Don’t Postpone Making Your Will
October 08, 2018
In this episode, Tim Schuster, from EisnerAmper’s Private Business Services Group, tells us why it is definitely not a good idea to be without a will. One key reason: Do you really want the state deciding how to dispense your assets? Tim also explains how the process has gotten somewhat more accessible and the three Ws of estate planning.
DP: Most of us heard of the unfortunate news in August of the Queen of Soul Aretha Franklin’s passing. But another bit of news we learned was that she left no will for her heirs. In fact, more than half of all Americans have no will. So, aside from the tax implications, which is a podcast unto itself that we'll save for another day, Tim, tell us how not having a will could impact the heirs.
TS: This is a terrible situation to be in if you die without a will. Now, what I'm hoping that people will understand is, after listening to this podcast, if you don't have one, start the process of obtaining a will. Depending upon in which state you reside and if you're single or married or have kids, the state could decide what happens to your estate. Without a will your estate is subject to the dictates of the state, and nobody wants that. By not having a will, you can also see costly family in-fighting. If a family businesses is involved, this would be extraordinarily disruptive. This whole area here has caused families fall apart.
DP:I believe it. At which age should people start thinking about a will or drafting a will.
TS: Most states say you must be at least 18 years or older to write a will, but accidents and unexpected events can and do happen. So it's best to draft one as soon as you are an adult in the eyes of the law.
DP: Now, some people may think, well, I don't have enough assets, so this is really cut and dry situation. Does it make a difference if the deceased leaves a four-figure estate versus an eight-figure estate?
TS: It does not matter. Everyone has an estate that is comprised of assets. The will is there to provide instructions. So the three "w” words" that come to mind are who, what, and when. Who do you want to receive something of yours? What do you want them to receive? When will they receive it?
DP:Makes sense. So we've seen the process of making a will become more accessible with some online providers. But at what point do you differentiate the do-it-yourself process versus working with an estate planning professional?
TS: That's a great question. Everyone's circumstances are different. Most people when they start their careers may not need more than just a will prepared. Some employers offer that as a fringe benefit, and that actually should be taken advantage if you do work for a company that offers that. With the Tax Cuts and Jobs Act, estates are not taxed until the value of the estate is over $11.18 million at the time of death. And that's only at the federal level. Each state has a different threshold that you should discuss with your advisor. Now, all of this is a complicated area that I would advise you discuss with your advisor or an estate planning team because people often don't realize how much their estate is actually worth. Estates can start racking up in value before, you know it. A big takeaway with the estate planning: no matter at what stage you are in your life, start the process sooner versus later. You don't want to be put in a position where you're trying to figure this out at the last minute, and if you can just have the wherewithal to do it now, do it.
DP: So let's say you do become proactive and you get a will drafted or do you work with one of the online providers. Then let's say your circumstances change, whether it's a family situation, your business changes, tell us about that.
TS: So it's worth reassessing your real estate structure every few years or so. If you had a life-changing effect, if you got married, have children, you're going to want to assess your position as quickly as possible. If you do have children, it is important to name guardians for them should something happen. If you do not know who to talk to about wills and estate planning, talk with your accountant or trusted business advisor.
DP: Good stuff that most of us would rather not have to talk about, but we do need to talk about it. It's very important. Now it's time for one of your New Jersey historical society Fun Facts.
TS: Oh, of course. This one's American-based, actually. So our current American flag was designed by a high school student. The student initially created the flag design as a school project and received the B-. The teacher said she would reconsider the grade if Congress were to accept the design. Well, not only did it accept this design of the flag, it was chosen and adopted by a 1959 presidential proclamation.
DP: Good for that student. Well thanks, Tim, for this valuable information.
TS: My pleasure.
DP: Thank you for listening to. The bottom line is part of the EisnerAmper podcast series. If you have any questions or there's a topic you'd like us to cover, emails that firstname.lastname@example.org and visit EisnerAmper.com for more information on this and a host of other topics and join us for our next EisnerAmper podcast when we get down to business.