Do You Really Need a Will?
Contemplating the time when you will no longer be gracing the land of the living can be downright discomforting. A person in their twenties or thirties believes with certainty that planning for the end of life can be put off because there is plenty of time to do it later. The fact of the matter is, however, that sooner is better than later, because “later” can sneak up on you when you least expect it.
What is a will?
A will is a legal document detailing how you wish your assets to be distributed upon your death. It allows you to name a guardian for your minor children if both parents are deceased. It also names an executor who will settle your estate for you. What a will might not be able to do is solve tax questions.
When you are just out of school, usually in your twenties, you will be able to live on the least amount of money you ever will again in your life. It won't be many years before you begin to accumulate assets. Ideally you will begin a lifetime habit of savings and setting aside monies for retirement. You may buy a car and a home. Maybe owning a time share will be appealing. Indulging an interest or hobby such as investing in rare antique rugs can create an asset at the same time. Inheriting stocks or memorabilia within your own family adds to the cache of things for which you are responsible. It is fine and dandy to accumulate the tangibles of life, both big — like houses — or small — like tools.
But what would happen to all of it if you were hit by a truck crossing the road tomorrow? Maybe you don't care what happens to it — you'll be gone, after all. If you are a singularly isolated human being, then it might not matter. The state would step in and decide who the heirs should be and would probably make a distribution of an estate to the nearest kin on a pro-rata basis.
As you move along in your life and career, you more likely will be adding treasured relationships. These may result in traditional or nontraditional family groupings. If children are involved, you most definitely will need a will to ensure their well-being in your absence with the execution of a will.
The three key provisions a will should cover are as follows.
Name a guardian for your children if both spouses die. Be sure to discuss your request with the person you select. If the person is not able or willing to take on this responsibility, you will need to find another trustworthy person who will. Choosing grandparents may be impractical as the older generation ages.
Create trusts. If you have longer-term goals for money you will leave, such as for your children's education, you may need to create a trust.
Name an executor. This is a big job and should be given to someone you know can handle major financial decisions prudently.
Choosing an executor is important. This individual will be your voice after your death, ensuring that your assets reach the intended recipients, making certain tax decisions, making sure life insurance and retirement plan benefits reach the beneficiaries, paying the debts of the estate (from estate assets), and filing final federal and state income and estate taxes.
The guardian for your children and the executor for your estate do not need to be the same person. It may be better to keep these responsibilities separate. Your sister, as legal guardian, may be a warm and loving step-in parent for your kids, but your brother-in-law may not be the most capable administrative or financial guy when it comes to handling the duties of executor. Find the right people for the right position. And always discuss it in full beforehand to be sure they are willing to assume the duties required.
Your will only allows you to direct the distribution of assets owned solely by you. Anything owned jointly, such as a home, or that has beneficiaries designated, such as life insurance policies or retirement accounts, cannot fall under the control of your will. These items are included in your taxable estate, however.
Each state has its own rules regarding the preparation and execution of wills. There is specific language that has to be included for you, the testator (this is how you are known when you make your last testament), and the witnesses who will be signing it. Your signature may need to be witnessed by two or three witnesses, who all have to witness each other's signatures as well so that there is no question later as to the veracity of the document if a witness cannot be located or has died.