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Many people put off making a will, sometimes until it’s too late, which is why up to 60% of Americans and Brits die without a will in place. Failing to write a will not only means your assets could fall into the wrong hands, but it could also cause untold stress for your loved ones.
What happens if you die intestate?
A will is a legal document that coordinates the distribution of a person’s assets after his/her death. If you die without making a will, the laws of intestacy are brought to bear.
These laws vary from country to country, or even from state to state in places like America and Australia. They rigidly decide which family members will inherit your estate and in what ratio, so certain people who you might not want to benefit may be excluded.
The Intestates’ Estate Ordinance in Hong Kong outlines the framework for intestate succession. If the intestate leaves a spouse and children, the first $500,000 goes to the spouse, anything over that is divided between the spouse and the children equally. Where the intestate has no children, the first $1,000,000 goes to the spouse and the remaining would be shared equally among the spouse and the intestate’s parents. When an intestate dies without a spouse, his parents will have first priority to his estate and next in line are his siblings.
Why do you need a will?
The typical reason why people say they don’t need an estate plan is that they believe their state’s law will allow their estate to go directly to their spouse and their children.
While this rings true, estate planning is still beneficial for certainty and expediency. Many people wouldn’t want their estate to follow the default position mentioned above. For example, they might want to leave gifts to special people or organisations or be able to determine the respective proportions, however, intestate rules do not allow for any of that. Having a will can bypass this issue.
How do you make a will?
The easiest and cheapest way to write a will is to do it yourself, preferably typed out rather than handwritten, on a loose piece of paper.
However, this option is only suitable for people with very straight forward financial circumstances. There’s also a risk that the tiniest mistake would render the will invalid. It is therefore advisable to seek help from a solicitor, especially if your case involves one of the following:
- The will might be questioned or challenged;
- You own property outside your country;
- You operate or own a business;
- Your physical condition does not enable you to sign a will;
- If you are receiving medical treatment, which may raise doubts as to your ability to make a will;
- You desire to establish a trust for your minor children so they will get their share of your estate periodically; or
- You wish to donate your estate or appoint someone special as a beneficiary.
These are but a few scenarios in which a solicitor’s expertise would prove valuable. If you have a complicated situation or just want to avoid the hassle of doing it on your own, a well-versed estate planning solicitor will save the day.
No matter which approach you take, a will that has been signed by you but not witnessed counts for nothing.
To give it legal effect, you need to find two people who have nothing to gain from your death to act as witnesses and sign your will at the same time.
What should be included in your will?
Writing a will is not rocket-science, but it is important to do it correctly. Start by listing out all your assets, including any life insurance policies, cash deposits, and investments.
You’ll also need to take any debts or liabilities into account, for example, your home mortgage or other loans.
Next, you’ll have to consider what legacies you wish to make. You can leave your entire worth to one person or divide fixed sums among named individuals. If you have children under the age of 18, your will is also an opportunity to appoint a guardian in the event that both you and your spouse dies. You will also have to consider financial support for them after your death, usually by setting up a trust.
Naming an executor in your will is an essential step. An executor is a person appointed to manage the estate who must be at least 21 years of age. If the beneficiary of the estate is under the age of 18 or the will explicitly states the beneficiary has to reach a certain age before inheriting the estate, the executor shall hold the estate in trust and keep it on the beneficiary’s behalf.
In these cases, the executor can exercise discretion to distribute the cost of living expenses before the beneficiary officially obtains the estate.
Can you change your will?
It is of utmost importance to keep your will updated. Time and circumstances may substantially alter what you own and to whom you wish to make bequests. Reviewing your will from time to time is therefore crucial. You can easily make amendments either by adding an addendum to the old will or completely rewriting one. You must, of course, have the updated will re-witnessed and signed. Any attempts to revise an existing will by writing in the margins or crossing out text will nullify the whole document.
The division of an estate after death is often the culprit of strained family relationships. The slightest differences can result in prolonged years of dispute or even litigation. As divorce becomes more prevalent and stepfamilies more common, estate planning will only get more sophisticated and unpredictable. In order to reduce conflict and speculation over how your assets “should be” divided, putting a will in place is the best thing you can do for your loved ones.
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