This is our next post in our series discussing why residents of Dallas, Texas need a will. Our last article was a general overview of the main reasons why you should create a will sooner rather than later. In this post we will discuss what as “asset” is, how they are divided, and what might happen if you do not plan the division of your assets in advance.
An asset is anything that you own, either in whole or in part. Some assets are tangible (like real estate, buildings, cars, boats, jewelry, or artwork). Some assets are intangible (like stocks, bonds, insurance, bank accounts, or mutual funds). Some assets have obvious financial value while other assets may have little financial value, but great meaning and significance to the family. Regardless of the worth of a piece of property, if you care who receives it, it should be specifically included in your will.
There is no one right way to divide your assets. Families are complex, and wills often are as well. There are two common methods used to divide assets. The first is simple percentages. You might say that each of your four beneficiaries will receive 25% of your estate. These percentages can be equal or not (e.g. 40%, 30%, 20%, and 10% to each of the four children). Another way to divide assets is to list specific items that will be inherited by specific beneficiaries. A combination of these two is also common. For example, the house, furniture, boat, and car are left to specific persons while the rest of the assets, referred to as the “remainder” are divided by percentage to the beneficiaries.
Let’s say that you keep putting off making a will, and then you die unexpectedly. What would happen to your assets? This is called an intestate death and it means that your assets would fall to the state’s defaults for division. The good news is that the state of Texas will not take your assets, but the bad news is that they will divide them according to the standard probate code. The guidelines for these decisions are extremely complex and fairly confusing, but suffice it to say that it is highly unlikely that the state of Texas is going to divide your assets among your heirs the way you would have liked.
You can see that even dividing relatively simple estates can get tricky in a hurry and of course, it gets even more difficult with larger estates, children, remarried adults, etc. Consider the obvious assets that you own and what you would like done with them after your death. By preparing a will, you save your family the heartache of trying to decide what you would have wanted. We will discuss the difficulties that you avoid by creating a will in our future blog posts.
The Johnson Firm can help you decide how best to divide your assets now so that your family is not involved in a long, contentious and expensive legal process later.