What Is a Will and Why Do I Need One?
No one likes to think about the fact that they’re going to die one day. That may be why so many Americans put off the task of making a will. A 2017 survey by AARP found that 60% of American adults — including 78% of millennials, 64% of Generation Xers, 58% of Baby Boomers, and even 19% of people aged 72 and older — did not have one.
Many people never bother to make a will because they think they don’t need one. For instance, in AARP’s survey, 29% of respondents said they didn’t have a will because they didn’t have enough assets to leave to anyone. Other people believe they don’t need a will because they have no children or other dependents. Or they assume that if you’re married, all your assets automatically go to your spouse.
But when you look at these assumptions closely, they don’t hold water. Even if your net worth is close to zero, you probably still have some items of value — financial or sentimental — that you’d like to leave to particular people. If you die intestate (without a will), your state’s laws will determine who gets those belongings. And depending on where you live, your legal heir might not be who you think it is.
If you want to make sure your treasured comic book collection goes to your long-time best friend and not to some cousin you never got along with, making a will through a company like Trust & Will is the only way to do it. And the good news is it’s not as expensive or time-consuming as you might think. Trust & Will gives you the ability to set up a will. in just 10 minutes.
What a Will Can Do
A will can answer many questions for your heirs. It explicitly lays out your wishes not just about your material goods, but also about who cares for your children and, in some cases, about what care you receive at the end of your life. A well-designed will can make things much easier on your family and friends after your death and even reduce their tax burden. Here’s what a will can do for you and your loved ones.
Distribute Your Assets
The main purpose of a will is to determine who gets all your assets after your death. Your assets include anything you have of financial value, such as:
- Your bank account
- Your home and other real estate
- Securities such as stocks and bonds
- Retirement accounts
- Your car
By making a will, you can decide which of your friends and family members receive specific assets. You can ensure your home goes to the person who’s most likely to want to live there, or leave enough money to your children to put them through college. You can also leave some share of your assets to charitable organizations that are important to you.
Just as importantly, your will can dictate who doesn’t get your assets. If you die without a will, your entire estate could end up going to an estranged spouse because you were never legally divorced, or to a sibling you haven’t seen in years. Leaving a will is the only way to make sure your assets go to the people who are closest to you emotionally, rather than closest by blood relationship.
Distribute Items With Sentimental Value
Even things with no particular monetary value can still have sentimental value to the people close to you. Examples include:
- Photo albums
- Musical instruments
- Family heirlooms
You can use your will to leave these special items to specific people you know will appreciate them. It’s a way to show them how much they mean to you and give them something to remember you by.
It also ensures your friends and family don’t get into arguments after you’re gone over who gets what. You may think your family and friends would never do this, but people who have lost a loved one sometimes express their grief in unexpected ways. Leaving specific instructions in your will reduces the risk that high emotions will lead to ugly behavior.
Establish Care for Children and Pets
If you have children, one of the most crucial functions of a will is to name a legal guardian for them. If you don’t do this, a court must decide who raises your children after your death. They could be left to the care of a relative they’ve never even met rather than a close family friend they know and trust. A will or other legal guardianship form is crucial for protecting your family.
In addition to a home and someone to care for them, your children will need someone to look after their finances until they’re old enough to do it themselves. This can be the same person who raises them or a separate person. If you think the person who will provide the best home for your kids isn’t equally well equipped to handle the money you leave to them, you can name a separate “guardian of the estate” for this purpose.
If you also have “children” of the furry or feathered variety, your will can outline what happens to your pets after you die. You can name a caretaker for them and even leave a sum of money to pay for their care. By making arrangements for your pets, you ensure they won’t end up in a shelter or on the street.
Make Your Final Wishes Known
Your will can dictate not just what happens after your death, but also what happens to you near the end of your life. An advance health care directive, also known as a living will, outlines your wishes about receiving life support and other treatments if you’re unable to make medical decisions for yourself. It also names a person who can make decisions about your medical care if you’re unable to do so. A living will can be part of your will or a separate document.
In addition to a living will, you can create a financial power of attorney. This document gives another person the authority to handle your finances if you lose the ability to do it yourself. This person, called the principal, can take care of such tasks as filing taxes, handling investments, or selling property.
Finally, your will can lay out your wishes about what happens to your body after you die. You can outline what type of funeral you want and whether you prefer burial, cremation, or some other option, such as donating your body to medical science. Putting your wishes into a will gives your nearest family members one less decision to make while coping with their grief.
Reduce Estate and Inheritance Taxes
If you leave behind a substantial amount of money or other assets when you die, your heirs may have to pay estate taxes, inheritance taxes, or both. An estate tax is based on the total value of your estate — all the money and property you leave behind. An inheritance tax, by contrast, is an amount that each heir pays based on how much they inherit. Some states have only estate taxes, some have only inheritance taxes, and some have both.
By knowing the rules for your state, you can design your will to reduce the amount of your estate that gets lost to taxation. For instance, you can split up your estate among several different people so that no one heir inherits enough to owe inheritance taxes. You can also reduce the taxable value of your estate by leaving more money to your spouse, who typically doesn’t have to pay tax on it, or to charity.
Save Trouble for Your Loved Ones
Losing a loved one is always stressful. It’s even worse when that person dies without a will. The heirs often have to wait weeks or even months for the legal system to figure out who inherits what. In some cases, they even have to appear in court and provide their birth certificates to prove they’re actually related to the deceased.
By leaving a will, you can spare your loved ones this hassle. They still won’t get their inheritance right away, but at least they’ll know what they’re getting. They won’t have to wonder about your final wishes on top of all the other work involved in dealing with a family member’s death.
Reasons to Make a Will Now
People come up with all kinds of excuses for not making a will. Some think they’re too young or too poor to need to worry about it yet. Others are concerned a will could actually make things harder on their heirs by saddling them with debt. And, most common of all, many put off the job of making a will because they think it will be difficult or expensive.
But making a will makes sense for nearly everyone. To understand why a will can be useful at any stage of your life, consider these six points:
1. You Have More Assets Than You Realize
One reason many people think they don’t need a will is that they believe they don’t have any assets. If you don’t own a home and you’re always teetering on the edge of overdrawing your checking account, it’s easy to think of yourself as broke. Why bother making a will if you have nothing of value to leave?
In reality, you probably have at least some assets you’re overlooking. These could include:
- Financial Accounts. In addition to your bank account, you may have an IRA or a workplace retirement account, such as a 401(k) or 403(b). Don’t forget the balance in any online payment account you use, such as PayPal.
- Your Car. Even if it’s not paid off yet, you can leave both your car and the balance on the car loan to a new owner in your will. They then have the choice of either continuing the payments or selling the car.
- Family Heirlooms. Consider all the items you have that have been passed down through your family, or that you’d want to see passed down to the next generation. This might include your engagement ring, a piece of furniture, artwork, or collectibles. Even items with little monetary value, such as photo albums, could have sentimental value.
2. You Can’t Predict the Future
If you’re young and healthy, it’s easy to assume you won’t need a will for a long time. After all, there’s no reason to think you’re going to die any time soon, so you have plenty of time to worry about it later. Right?
But being young and healthy isn’t the same as being immortal. It doesn’t protect you from dying in a car accident or a natural disaster, or from a sudden illness or injury. The bottom line is, you can never be truly sure what tomorrow will bring.
3. You May Not Know Who Your Legal Heirs Are
Some married people think they don’t need a will because all their assets will automatically go to their spouse when they die. But depending on where you live, this might not be the case.
Take the state of Georgia as an example. According to Nolo, when a married person in Georgia dies without a will, what happens to their assets depends on whether they have children. If they leave both a spouse and children, the estate gets split equally among them — although the widow or widower always gets at least one-third of it. The only way for a married Georgia resident with children to make sure their entire estate goes to their spouse is to make a will saying so.
For unmarried people in Georgia, the situation can be even more awkward. If you die leaving behind neither a spouse nor children, your whole estate goes to your parents — even if they’re in their 80s and aren’t likely to outlive you for very long. If you have siblings, they get nothing unless your parents are already deceased.
4. Your Debts Won’t Be Passed On
Part of making a will is naming an executor. This person is responsible for jobs like paying off any bills you leave unpaid after your death. This creates a dilemma for some people because they have credit card debt that’s higher than the value of all their assets put together. They worry that if they make a will, the person they name as executor will be forced to pay the difference out of their own pocket.
If this fear is holding you back from making a will, you can stop worrying. What happens to debts after your death depends on the type of debt, but as a general rule, debts can’t be left to your heirs. Any debt that can’t be paid out of your estate simply has to go unpaid. There’s no danger of sticking anyone with bills they can’t afford to pay by making a will.
5. It’s Not Hard to Do
Perhaps the biggest single barrier to making a will is the hassle involved. Many people assume that writing a will is a complex or expensive process that requires the aid of a lawyer. They put it off because they think they don’t have the money or time to do it properly.
In fact, there are several ways to make a perfectly legal will without consulting a lawyer. You can use boilerplate forms with standardized language, where all you have to fill in is the names of your heirs and the amounts left to each one. For a little more flexibility, you can use an inexpensive online will-maker that allows you to create a customized will. You can even write out your own will by hand, although you must make sure to include all the legal elements of a will, such as naming an executor.
All these options are much less expensive than hiring a lawyer. Although Thumbtack puts the cost of a lawyer-drafted will between $940 and $1,500, most online will-makers cost $250 or less — and some are completely free. Blank, boilerplate will forms for many states are also available for free. And writing your will by hand costs no more than a sheet of paper and some ink.
These methods don’t have to be time-consuming, either. For instance, most online will-makers can produce a simple will in 30 minutes or less. All you need is:
- Your personal information, such as name, address, and date of birth
- The name of your executor
- The names of your beneficiaries
- The name of the legal guardian you are naming for your children, if any
6. You Can Change It Later
A final reason some people put off making their wills is that their life situation is unsettled. For instance, if they’re single and expect to get married one day, they think they might as well wait until they can make a will that favors their future spouse. Or if they plan to have kids one day, they want to wait and make a will that acknowledges those kids. They see no point in setting down their final wishes when they know those wishes aren’t really final.
But a will you make today isn’t set in stone. You can update it at any time if your life circumstances change — or if you simply change your mind about how to leave your assets. In fact, legal experts recommend that you change your will regularly in response to changes in your life. These can include getting married or divorced, buying or selling a home, or having children or grandchildren.
Updating an existing will is even simpler than making a new one. In many cases, you can simply add a codicil, or addendum, to add a new bequest to your will while leaving the rest unchanged. Even if you decide to make a completely new will, you can still use the old one as a reference, which makes the process faster.
There are only a few people who have nothing to gain by making a will. For instance, people under 18 years old can’t create a legally binding will in most states. Also, people who have no assets at all — for instance, people who have recently declared bankruptcy — have no need for a will since they have nothing to leave.
At the other end of the wealth spectrum, many people with substantial assets prefer to manage their estates through a living trust, which dictates how their money should be handled both before and after their death. These people don’t need a separate will because the trust covers everything.
For everyone else, a will is useful. For some people, it’s absolutely vital. Anyone with children under 18 definitely needs a will or a separate guardianship document to provide for their care. And anyone with substantial assets needs a will to ensure those assets go to the right people — and to minimize estate taxes at the same time.
A will is also essential for anyone living with a partner but not legally married. The law won’t treat this person as your spouse if you die intestate, so a will is the only way to make sure they get their share of your assets.
Have you made a will? Why or why not?