When you think about a will, does it conjure up images of rocking chairs and bingo games at the senior center? A will might sound like something your parents or grandparents need, but the truth is, none of us know what the future holds. That’s why, no matter your age, having a will is important.
If you don’t already have one, don’t worry—you’re not alone. A 2019 survey by Caring.com found that while 76% of people agree that having a will or some type of estate plan is important, only 40% actually have one. While you probably have plenty of time before your will would go into effect, creating a will now can help give you peace of mind, no matter what happens later. Here’s what you need to know.
What is a will?
Simply put, a will is a legal document that lays out your final wishes, leaving instructions on how your property should be distributed after you die. You can also use a will to:
- Name someone to carry out your wishes
- Name who will care for your minor children
- Decide how to pay for debts and taxes
- Provide for pets
Creating a will is important because it lets everyone know how you want things handled after you die. Without those instructions, someone else will likely step in and decide who gets what, and you may not like what they choose.
When you die intestate—that is, without a will—the state oversees how your assets are distributed. A judge or state official will, in many instances, use a set formula to divvy things up. That can result in part of your estate going to your spouse and part of it going to your children, if any. In many instances, it may result in the sale of assets such as your home or other physical assets. This can make things harder for a surviving spouse who was counting on those things to help maintain his or her standard of living.
The situation can get even more complicated if you have children who are minors. If your children are under the age of 18, the court may appoint a representative to oversee their finances.
Dying without a will can also be expensive. Your assets will likely go into probate, a complicated and costly legal process. Fees vary by state but, on average, attorney and court fees take 3% to 8% of an estate’s value. On top of that, your family may be forced to spend months or even years wrestling with the courts over who should get what—definitely not something you wanted to put them through.
Who needs a will?
A lot of people think they don’t have enough assets to bother with a will, but estate planning is important even if you don’t have a sprawling estate. You definitely need a will if you:
- Are married: Even though it’s likely your spouse will inherit your assets if you die without a will, you don’t want to leave it up to chance. Also, if you want someone other than your spouse to inherit your things, you need to make that clear.
- Have children: If you have children, it’s extremely important to designate who will take care of them after you’re gone and who will manage their assets. Just like with a spouse, it’s likely your children will inherit a portion of your assets even if you die intestate. A will is your chance to say how much of a share they get.
- Have a nest egg: As a rule of thumb, if you have assets over $100,000, you need to decide how they’ll be distributed when you die.
What doesn’t a will cover?
While wills are a simple way to make your wishes known after you’re gone, they can’t be used for everything. Here are some assets you typically can’t leave in a will:
- Anything jointly owned with someone else: This includes things like a house, a car, bank accounts, and investment accounts.
- Assets that have a beneficiary: Life insurance policies can’t be included because they have beneficiaries. The same goes for certain bank accounts and financial accounts, like IRAs, that designate a beneficiary in case of death.
- Any property that is held in a trust
- Any stocks or bonds that are set to transfer to someone else when you die
- Any digital assets: This includes valuable information on digital devices like computers and smartphones. This includes social media, emails, photo and image sharing, financial assets, brokerage accounts, and even cryptocurrency.
If you have any of these assets, you should consider talking to an estate planning expert who can help you get started.
How do you make a will?
Making a will is easier than you think. While it’s always wise to consult with an attorney, you could start by putting together a list of your assets. This includes the contents of safe deposit boxes, family heirlooms, and anything else you want to leave to a particular person or organization. If you have personal property that you’d like to leave to specific people, create a list for those items so they can be included in your will.
In terms of creating the actual legal document, there are several ways you may want to explore:
- DIY route: This can be a simple and cost-effective way to create a basic will, and there are thousands of online tools to help you.
- Go to an attorney: If you need additional help in understanding your options or have any complex considerations, like a second marriage, children from a previous relationship, or dependent family members with special needs, it’s worth spending the money to consult with an experienced estate planning attorney to make sure that your documents are executed properly. The thing to keep in mind about a will is that, by the time you find out there are problems with it, it’s usually too late. In fact, even if you choose to make the will yourself, it’s probably smart to have a professional look it over to avoid problems later on.
Once you’ve created a will, be sure to review it regularly. Marriage, divorce, a new job, a new home, and a new baby are all life events that can change how you want to distribute your assets. A good rule of thumb is to review and update it as needed every two or three years, or after major life changes. It’s also smart to check from time to time to see if your state has updated any laws that could impact your will.
Unexpected peace of mind
No one’s future is guaranteed. Everything can change in the blink of an eye. That’s where life insurance can make all the difference. Just like a will, life insurance provides peace of mind that the people who matter most to you are protected if something unexpected happens to you. In fact, 65% of people with life insurance say they are able enjoy life more knowing their loved ones are financially protected. Get help finding the right coverage to protect them here.