According to one study, over 68% of Americans do not have a will. But that is changing because young adults are 63% more likely to have a will than they were pre-pandemic. Making a will is not the most exciting topic, and it forces you to face your mortality. But whether there’s a life-changing event or not, it’s highly recommended to put a plan in place for your home, bank accounts, and belongings if the worst were to happen. Here are ten things you need to know that you might not have considered.
1. What happens if you pass away without a will?
If you pass away without a will, you and your loved ones will not be in charge of how your assets get distributed. Dying intestate (i.e., without a will) means the state courts will decide who gets your belongings and who will become guardians of your children.
If you have a family member you are helping to support or an unmarried partner, you may not be able to pass your assets on to them. The laws in each state are different, but for the most part, your assets will be passed on to your closest blood relative, regardless of who you would have chosen.
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2. Some assets are distributed regardless of what your will says
It’s a good idea to check the beneficiary on your accounts every few years, especially during significant life changes such as getting married or divorced, having children, or buying a house.
3. You can set up a will for free, but beware of the limitations
If you search online, there are many free or low-cost templates you can download to make a will. But be aware that these forms will not necessarily comply with all the specifics of your state laws.
If your life and assets are more complex, it may be wise to enlist the help of an estate planning attorney in your area who is familiar with the local laws. They can also help you work through various scenarios you may not have thought of, such as how best to transfer title to a property or what to do if you’re in business with a partner.
4. There are other documents you should consider
Making a will is just one part of the estate planning process. There are often other legal documents you will want to have on hand and helpful instructions for your loved ones, especially if you are the one that mostly takes care of the finances.
One document you may want to consider is a living will. This is an advance healthcare directive that outlines your wishes should you be unable to make those decisions. For example, if you are on life support, it would be written down as a legal directive instead of forcing your spouse or loved one to make the difficult choice to end life-saving measures.
Another document to consider is the power of attorney. This grants a person or persons the ability to make medical, financial, or other decisions for you if you are incapacitated.
5. Name guardians for your children
If you are a parent, you will want to make sure you use your will to name guardians for your children. This can be a tough decision and probably requires a conversation with the would-be guardians. However, it is definitely in your best interest to have this written down and not left up to the state courts to decide.
6. Consider setting up a trust
If you want to pass money down to your kids but don’t want them to receive a massive windfall early, you can create a trust to hold one or more of your assets. You can then make your child the beneficiary of the trust.
This trust will hold the assets on behalf of its beneficiaries and is its own legal entity. When you set up the trust, you can plan how and when the assets are distributed. For example, the beneficiary could receive a certain percentage when they reach a certain age or a set amount each year.
7. If you own a business, make sure you include it in your estate plan
If you are a business owner, your business itself could be one of your most valuable assets (and one of the hardest to pass down).
For a small business owner, think about how much your business relies on you personally. If you were to pass away, how would the company keep running? Would you sell all of the business assets and close up shop? Or appoint a family member or colleague to take over? These are all questions that you should consider.
8. Name an executor of your will
The executor of your will is in charge of carrying out your final wishes as stated in the will. They will distribute your assets to your beneficiaries, pay your debts, and generally settle your accounts after you pass away.
When making the will, be sure to name an executor and possibly even a backup. This should be someone organized, reliable, and trustworthy as the job has a lot of responsibilities. Often the executor will be a spouse, adult child, or trusted friend.
9. Make sure to follow the rules to make it legal
State rules vary, but for the most part, there are a few key things you must do to make your will a legal document. Just writing it down on a piece of paper and signing your name is often not enough.
Once you write out your will, most states require that you sign it in your own handwriting in front of at least two witnesses, who will also need to sign your will. These witnesses cannot be your executor, guardians, or any beneficiaries in the will. Some ideas for your witnesses could be friends, neighbors, or co-workers.
10. Don’t forget to update your will periodically
Once you’ve finally made a will, you probably want to put it in a drawer and forget about it forever, but don’t! Life happens, and significant changes could mean that you need to re-evaluate your will. You should consider updating your will at least every five years or if you have a big life change.
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