Less than half of Americans have a will, or have any idea of how they would like to have their money and property handled at the time of their passing, according to a recent article titled “How to make a will and why you need one while you’re still alive” from Today.
Why do you need a will?
A will is a legal document establishing your wishes about the distribution of assets after your death. This includes money, real estate, investments and even the care of minor children. If there is no will, the state law will control who receives assets, called “the laws of intestacy,” and they are rarely what you would have wished.
Having a will saves an enormous amount of time and expense in estate administration. If your family includes minor children, your will nominates a guardian, rather than having the court appoint a guardian without your input.
How does a will differ from a living will?
The similarities in name make this an easily confused concept. The living will is a document where you express your wishes for treatment under certain medical circumstances, if you are unable to make those decisions for yourself. The laws vary by state, which is why you need an estate planning attorney in your area to create the living will for you.
The living will is also different from a Health Care Power of Attorney. General medical decisions not related to end-of-life care are usually covered in the Health Care POA. This gives another person the ability to be involved in your health care, discuss your situation with doctors and speak with your health insurance company.
The living will provides for specific instructions for medical care during your lifetime. The will, also known as a last will and testament, lets you chose who will be in charge of the administration of your estate—your executor—and who will receive assets upon your death.
Before meeting with an estate planning attorney, consider the who, what and how:
What assets do you own? A complete inventory of your assets, including account names and numbers, will be helpful in distributing assets.
- To whom do you want to leave these assets?
- Who do you want to be in charge of distributing your assets?
- Who do you want to be responsible for raising your minor child or children?
- How do you want your assets distributed—in a trust, over time, or outright?
Creating an estate plan offers an opportunity to account for and consolidate your assets. It’s also the time to check on beneficiary designations. They always override what the will says. You want to be sure assets don’t go to the wrong person because you forgot to update your life insurance policy, for instance.
Finally, you can and should update your will every three to five years and every time there is a major life event, including births, deaths, marriages, divorces, the sale of a business or other large life events. You may not need to redo each and every document. However, wills and estate planning documents are not designed to be done once and never revisited. Life changes and so do tax laws. Failing to revise a will could mean missed opportunities.
Reference: Today (Aug. 17, 2022) “How to make a will and why you need one while you’re still alive”
Suggested Key Terms: Last Will and Testament, Minor Child, Guardian, Executor, Trust, Assets, Beneficiary Designation, Estate Planning Attorney, Health Care Power of Attorney, POA, Living Will