Yes, You Need a Will

Many people think that creating a will or trust is unnecessary because their surviving spouse will automatically inherit everything. But this is true in only some states, and only if the assets were acquired during the marriage and were not gifts to or inheritances of one spouse.

In most states, the law will make your surviving spouse share your estate with your children, siblings or parents — unless you declare otherwise in a will. And because assets left to anyone other than a spouse face heavy estate taxes if they are substantial in size, the federal government can become an unintended heir to your estate.

Remember: Even if you are a middle-income earner, you may be building up large — and eventually highly taxed — assets. These include your 401(k), IRA and other tax-deferred plans; your company stock purchase, savings and pension plans; your private savings and investments; your house and its furnishings and any other real estate; your cars, art objects, jewelry and other personal property; your cash in a bank or elsewhere; your share of any business that you partly or wholly own; and your copyrights and your claims against others.

The only thing not considered part of your taxable estate is an asset that you have given away completely and permanently — one that you no longer control and from which you get no benefits.

And, as mentioned, whatever your spouse may collect from your estate is not subject to federal estate taxes. That is a good reason to create a will that clearly establishes just how much you wish your spouse to get from your estate after your demise.