s estate plan. If you die without a will, your assets will be distributed under your state’s law. The possible consequences include:
* No tax planning. It’s true that the federal estate tax exemption is now set at $5 million, so most people won’t owe that tax. However, many states have much lower exemptions. With a will, you can do some planning to reduce state estate tax.
* No distribution planning. Your state’s law might call for most or all of your assets to pass to your spouse. That could be the case even if you are estranged or in the middle of divorce negotiations. Your children, parents, siblings, and other loved ones might get little or nothing.
* No planning for guardians. If you and your spouse die without wills, while your children are minors, you’ll forfeit the chance to name guardians for the children. Others–perhaps a local court–will decide who will raise your kids and manage the assets they’ll inherit.
* No charitable planning. If you die without a will, none of the assets passing under your will can go to your favorite causes.
Even a simple will can determine how your assets will be distributed, name guardians for minor children, and provide some basic tax planning.