Who needs a will?
Every adult can benefit from having a will, no matter what their age… but AARP surveys show that 2 of 5 Americans over 45 don’t have a will. (Yikes!) In most states, you can write a will as soon as you’re 18 years old. A will helps your family understand your wishes and enables a more defined legal process following your death.
Let’s just get this out there: If you’re in your 20s or 30s, why would you need a will? Well, life is unpredictable, and your belongings should be distributed as you wish if the unthinkable happens. You may not have acquired many assets at this point, but you may have debt that needs to come out of your estate. Learn more about what happens when you owe more than you own.
Why have a will?
Making a will is one of the smartest things you can do for yourself and your family. It provides peace of mind as to what happens to your property and children when you die. Many people want to avoid the topic of their mortality, but think of it this way: Don’t you want your estate to pass on to the people and organizations you care about? Wouldn’t you feel better knowing that your most caring sibling or friend would raise your kids if you died? Here are a few other good reasons everyone should have a will:
- You determine the executor of your estate. You get to decide who will follow through on your wishes. Choose an executor—and backup executors—wisely. He or she should be someone you trust with handling the matters of your estate. If they’re organized, too, all the better!
- Avoid lengthy probate and legal challenges. Having a will made in the guidance of an attorney can help your family after you die by creating clear legal documentation. A will may allow your estate to be settled more quickly, easing the burden on your family and freeing up your money more quickly. It may also avoid or settle legal challenges brought to your estate by other parties, such as family members.
- Minimize your estate taxes. By designating who and where your assets go after you die, you may be able to minimize the estate taxes that apply to your heirs. With gifts of approximately $11,000 exempt from estate taxes, you can provide your beneficiaries with amounts they can enjoy sans the tax man. (We can’t actually give you tax advice, so be sure to consult your tax adviser.)
- Things change. Your will can change. When life events happen, your will can and should be reviewed to make sure it still reflects your wishes. In cases of divorce, the birth of children, deaths in the family, and disagreements with heirs, you can change your will to name new beneficiaries. This ensures that an estranged relative doesn’t receive the inheritance you left by default. A will provides clear proof of those individuals who are close to you and whom you wish to inherit. It is truly a living document you can change at any time.
Without a will
Dying without a will can not only delay the transfer of any remaining assets to family members, it leaves decisions up to a judge and appointed administrator. Dying without a will is called intestate. When this happens, the administrator uses state laws to determine who inherits what and where any minor children will live. That administrator will be bound by the letter of the law rather than the wishes that you thought about but never wrote down. And the probate process can take up to three years.
What a will does
You can’t have your wishes carried out if you don’t document them! A will provides a legal document that spells out your choice of heirs and the executor of your will. The executor is someone you trust to see that your will gets carried out. This could be an adult child, trusted family friend, or other trusted relative. Your will should state how assets should be divided and who will care for your children if they are minors.
How to write a will
In order to understand the complexities and ensure its validity, most people turn to an attorney for help in drawing up a will. There are several types of wills that lawyers can explain to you. A basic will must include beneficiaries, guardians, and an executor. Others turn to online legal resources for writing their will, which may cost less than using an attorney.
What do you need to write a will? Here are a few items you’ll want to review, discuss, and/or gather before you get started.
- Assets and Debts — It’s a good idea to make a current list of your assets and debts so you know what you have and how it can be distributed. Assets include banking accounts as well as retirement accounts, CDs, stocks, and life insurance policies, as well as property like homes, cars, boats, etc. Debts include credit cards, loans, overdue taxes, and so on.
- Beneficiaries — Who do you want to inherit your assets? Make a list of the people, their contact information and their birthdates. For your minor children, you may also want to set up a trust in case of your death. This can be reflected in your will.
- Executor — Who will handle your estate? Choose someone worthy of this responsibility you trust and know to be organized. Have your first and second choices’ current contact information handy.
- Guardians — When you have minor children, you can name guardians who will take care of the kids in case something happens to both parents.
- Other Legal Documents — Existing wills, divorce papers, prenuptial agreements, and other documents may come into play when creating your will. Gather them, just in case.
Storing your will
When complete, it’s important to store your will in a place accessible to you and your heirs. This could be a fire safe at home or a locked file cabinet. Be sure to inform your spouse and heirs where the will and keys to the document are kept. Your lawyer typically keeps a signed copy of your will, as well.
You might think that a safe deposit box is a natural place to keep your will. After all, that’s where you keep a lot of your important papers, right? The problem: Without proof that he or she is the executor, your named executor can’t access the safe deposit box. And the proof that he or she is the executor is, well, in the safe deposit box. (Yep, it’s a classic chicken and egg situation!) There are legal workarounds, but not having ready access to your will may slow down the settling of your estate and maybe even cost your family some coin. (So think twice before you stash your will in your safe deposit box.)
Thinking about your mortality or about losing a loved one doesn’t have to be scary. It may actually be calming for you to know that you have plans in place for your estate. Having a will can provide that serenity.