Creating a Will and Why You Need One
Sadly, more than 55% of Americans die each year without a will; and while it’s understandable why the subject of death is not one people like to contemplate, if they actually knew what happens to their estate when they die “intestate” (without a will), they might reconsider their reluctance. No doubt that many people don’t view themselves as having an “estate” under the misconception that only the wealthy die with one.
In reality, we all die with an estate which is subject to the same probate laws that guide the wealthiest of estates. The bottom line is if you don’t have a valid will, the state will create one for you, and it’s highly likely that it doesn’t share your same interests, desires, and intent for your family and property. Dying intestate with even a small estate can create tremendous and unnecessary hardships – financial and emotional – on the people you want to protect.
A will is the most basic and the most important tool that forms the foundation of any sized estate. While some larger estates may require more complex tools and techniques to minimize taxes and maximize the transfer of assets, a will is a fairly simple, but legally binding, document that can be drafted from templates that are available on the internet, or written by an attorney at very little expense. Either way, you only need to follow a few very simple steps to get your house in order:
Make a list of all assets, including cash, real estate, bank accounts, life insurance, retirement plans, investment accounts, cars, jewelry, family heirlooms, and any other property that holds any value for you or your family. Do the same for your debts. Your will is an important source of information your family and friends will need to find and sort through your important documents, so it should include the specific location of your insurance policies, legal documents, bank accounts, safe deposit keys, and details on creditors.
Think of the Children
If you have dependent children the biggest decision you have to make is who will become their guardian should both you and your spouse die. The guardian will be responsible for their care until throughout their dependency, and they will also manage the assets that you leave for your children based on your instructions. In addition to naming a guardian, your specific guidelines on how you would want your children to be raised are communicated down to the selection of schools, religious upbringing, and parental control to be exercised by the guardian.
Allocate your Assets
For smaller estates, this should be fairly straightforward. In a typical family situation, most of the property is designated to the surviving spouse and then to the children. If there are extended or second family considerations, they need to be specified. Any special bequests should be itemized. Generally, assets such as life insurance and retirement plans that pass by beneficiary designation, although careful attention needs to be given to how the designations are stated to ensure that there is a succession of beneficiaries in the event the primary and secondary beneficiaries also die.
Select an Executor
This is the person whom you designate to oversee the provisions of your will including distributing the assets, paying debts and estate settlement fees. In most wills, the spouses choose each other as executors; however, it is important to name a back-up in the event your initial choice is unable or unwilling to take the helm. Obviously, the person you select needs to have the compete trust of you and your family.
Make it Legal
In many states, a simple will only need to have witnessed signatures to be considered legally binding. Regardless, with so much at stake, and with the costs relatively minor, it would be important to have your will reviewed or, better yet, written by an attorney. Simple wills can cost as little as $300, and if your estate is bigger or more complex, the $200 and hour price of an attorney is worth the investment. You can reduce the cost of an attorney by investing your time up front to take inventory, organize your documents, and think through your desires.
Don’t Set it and forget it
As much as you might want to get the issue of a will behind you, you don’t want to make the same mistake that many others make by letting your will grow stale. Things change – family status, assets, and even your wishes can evolve over time and, if your will isn’t current, it may no longer serve your purposes. Wills should be reviewed after any major live event or every four or five years. It is also vitally important to seek the guidance of an attorney when making changes as a small mistake could render your will invalid.
*This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2020 Advisor Websites.