Are you one of the 40% of adults in the USA that do not have a will?
Do you need a will? Yes, and here’s why:
Having a will is important for a number of reasons:
By means of a will, you can establish trusts to invest and manage assets for your beneficiaries.
You can provide specific bequests to love ones.
A will can help save taxes and avoid unnecessary expenses on the administration of your estate.
And, of course, a will allows you to make charitable bequests to your favorite causes.
What are the consequences of not having a will?
Creating a will allows you (donor) to distribute your assets as you see fit, not having a will places that control elsewhere (e.g., your home state):
Anyone can be named as executor (possibly a stranger can be nominated) to handle your estate.
You may lose the option of nominating who you want to serve as guardian for any children considered minors.
Without a will (“dying intestate”), your state determines how your property is divided.
Why people don’t have wills.
Certainly, there are personal reasons people put off drawing up a will. They may be uncomfortable contemplating their own death or deciding who will get what. Then, too, a number of misconceptions keep individuals from creating a will.
My spouse will automatically get everything. Not true, and under most state laws, the children may share in the distribution of assets.
Everything is jointly held. While many people assume that property will always pass to the surviving spouse, this isn’t always the case. For example, a collection of valuable jewelry may be required to be divided between a spouse and the children based upon state statutes. And what if both spouses die together in an accident?
I’m single. Certainly this is no reason to leave the distribution of your assets up to your state of residence.
I don’t have enough assets. Perhaps. But you still want the assets you do have distributed in accordance with your wishes.
A donor (you) is the person creating a bequest.
BEQUESTS
A charitable bequest is a written statement in your will directing that a gift be made to a certain charity (the beneficiary) upon your death. In this case your are the donor. Often, a donor will bequeath a parcel of real estate, a sum of money, specific amount of stock, or even a home. Upon your death, the bequest is said to have “matured.”
Types of Bequests – the following are recommended clauses that may be used to make a gift to the Newark Area Welfare Committee through your will. The following clauses, of course, are only examples. Be sure to contact your attorney for proper legal advice.
GENERAL BEQUEST – a specific dollar amount or a specific asset:
“I give and bequeath one hundred thousand dollars ($100,000) to the Newark Area Welfare Committee, a not-for-profit organization incorporated in the state of Delaware the principal office at Newark Area Welfare Committee, c/o Beverly Stoudt, 764 Arbour Drive, Newark, DE 19713, for its general purposes.”
PERCENTAGE BEQUESTS – A percentage of the total estate:
“I give, the Newark Area Welfare Committee, property equal to 20% of my total estate. A not-for-profit organization incorporated in the state of Delaware the principal office at Newark Area Welfare Committee, c/o Beverly Stoudt, 764 Arbour Drive, Newark, DE 19713, for its general purposes.”
RESIDUARY BEQUEST – a percentage of, or entire, residue:
“I give my residuary estate, which is all the rest, residue and remainder of my property, real and personal, of every kind and description and wherever located (including all legacies and devices that may for any reason fail to take effect), belonging to me at the time of my death or subject to my disposal by will to the Newark Area Welfare Committee, a not-for-profit organization incorporated in the state of Delaware the principal office at Newark Area Welfare Committee, c/o Beverly Stoudt, 764 Arbour Drive, Newark, DE 19713, for its general purposes.”
CONTINGENT BEQUEST – result of a certain condition:
“In the event that my wife does not survive me, I leave the property set aside for her to the Newark Area Welfare Committee, a not-for-profit organization incorporated in the state of Delaware the principal office at Newark Area Welfare Committee, c/o Beverly Stoudt, 764 Arbour Drive, Newark, DE 19713, for its general purposes.”
SPECIFIC BEQUESTS
“I give, devise, and bequeath all my rights, title and, and interest in and to [describe the specific property], to the Newark Area Welfare Committee, a not-for-profit organization incorporated in the state of Delaware the principal office at Newark Area Welfare Committee, c/o Beverly Stoudt, 764 Arbour Drive, Newark, DE 19713, for its general purposes.”
ENDOWMENT BEQUEST
“I give, devise, and bequeath [describe the specific property or amount] to the Newark Area Welfare Committee, a not-for-profit organization incorporated in the state of Delaware, the principal office at Newark Area Welfare Committee, c/o Beverly Stoudt, 764 Arbour Drive, Newark, DE 19713, to establish an endowment fund (to be known as the________ Fund); the principal amount to be invested and the annual income therefrom to be used for the benefit of the Newark Area Welfare Committee.”
ADDITION to ENDOWMENT FUND - only the income from the bequest can be used:
“I give, devise and bequeath to the Newark Area Welfare Committee, a not-for-profit organization incorporated in the state of Delaware and located at Newark Area Welfare Committee, c/o Beverly Stoudt, 764 Arbour Drive, Newark, DE 19713, and its successors forever, the sum of $_________ dollars (or otherwise describe the gift) and direct that this bequest be added to the endowment fund of the Newark Area Welfare Committee.”
Cash, securities, real estate or property of any description may be bequeathed to the Newark Area Welfare Committee by a clause in the donor’s will or by a Codicil added to the will. The donor using this method retains full control and use of property during his lifetime and may alter or revoke the bequest at any time.
CODICIL
“Having hereinbefore made my last Will and Testament dated and being of sound mind, I hereby make, publish and declare the following codicil thereto: (here insert in the same form as if it had been included in the body of the will). Except as hereinbefore changed, I hereby ratify, confirm and republish my said last Will and Testament.”
At the time of the donors death, the bequest qualifies as a charitable deduction for estate tax purposes. The bequests does not, however, provide the donor with any tax advantages during their lifetime, nor does it provide an assured income for the donor or his or her beneficiaries, as other plans may.
BENEFICIARY DESIGNATIONS are gifts that occur outside the will. This might be an Individual Retirement Account or insurance policy. A donor can make a nonprofit the beneficiary of these financial instruments. IRAs can also simply be rolled over to a charity. For some individuals this makes sense to avoid the tax bill when they start taking money out of the IRA.
Making a nonprofit the beneficiary of an insurance policy is sometimes done by a donor whose children or spouse will not need the funds; or by a donor who would love to leave more money than he or she can actually afford to a beloved cause. Insurance policies can also be cashed out and donated to the charity.
The Newark Area Welfare Committee strongly recommends that you the donor employ a competent lawyer to prepare the will or codicil and to supervise its’ execution in order to comply with all the requirements of the law of the state in which the maker of the will reside, as well as the provisions of the Internal Revenue Code governing the deduction of charitable gifts and bequests. It is also wise to give the Newark Area Welfare Committee considerable latitude in the use of any fund so that a change of circumstances may not impair the usefulness of the gift. The president of the Newark Area Welfare Committee will be glad upon request to review the rephrasing of any proposed form of bequests, subject to your attorney’s approval.
Resources: “Raising Money Through Bequests” by David Valinsky and Melanie Boyd, and About.Com Nonprofit Charitable Orgs.