A will is one of the most important documents you’ll ever create in your lifetime. Your will can clearly state who will be guardian of your minor children, who will inherit your assets, when they will inherit your assets, and any conditions that must be met for them to receive your assets. Yet, according to a legal services website RocketLawyer.com, almost 50 percent of Americans do not have a will.
Your loved ones will likely have to hire an attorney and incur delays to determine who will receive your assets.
If you die without a valid will, the court does not have your instructions to follow, and it has no way of knowing how you may have wanted to distribute your assets. The state where you lived steps in and makes the decisions for you, according to the distribution schedule set forth in its intestacy statutes. The state’s decisions may or may not conform to your wishes, or do what is best for the people closest to you. Your loved ones will likely have to hire an attorney and incur delays to determine who will receive your assets.
Common misconceptions
My assets are so small that a will is not necessary.
You are generally worth more than you think. Even if some possessions do not hold great monetary value, they could hold an enormous amount of sentimental value—and that’s something you can’t put a price on. Failing to indicate who receives these treasures in your will can cause friction among family members that lasts for decades.
When I die, my spouse will get all of my assets.
Maybe, and maybe not. Any assets held jointly with right of survivorship automatically pass to the joint owner. Assets with a beneficiary designation, such as IRAs, life insurance, and annuities, pass as stated on the beneficiary form. What happens when your surviving spouse dies? What happens if your beneficiary form is outdated? Will your children receive their share at too early an age? Does your spouse have the financial skill to manage the family wealth?
I can create a will on my own and save the legal costs.
“Do-it-yourself” wills often do not contain all of the necessary components as required by state law. Anyone who might benefit from an invalidation of your will can contest it, and if the courts decide in his or her favor, your estate may have to pay for all legal costs. The few dollars you save now can cost your loved ones thousands of dollars later.
I don’t want my final wishes to be set in stone. I’ll create a will later in my life.
The terms of a will can change as often as needed. Legal experts agree that you should reexamine your will periodically to make sure it’s up-to-date. A will should receive a “checkup” whenever there is a substantial change in your life.
How to create a will
Drafting a will is difficult and is not an endeavor you want to tackle single-handedly. It’s important that you call on the services of an estate-planning lawyer. A lawyer might help you:
- Determine what type of will you need
- Make the right decisions as to how your assets should pass
- Change the terms of an existing will, if appropriate
- Save on estate taxes
- Take advantage of estate planning opportunities people often overlook
Life insurance and wills
How does life insurance fit into the picture? Life insurance is a vehicle you can use to ensure your estate has the cash needed to pay expenses at your death, such as funeral costs, debts, and estate taxes. Without liquid assets, the estate may be forced to sell assets—securities may have to be sold in a down market and other assets may have to be liquidated at a discount. In most instances, life insurance proceeds are paid income tax-free to your beneficiaries. If desired, life insurance can be owned by a trust or a third party and also not be subject to estate taxes.
Don’t wait until it’s too late
Creating a will forces each of us to come face-to-face with our own mortality—and dealing with death is difficult. But it will be much more difficult for your loved ones if you don’t have a will. To ensure that your will is legally viable, seek the services of a qualified attorney to draft and refine it.
This educational third-party article is provided as a courtesy by C. Timothy Mahoney, Agent, (CA Ins. Lic. #OH54642) New York Life Insurance Company. To learn more about the information or topics discussed, please contact Tim Mahoney at 865-599-3271.
Neither New York Life nor its agents provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
1Yahoo! Finance, “Half of Americans with Kids Set to Die Without a Will,” May 6, 2012, Lisa Scherzer, The Exchange, http://finance.yahoo.com/blogs/the-exchange/half-americans-set-die-without-193140015.html.
About the Author: Tim Mahoney
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