Do you have a will? Sure, people are living longer these days, so why not put it off for a few more years? Think again. Improved longevity shouldn't have much of a bearing on when you prepare a will. Experts say almost everyone should have an estate plan, and it all starts with a will.
A will is arguably the most basic part of an estate plan, which also includes a financial power of attorney, a healthcare directive (also known as a medical power of attorney), and potentially a trust. As part of writing a will, the will's creator identifies an executor or personal representative of the estate who will be charged with managing the estate and wrapping up the decedent's affairs, which includes identifying and resolving all debts and filing his or her tax returns.
However, many people fail to create a will, often because they're afraid to face their own mortality. A number of people say they're too busy to sit down and draft a will, according to estate planning attorneys. "People spend their time and effort worrying about the now and not necessarily the what-ifs," says Karin Prangley, an estate planning lawyer with Krasnow Saunders in Chicago.
Dying without a will triggers intestacy laws, which means the state determines how a person's estate is distributed and how their assets are allocated. In other words, if you don't make a will, the state's law effectively does it for you. In most states, the estate is divided between the decedent's spouse and children, but not all states. There's a common misconception that people don't need a will if they just want their assets given to their spouse, says Elizabeth High, an estate planning lawyer with LeBlanc & Young in Portland, Maine.
For many families, a relative dying without a will causes significant strife, since a will names the legal guardians of the person's children. "The last thing you want to have if you die is a fight over who's going to raise your children," High says. She adds that family members are also likely to have clashing views about how the decedent wanted their money distributed.
Yet the majority of Americans do, in fact, die without a will, according to estate planners. And an alarming 50 percent of Americans with children don't have a will, according to a recent survey by RocketLawyer.com. "If you have children, it's absolutely time to put together an estate plan," says Brian Donnelly, an estate planning lawyer with Donnelly Ritigstein in Moorestown, N.J.
With so many intricacies to the law, U.S. News has identified five important things to keep in mind when preparing your will:
1. Don't make it yourself. Loads of websites offer programmed tools for do-it-yourself wills, but few people have a financial situation that's so simple they don't need a lawyer. A common issue with such websites is that they aren't state-specific. "The laws of particular states have nuances, and those often aren't picked up by an online program," says High. Also, a layperson probably isn't attuned to how elements like estate tax work.
Often, self-prepared wills aren't signed and finalized correctly. With these wills, Prangley frequently sees the executor or family members who are included as beneficiaries signed on as witnesses. "That does one of two things, depending your state: It either invalidates that witness and the entire will, or it may prevent that witness from receiving any benefit under the will," she says.
To avoid mistakes, reduce taxes, and potentially save your family money down the road, consult with an estate lawyer when preparing your will. "This is your whole life's worth, so why are you taking care of it entirely online or on your own?" says Donnelly.
2. Identify your assets. Before meeting with a lawyer, take a comprehensive inventory of your financial assets: bank accounts, credit cards, investments, retirement funds—the works. "If you don't know what your assets are, who gets them is irrelevant," Prangley says.