WE LIVE IN USA
With no will, state law decides: and it doesn't necessarily all go to your spouse
Plenty of people think "we don't have much, we don't need a will," or "it'll all go to my spouse anyway." That second assumption is wrong in some states.
What happens without a will
Property is distributed under state lawdistribution (intestsuccession). And the rules differ quite a bit from state to state.some states give a share to parents or children rather than everything to the spouse.
Common patterns:
- With children, the spouse and the children share
- No children but surviving parents, the spouse and the parents share
- A remarriage with children from a prior marriage makes the split more complicated still
If you've just married, have no kids yet, and your parents are living, this is precisely when the "spouse doesn't get everything" situation is most likely to happen.
Two tools
A will
A simple will typically runs $300 to $1,000. It sets out how property is divided, who the executor is, and who the guardian of any minor children will be.
The drawback is that it goes through probateGoing through court is public, time-consuming, and expensive.
A living trust
Typically $1,500 to $3,000. Assets go into the trust, you still control them while alive, and on death they transfer directly under the trust's terms.
The advantage is avoiding probate: It is faster and private, and especially handy if you hold assets in multiple states. The downsides are the setup cost and remembering to actually "retitle assets into the trust" (plenty of people set up a trust but never move their house in, which makes the whole exercise pointless).
How to choose
- Simple assets, all in one state: a will is usually enough
- Real estate, especially in more than one state: a living trust clearly earns its cost
- You want the arrangements private: a living trust
- You have minor children: Whichever you pick, remember to name a guardian in a will, as a trust can't do that for you.
The key line: beneficiary designations beat the will
This is where an otherwise good plan most easily falls apart.
However complete the will, an unchanged 401(k) beneficiary pays out the old way. Life insurance, retirement accounts and IRAs pass by contractual beneficiary designation and never go through the will (see item 19 of the checklist).
So the right order is: spend five minutes fixing every beneficiary first, then talk about a will. The first is free and takes effect immediately; the second costs money and time.
Extra considerations in a cross-border marriage
If one spouse is not a US citizen, inheritance tax works a bit differently. The unlimited marital deduction doesn't apply, so you need to consider arrangements like a QDOT trust (see item 87 of the checklist).
Also, if you still hold assets in Taiwan (a house, accounts, policies), a US will may not be able to dispose of Taiwanese property. You may need arrangements on both sides, and you have to make sure the two documents don't contradict each other. For that, find a lawyer who works in cross-border estates.
In one line
Fix the beneficiaries first (free, effective immediately), then talk about a will, and drop the assumption that it all goes to your spouse, because in some states it doesn't.