You work hard your entire life to earn money, create a family, and buy all the things you've always desired to live your version of the American Dream. But what happens to all your money and your stuff -- and don't forget your minor children and pets -- when you die? A will is the legal document that dictates how your possessions will be distributed -- and who will take care of the living creatures you're responsible for -- when you're no longer around.
Without a will, you'll be "intestate" -- which means you'll have no say in what happens once you die. Every state has laws that govern the distribution of a person's estate if they die without a will, and it's doubtful that a general set of laws will be in line with your personal desires. Even so, in a study by Caring.com, 40% of Americans admitted they don't have a will, even though 70% of respondents thought it's important to have one.
If you don't have a will, ask yourself why you don't. Maybe you think you don't need one. But here's a surprise: More than likely you do. If you're procrastinating on taking this crucial estate planning step, here are some things to contemplate.
Image source: Getty Images.
Who needs a will?
Almost everyone needs a will, but you definitely should have one if:
- You're married.
- You have minor children.
- You own real estate.
- You have money in the bank or investments in the stock market.
- You have "stuff," like cars, furniture, jewelry, paintings, TVs, computers, etc. (And who doesn't?)
When it comes to your money and your possessions, you probably have desires as to who gets what. You may want to help pay for the education of some younger relatives or give specific pieces of jewelry to people who you know will appreciate them.
When it comes to your children who aren't yet adults, you probably have very definite thoughts about who should have guardianship if you die.
With a will, you have control. Otherwise, the state in which you live will divvy things up according to its laws, and your wishes will be kaput.
Big little surprises: Things you haven't thought of
If you don't fit any of the bullet points above -- except maybe having stuff, of course -- you might think you don't need a will. You might recognize that you could die any day, but don't think there will be anything to sort after you're gone. But that's not true.
After you die, there could be surprise money coming to you -- without a will, what will happen to those funds? Your estate could receive cash from returned security deposits, medical reimbursements, or refunds from the phone or cable company. Worse yet, what happens if you die in a car accident and there's an insurance settlement? Who'll receive those funds, which could be substantial?
What about your beloved pets? You don't want Fluffy to end up with Aunt Carol, who's allergic to cats and doesn't really like them. And what about your car? That's an asset that has to go somewhere. If a vehicle is your only asset, you could get around a will by naming a TOD (transfer on death) beneficiary on your registration, in the states that allow this, and then your vehicle would avoid probate.
Do you use social media? What will happen to your accounts? Do you want your posts to eternally exist or be sent to social media heaven? Each organization, like Facebook, Instagram, and Twitter, has specific rules governing options for when a user dies, and those could include turning the page into a memorial account or a legacy account, or deactivating the account entirely. If you don't state what you want in your will, your accounts may remain open pages forever, with no one aware you wanted to take down that photo of yourself learning to polka.
You might not need one if...
In certain situations, it's possible you don't need a will. If you're young, single, and have no children, you may slide by without one, leaving a minimal headache for your survivors. If you have no financial assets and are carrying debt, you would have no assets to protect, after all. So unless you care about what happens to your stuff, you could make a small case against having one.
There's another situation where you may be able to go without one: if all the assets you care about can be transferred via beneficiary designations. This would include things like brokerage accounts and retirement funds. Make sure you fill out the proper forms and keep them up to date (you don't want an ex-spouse still on the form after you've parted ways) and the assets will pass to whomever you designate, whether or not you have a will. Also, if you have your money in joint checking accounts, the account will pass to the surviving person on the account, regardless of what their relationship is to you.
Better safe than sorry
Wills are associated with death, and most people don't like to think about either. This may explain why high-profile celebrities with massive estates -- like Picasso, Bob Marley, Prince, Aretha Franklin, and even Abraham Lincoln -- died without one. Your estate might not be as complicated as any of theirs, but even if it's not, a will makes sense.
You can create one by finding an estate planning attorney. You can ask friends, family, your accountant, or even other lawyers for referrals. And if you're resourceful, you can create a will yourself.
You've worked hard to build up your estate, a fancy word that means the things you own. Make sure that when your time's up, the things that matter to you are distributed according to your wishes. Where there's a will there's a way -- of having your desires fulfilled.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Barbara Eisner Bayer owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook and Twitter. The Motley Fool has a disclosure policy.