It’s estimated that half of the people who die in the U.S. every year don’t have a will. Making sure you have a valid and detailed will as part of your estate plan may help your family find financial security after your death. A will could also alleviate potential legal and financial problems that families can sometimes face during their time of grief.
Here are some factors to think about when writing your will in an effort to help your loved ones be as financially secure as possible.
Consider having an attorney write your will
There are websites or templates that can help you create a will for as little as $20. According to AARP, using an attorney to write a will can cost anywhere from $100 to $1,000, depending on where you live and the complexity of your situation, but it may be worth the cost.
You don’t have to use an attorney to create a will, but it is often recommended, since they can verify important details, which may help your heirs go through probate with fewer issues. Attorneys can assist with your overall estate planning, including setting up a trust to potentially help reduce estate taxes, which may make it easier for your family to settle your affairs.
If you choose to create your own will, there are many do-it-yourself kits and templates available, but make sure they meet your state’s requirements and have been signed and witnessed correctly.
Appoint your executor carefully
The executor of your will is responsible for ensuring the instructions you leave are carried out accurately and in good faith. While many choose to name their spouse, adult child, or a trusted friend or relative as executor, it may be beneficial to appoint an attorney or accountant instead.
This not only relieves some of the burdens on your grieving family, but means a professional may also offer advice on how to manage your money and assets, working to ensure that as much of your estate is available to your heirs as possible. While the best tax software can often be very useful, it’s possible that your estate will be complicated enough that you need a professional to help you.
Before being appointed, your executor should understand the duties of the role, including distributing property and dealing with any debt settlement that may be required.
Detail your assets and debts
When creating a will, it’s helpful to know exactly what your estate contains. Making a list of your income, investments, property, and debts can provide your lawyer or financial planners with a detailed view of your situation and allow them to offer tailored advice.
As you create your list, be sure to include assets like:
Checking and savings accounts
Life insurance policies
Stocks, bonds, and CDs
Valuable jewelry, furniture, and family heirlooms
Also list out your debts, such as:
Student, auto, or personal loans
Once you have a list of assets and debts, start to think about how much you’d like to leave specific people in your life. Remember that, in general, your executor will pay your outstanding debts first and then distribute the remaining assets per the directions you provide in your will.
Be specific about your beneficiaries
Once you have an idea of what your estate contains and what will be left over after debts are paid, begin to designate who should receive what, and name your beneficiaries. Consider using the following tools to help you provide clarity to your loved ones:
Letter of instruction
If you want to include detailed directives, create a letter of instruction that you keep with your will to offer further clarification. While not legally binding in some states, this letter allows you to go into detail about which items you want to leave to each person.
Be sure to include a list of all of your financial details, including pension plans, insurance policies, and essential documents like your Social Security card, birth certificate, and marriage or divorce documents.
Also include account numbers and password information for the various websites you use. This can save your executor time and frustration, and potentially save on accountant or attorney fees since those professionals tend to charge by the hour, and your family won't have to pay for them to dig for or request information.
A trust can be a great way to ensure that your estate is dispersed as you intended, as well as potentially protect some of your assets from creditors or estate taxes. Discuss setting up a trust with your attorney if you have complicated bequests, minor children not old enough to inherit, or dependents who receive public benefits like Medicaid. There are many different types of trusts with many different requirements, so consult a financial planner and attorney to see if a trust might be suitable for your situation.
Designate a guardian for your children
One of the most important things you can do when writing a will, is name a guardian to care for your children after your death. If you don’t name a guardian, and your spouse or co-parent has also died or is unable to parent, the state will appoint a guardian, and it may not be someone you would choose.
If you’ve created a trust to hold assets for your children, you’ll need to appoint a trustee to watch over the funds and assist your children with their inheritance. The guardian and trustee can be the same person, or you can nominate two different people or even have multiple trustees. There are a variety of options, so be sure to discuss your plans as a family and with your attorney.
Signatures and self-proving affidavits
Making sure that your will has valid signatures is important. It can help avoid costly probate issues and reduce the likelihood that someone will challenge your will. Most states require that you sign your will in the presence of two witnesses, who should be neutral third parties and not named as beneficiaries in the will.
If allowed in your state, self-proving affidavits or language can be included in your will so that your witnesses don’t have to testify in probate court after you have died, which might help speed up the process. Self-proved statements are a sworn statement notarized with two witnesses and attached to a will.
Keep your estate plan up to date
You may never need to update your will or estate planning documents, but it’s a good idea to check them regularly. Significant life events like marriage, divorce, the birth of a child, or children reaching adulthood might necessitate a change to your arrangements, so occasionally review it for accuracy. It’s important to remember that the only version of your will that matters is the most current, properly executed one in existence at the time of your death.
A good general rule of thumb is to review your will every two to three years, but you might find it easier to set aside one day a year to review and update all of the documents in your estate plan.
While you’re updating your will, double check that you’ve also updated your beneficiary designations on your bank and retirement accounts, life insurance policies, and any other required beneficiary designation. Designated beneficiaries on certain types of financial accounts supersede any instructions in your will, so make sure those are up to date to avoid confusion and that your assets are going to the correct people.
The easiest way to keep your family financially secure after your passing is to have an up-to-date will and estate planning documents with clear direction. The clearer your final wishes, the easier it will be for your family to guarantee they are followed.
Once you’ve gotten your financial estate plans in order, start looking at the sentimental items or family heirlooms and consider including bequeathing instructions for those along with your estate planning documents.
Writing your will is not fun, but it’s an essential part of ensuring that your loved ones are cared for when you’re gone.
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