More than any other document, a will puts you in touch with your mortality. That probably explains why, according to a survey by Lawyers.com, 65 percent of adults in the U.S. don’t have a will. However, if you care about what happens to your property after you die – and more importantly, if you care about the people impacted by your death – you need a will.
It’s true that without a will some assets will end up where you want them. For example, if you’re married, property titled in both of your names will go to the surviving spouse upon the other’s death whether you have a will or not. Likewise, assets with proper beneficiary designations will go to whomever you designate. (See also, Will Your Beneficiaries Benefit as You Intend?)
However, for everything else—property held in your name only, including a closely-held business; assets without a beneficiary designated; and items without the option of specifying the owner or beneficiary (artwork, jewelry, coin collections, your grand champion Chihuahua)—if you die without a will, your state’s “intestate” laws will determine who gets what.
Your state’s plan for your stuff
While intestate laws vary, in most states, if you’re married with no children and die without a will, your property will transfer to your spouse. That may not sound so bad, but consider this: What if you and your spouse died in the same accident, and neither of you had a will? In some states, if one of you lived a bit longer than the other, the parents of the one who lived the longest would get all of your property. Would that be your preference?
Or consider this: In some states, if you leave behind a spouse and a child, half of your estate would go to your spouse and half to your child. If the child were a minor, a court would have the authority to name a guardian to manage that child’s portion of your estate. At age 18 or 21, depending on your state, the child would receive his or her portion of the estate with no restrictions. Is that what you would want?
Your state has strict guidelines as to which relatives are entitled to your assets, and chances are good that its plan is not your intended plan. If you have the desire to leave anything to your church or other non-profits, don’t go with your state’s plan. You won’t find any charities on its distribution list.
Typically, a married couple will opt for mirror wills. If you die, everything goes to your spouse; if he/she dies, everything goes to you.
The kid factor
If you’re married with kids, it’s all the more important for each of you to have a will. That’s because this is the document in which you will name a legal guardian for your kids in the event of both of your deaths.
The guardian may also be in charge of managing any money your children would receive upon reaching your state’s age of adulthood. Or, if money management isn’t their strength, you could name someone else or even a financial institution to handle the money management responsibilities.
Of course, talk to your proposed guardians before naming them in your will to make sure they’re comfortable with that responsibility.
Before having kids, you can save on the cost of updating your will by naming a guardian for “future children.”
Do you need an attorney?
There are inexpensive software packages and online services you could use to prepare a will. However, this document is too important to leave anything to chance, so use an attorney. Depending on the complexity of your situation and the attorney you choose, you’ll probably end up paying between $500 and $2,000.
That price should get you a package of documents including a will, power of attorney documents for healthcare and finances (where you name someone to make decisions for you if you are incapacitated), a living will (where you specify how much care you would want to receive in the event of serious injury), and a HIPAA form (specifying who could receive medical information about you if you were hospitalized). To find a good estate-planning attorney, ask friends for referrals.
I believe every adult – married or single, with kids or without kids – should have a will. As your estate grows in size or complexity, and especially if have kids from a previous marriage or own a business, you may want to consider a trust.
Do you have a will? If not, why not?
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I agree. This is critical, especially if you have kids. I would also add that you should make sure to ask questions and dont hesitate to add special information to your will and/or trust. For instance, we setup who would take care of our kids, but later on added more specific information for how to invest and pay for our kids education and care if something were to happen. In my opinion the more information you provide, the better, and the better you’ll feel too!
Great additional points. Some people include a “letter of instruction,” which you can learn more about here: https://soundmindinvesting.com/articles/view/final-instructions