hile no one wants to think about their own mortality, what happens to our assets when we die is a big deal. So much so that when family members don’t have a legal document that states how they want their property, money, and other items to be distributed, it can lead to awkward family gatherings and even make for some nasty family fights. No one wants to see their family take sides and fight with one another over these important things, which is why society saw fit to create a legally binding document that would take care of this pesky problem.
But what exactly does a will do, and how do you know if you need one? It’s a good thing you asked because in this article we’re going to delve into:
- What a will is
- Who typically needs to have a will
- How to set up a will
Why Do We Need Wills?
What is a will?
A will is simply a document that allows you to communicate what will happen to your money and property after your death. Typically people work with an attorney to create a will to ensure that the wording is correct and precise enough so that no one can misunderstand what is in the document. Wills are pretty simple (as far as legal documents are concerned) and are composed of just a few parts:
- Executor. As scary as that title sounds, an executor is just someone that you have appointed to be the point person that carries out the will’s contents. Typically this is someone you would trust, and whose judgment you value highly. This person is responsible for reading the will and ensuring that all the provisions are followed according to your wishes.
- Beneficiaries. These are the people (or accounts) that will be receiving the benefits of the contents of the will. The named people will be inheriting the assets from the deceased person.
- Instructions. The will also lays out the instructions for the how and when the beneficiaries will inherit their assets. Sometimes beneficiaries are not people-- they can be trust accounts or even estates that will hold money or other assets until minor children come of age, for example.
- Guardians. If there are minor children involved, a will can also list who will be left in charge to manage the children and their assets.
Those are the basic components of a will, where you will decide who gets what upon your death. Before drawing up your will, it is helpful to understand that there are certain assets that allow you list a beneficiary-- such as IRAs and investments-- which are not necessary to put in your will. However, there are assets that do not allow a beneficiary to be named except in a will-- including bank accounts and real estate. So if you have the opportunity to name a beneficiary, it might be in your best interest to make sure those are always up to date-- that way you won’t have to worry about including it in a will.
Is a trust an option?
When you start talking about wills, trusts often come up as well. A trust is a document that goes into effect as soon as you create it-- while wills do not go into effect until your death. A trust is typically used to distribute property or money to beneficiaries during their lifetimes. A person or a bank-- called a trustee in this arrangement-- will execute the wishes of the person who set up the trust.
A trust is also not required to go through the probate court, unlike a will. Every will that is executed must pass through this court in order to ensure its validity, and that the wishes of the deceased are followed. This is a more time consuming process, and creates additional fees from the court and attorneys. Trusts are not required to go through this process, and thus can be less costly and private as opposed to public.
Who Might Need a Will?
Now that we know what a will is, it’s time to talk about whether or not you might need one. There are some people who think everyone should have a will regardless, because you never know when you’re going to go. But is that necessarily true? There are a couple of important components to consider when mulling over whether or not to write a will.
Marriage: Do You Need a Will When You Tie the Knot?
If you’re married, it’s probably a good idea to draft up a will. You and your spouse are legally tied together, so if something should happen to one of you, it’s probably in your best interest to have a document that states what happens to property and assets after death. Typically spouses are considered the beneficiary of assets after a death, but this might not be true for all items. To be completely sure, consider getting a will.
If there is anyone else besides your spouse who you would rather list as your beneficiary (children or a sibling perhaps) then a will is the place to do it. Although, we’re not so sure how that may go over with your spouse, but it does happen.
Kids: Do You Need a Will When You Start a Family?
Having kids makes you think about a lot of things differently-- especially what will happen to them after your death. You want to ensure they have access to your assets and property after your death, so it’s a good idea to have a will. If you die intestate, or without a will, your assets should by default to your spouse, and if they pass away, to your children. But you might not want to take that for granted, so best to get a will drawn up laying out your beneficiaries. On the other hand, if you do not want your children to inherit assets and property, it is extremely important to make your wishes known.
A will is important to have especially if you have minor children under the age of 18, who can be beneficiaries but not allowed to inherit just yet. Your will is going to list the executor and a guardian as well, and these people (or institutions) will be responsible for distributing assets to your children when they are of age.
Assets
If you have a positive net worth, especially over the amount of $100,000, then it is crucial to have a will or a trust in place. If you have that kind of worth, property, or other valuables, it will make it much easier on your family to have a plan in place either while you are alive to distribute them, or after your death so there are no misunderstandings. Family fights can start for much less, but imagine the squabbles over a house or large amount of money that can arise.
Who doesn’t need a will?
If you’re young, single, and have no children or remarkable assets, then you can probably get away with not having a will. If you have no property, positive net worth, or valuables, then there can be nothing to distribute after your death. It might sound a little harsh, but your beanie baby collection does not count as an asset, however dear it might be to you, and however much you’d like to see it looked after. If anything should change your situation-- getting married, having kids, inheriting money or property-- then it is probably a good idea to start your will.
How Do I Get a Will?
Trust the professionals
Even though you might be saying to yourself, hey that sounds simple, I can create a document that lays out my wishes-- don’t. It’s not a good idea to write a will by yourself, instead choose to seek the advice of estate planners or attorneys who specialize in wills, trusts, and estate management. They know much more than you about this process, and will be sure to ask you all the right questions to draw up a will that will be clear and concise-- leaving no room for confusion. They will also help you arrange all your assets in the way you would like to see them distributed, so nothing is left to chance.
Online resources
There are also many online programs such as Legal Zoom where you can create a legal will (and many other documents) in 20 minutes or so. We’re not sure how thorough this process is, or where you to turn to with questions, so you may want to do some research on this before embarking on this route. If you know someone who did make a will this way, best to see how they’d rate the process and whether or not they would recommend it as well.
While it sounds scary and final, having a will is a good thing to do for your family-- it ensures your wishes are followed and you choose who will be your beneficiaries. If it’s not the time for you to have a will yet, that’s okay too-- just make sure you do think about it when the time comes.
