About 50% of Americans don’t have a will.1 Without one, it’s likely that their money and property will take months to become available to heirs, or worse, may go to unintended people. Moreover, passing away without a will could mean heirs may not get as much money because of estate and inheritance taxes. Here are some convincing reasons to make sure you’re one of the people that leave a will.
What is a will?
The concept is simple. The New York State Courts’ website defines a Last Will and Testament as a “written statement of what a person wants done with their property after they die.”2 What makes up your estate? Your estate includes:
- Money in bank accounts
- Other financial assets – like life insurance and annuities
- Your home
- Your retirement plans and possessions
Writing a will before you die helps ensure that everything not controlled by a beneficiary designation will be divided according to your wishes. You can also name guardians for your children, make charitable donations, and leave property and money to individuals, which can be important where property is concerned.3
Can you legally write your own will?
Yes. “Do-it-yourself” wills can be found online or in office supply stores, but they are not recommended. Oftentimes they are designed only for the simplest and most modest estates. Without sufficient guidance and advice, you can make significant mistakes that may result in unnecessary delays, fees, expenses, and taxes. It’s wiser to hire an attorney, such as a trust and estate lawyer, who will be familiar with the latest state and federal laws and can file the paperwork correctly. Incorrect dates and information can greatly delay the settling of a will. Even removing a staple from the original can be a serious issue.4
Can a will speed up probate?
Yes, significantly. After the death certificate has been filed, your estate must go through a court process called “probate.” The probate court approves the will and hears any legal challenges, claims from creditors, etc. If you have made a will, you’ll have listed your assets and set out your wishes, solving many issues ahead of time. Court time can be minimized – in some cases to as little as a few weeks. Probate times vary from state to state, so ask your lawyer what your heirs should expect.
What if you die without a will?
This is called dying “intestate.” State laws will then determine what happens to your assets. There may be unintended consequences when this happens. Your estate may be difficult to divide and there may be expenses beyond the funeral: filing fees, costs of winding up your affairs, appraisal fees, brokerage fees, and taxes. Without a will, if you had wanted your money or property to go to a favorite person or institution, they won’t see any, unless you have named them as a beneficiary in accounts or insurance policies that are controlled by beneficiary designations. An estate with no will is also easier to challenge, so people you may want to exclude can make a claim and cause probate delays.5
How does the state then decide who gets your money?
With no will to tell it otherwise, the state will go by what is known as a default scheme to distribute your assets. The state will follow guidelines such as positions in the family – spouse first, children next, etc., and distribute assets based upon formulas and percentages. If, in the past, you chose beneficiaries for retirement account funds, insurance policies, etc., these people would take priority. Any business owned by your estate might have to be sold. Also, if you have children from previous marriages, the state may not split the assets in the way you would have liked.6 After taxes and debts, if you have no relatives or named beneficiaries, the state keeps everything.
What do “living will,” “healthcare directive,” and “durable power of attorney” mean?
Everyone over the age of 18 should have these documents. The healthcare directive sets out who has responsibility over your health care if you’re no longer capable of making decisions. The living will provides for life-sustaining decisions. For example, how long would you want to stay on life support? A durable power of attorney lets you name a person or organization to make financial decisions on your behalf.9 You can find forms for a living will at hospitals, doctors’ offices, and online from the National Hospice and Palliative Care Organization. Attorneys will typically provide all of these forms for you, along with your will. Note that all these documents are generally state specific.
A legacy plan is better for everyone
Preparing a will is usually straightforward and reasonable in cost. Ignoring it can cost your heirs and compound their stress levels after you’re gone. A will can make sure your money goes to the people and places you intended. Consult a lawyer and a financial representative for help. You’ll feel good about it now, and your heirs will be grateful for your preparedness.