A will is an essential part of any estate plan. It is a key document for transferring your assets upon your death. It allows you to decide who inherits which assets and who will manage your estate as executor and/or trustee.
According to Caring.com’s 2022 Wills and Estate Planning Study, 1 out of 3 Americans without estate plans think they have too few assets to leave behind.
But there are many reasons to have a will.
If you die without a will, important decisions will be left to the local courts and your state laws. You will have had no say in who receives your property and other assets. This often makes it difficult for your loved ones after you die.
Here are some reasons why you need a will:
It streamlines the legal process. The majority of estates will have to go to probate court to start the legal process overseeing the distribution of assets. When you don’t have a will, the court process — known as intestate administration — can get complicated. Without a will, the court decides who will administer your estate. And this can be time-consuming, expensive, and even contentious for your loved ones.
One of the most important reasons to have a will is to streamline the legal process. When you have a will, you name the person who will manage your estate.
It determines who will manage your estate. As mentioned above, this is perhaps the best reason to have a will. When you have a will, you become a “testator” and have the opportunity to nominate an “executor.” This is the person who will be in charge of managing all your affairs.
Being an executor is an important job. Responsibilities might include everything from closing bank accounts to liquidating assets. Be sure to choose someone who is capable and who you trust to carry out these activities. If you don’t choose an executor in your will, the court will pick one for you — and it might not be the person you’d want.
It decides who will get your assets and property. When you have a will, you can name people as beneficiaries for specific assets. You can also name beneficiaries for any property that you don’t list — the “residuary” of your estate. When your executor handles your will, they’ll be in charge of distributing these assets.
It appoints a guardian for your minor children. If you’re a parent, you can use your will to designate a guardian for your minor children. The surviving parent will usually get sole legal custody if one parent dies. But if both parents pass away, this is one of the most important reasons to have a will.
A guardian will be responsible for all your children’s daily needs, including food, housing, health care, education and clothing. And if you don’t appoint a guardian in your will, a court will have to choose one for you. This could mean that someone you would not have chosen will be raising your kids.
Name a digital guardian. This a relatively new concept for wills. Most of us have digital assets which might include online accounts, such as Facebook or email, and digital files or property (photos, videos, domain names, etc.). In your will, you can name a digital guardian or executor to manage these assets after you die. You can leave them to specific people, and also include information on how you want them handled (e.g., if you’d like an account closed).
It reduces potential family disputes. If you die without a will, your family will have to guess at what your final wishes were. And odds are that they won’t all agree. This uncertainty can create friction, and even fights, which can divide a family and might last a lifetime. Having a will prepared solves the problem by eliminating the guesswork.
It supports the charities or causes you care about most. You might want to leave a positive impact on the world after you pass. The perfect way to do this is to support the charities and causes you value most. In your will, you can preserve your legacy by leaving part of your estate to a charitable organization.
It provides funeral instructions. Most of us do not want to think about our funerals. But if you prepare, and leave instructions with your will, you can ease the burden on your loved ones after you pass. While these instructions aren’t legally binding, they can give your executor and loved ones some guidance on your wishes.
When you include funeral instructions, it will be helpful to give suggestions for the service and location, make requests for your final resting place, and more.
Keep in mind that a will is not the only document you need for a complete estate plan. Many financial accounts might be left to others through completion of beneficiary forms, which do not require them to go through the probate, simplifying their distribution.
Review your will and estate plan regularly to reflect life stages and changes in circumstances. Most wills do go through the probate process, but updating your will can help to simplify and alleviate what can be a long and expensive process for your heirs. Creating a will provides your loved ones and family members with peace of mind after you die.
If you don’t have a will, contact your financial planner or attorney for guidance on how to get started.
James R. Cook, CFP® is a Financial Planning Specialist. He brings expertise in comprehensive financial and retirement planning to his work at MMBB. Cook holds a B.S. in Psychology from Lewis & Clark College, a Master of Divinity degree from Fuller Theological Seminary, and an MBA from the University of Missouri Kansas City.