What You Need to Know About Writing a Will
As many as 40% of Americans over the age of 45 don't have a will. Don't fall into this statistic. It's imperative that you have a will to ensure that your wishes are carried out and your heirs avoid unnecessary hassles and costs after you're gone. Here's what you need to know before you get started.
What Is a Will?
A will is a legal document that declares how your estate will be divided after you pass away. It can also provide you and your family with the peace of mind in knowing that your property will go into the right hands. Writing a will may seem like a complicated, daunting process, but it may be easier and more affordable than you think. (See also: 6 Things I Learned About Money From Famous People's Wills)
What Happens If You Don't Have a Will?
If you don't have a will, your estate will be settled based on your state's laws. A judge will appoint an administrator to make decisions on your estate based on your state's probate laws. Their decisions may not be in line with what you would have wanted, which is why a valid will is so important.
Name an Executor of Estate
First, you will need to name an executor, who is the person who will manage your estate and execute your wishes. They will also deal with any outstanding debts and file your tax returns. Make sure to clearly specify in your will that your executor has the power to deal with any debts and related issues that are outlined in your will.
In most cases, the executor is a spouse, child, relative, close friend, attorney, or bank. You can also name joint executors, and may want to consider naming your attorney as one of the executors. Administering an estate is a complicated process, so you'll want to select an organized, trustworthy person for the position.
An attorney will charge to serve as your executor, which is usually 2%–4% of your estate's assets. If you are designating a friend or family member as executor, you want to be clear about whether they'll be receiving compensation. Serving as executor can be a long, daunting process, so it may be a good idea to compensate the executor. You will want to state very clearly in the will what type of compensation they can expect to receive.
Choose Beneficiaries and Guardians
It's imperative that you know what your assets are, so that you can assign them to the right people. Take note of all your assets, including bank accounts, investments, retirement accounts, property, jewelry, and anything else in your possession.
Your will specifies the beneficiaries for your assets, so you will need to decide who gets what. Very clearly state who will receive your assets, and make sure to also specify if someone in your family will receive nothing. If you do not mention that they are getting nothing, your will may be contested in court. You can also specify conditional gifts, which will be distributed if the beneficiary meets certain conditions.
Your will also names guardians for any minor children and dependents. While you don't need to get permission to name someone as a guardian for your children, you definitely will want to ask. When the time comes, they don't have to accept the responsibility, so make sure they are okay with it. It can be difficult to choose a guardian for your children, but you should carefully make this decision now because if you don't, a judge will make the choice later.
It's also a good idea to specify how your pets should be cared for. You may also want to leave money to whomever you designate as the new caretaker so that your pets can be well taken care of.
Review Beneficiary Designations
Certain accounts, such as retirement accounts, life insurance, and annuities won't pass through probate, so they don't need to be specified on the will. For these types of accounts, you will specify the beneficiaries on a document called a beneficiary designation.
Write a Letter of Instruction
A letter of instruction will be kept with your will and is a more informal write-up of which properties should be assigned to which beneficiary. It can also include instructions on paying any outstanding debts, account numbers, passwords, and other information that will help your executor settle your estate. You can also include instructions regarding your death and burial.
Choose a Witness
You will need to have at least one witness present when signing the will (some states require two or three witnesses). It is advised that you do not select a beneficiary or your attorney as your witness(es) as this can potentially create a conflict of interest. Some states also require that the will be notarized.
Choose a Safe Spot for Your Will
You should keep your will in a secure place, such as a fireproof safe in your home. Many people also have their attorney hold onto it for safekeeping. Make sure you let someone you trust know where the will is. You can also give signed copies to your attorney, executor, or a family member that you trust. However, the original signed will is usually required in order to avoid any unnecessary issues.
Updating Your Will
You can update your will whenever necessary. In most cases, a will is adjusted after major life events, such as marriage, divorce, the death of a beneficiary, or the addition of a new dependent. It's a good idea to revisit your will at least every five years to ensure nothing has changed. If there have been significant changes, or you have moved to another state, you may want to write a new will instead of simply updating the old one.
Do You Need a Lawyer?
Having an attorney to walk you through creating a will and testament can be invaluable. Writing a will is already a stressful, unusual process, and having a skilled professional on your side will ensure you have no questions at the end and that all of your assets are appropriately accounted for. They can also review your will, help prevent simple mistakes (like signing something in the wrong place, which can invalidate the will), and provide you with witnesses.
Every state also has different requirements, which can be difficult to keep up with on your own. Most websites that offer DIY wills aren't state-specific. An attorney will ensure that you meet the requirements of your state and that you don't make any unintended mistakes. Keep in mind that your will is determining where 100% of your assets will go, so it may not be something you want to deal with on your own.
Writing a Will On Your Own
On the other hand, if you have a very simple, straightforward financial situation, you may not need a lawyer. Many people choose to prepare their own will, which is why do-it-yourself will kits are so popular. Some online service providers, like LegalZoom, can walk you through the will and testament process, with complete customer support, all at an affordable price. You can also choose estate planning software, like the Quicken WillMaker, which will provide the legal documents you need to plan for your future.
How Much Does It Cost?
Drafting a will is not expensive, especially when you consider how important this document is. In most cases, it costs around $40–$100 to file a will on your own, and approximately $200–$2,000 to hire an attorney to do it for you (depending on the complexity of your finances).
Do you have other tips for writing a will? Please share your thoughts in the comments!
Disclaimer: The links and mentions on this site may be affiliate links. But they do not affect the actual opinions and recommendations of the authors.
Wise Bread is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.