What would happen if you passed away without a Will? A will is one of the most basic yet important estate-planning documents that can help you transfer your assets with ease. A will might be that little bit of grease that can make the difference between a smooth transfer of assets and a probate nightmare.
Let’s learn more about what a will is, why you need one, and some tips on how to create or update yours.
What Is a Will?
A Will, or a Last Will and Testament, is a legal document that outlines your intention for the distribution of your assets after your death. It lays out where your assets are now and where you want them to go. It is an integral part of a comprehensive estate plan and should be the very first step in the estate planning process. It can go a very long way to helping your loved ones avoid unnecessary legal and financial loopholes and let them know exactly what to do with your assets. These explicit instructions are essential and can help everyone avoid a lot of headaches.
Wills vs Trusts
When you’re researching estate planning documents, you have likely come across both wills and trusts. While both documents can help dictate what you want to do with your assets when you’re gone, there is one main difference.
The main difference between a will and a trust is that a trust takes effect as soon as it’s created and signed, while a will does so only after you pass away.1 There are also two different types of trusts to consider: revocable and irrevocable.
- An irrevocable trust is one that can’t be changed or canceled after you have signed it. Essentially, you give away ownership of your assets in the trust, but it may not be a bad thing.
- A revocable trust can be changed. The grantor continues direct ownership of the assets along with the right to change the terms or even end the trust.
Some other differences between wills and trusts are that:
- A will requires probate to transfer items to beneficiaries, but trusts can avoid probate.
- Wills are public records and trusts can remain private.
- Because a trust takes effect right when it’s created, it can be used in the event you or a loved one become incapacitated and unable to make decisions independently.
Do You Need a Will?
I know, we face so many financial obligations every day and are hit with a garage of different opinions on everything financial. That begs the question; Should creating a will be at the top of your list? Surprisingly, this is where most financial experts agree, YES you need a will. Even if you are not a Rockefeller and don’t have substantial assets to transfer, a will can help your family feel confident and secure that they know your wishes. In addition to making the transfer of assets easier, here are a few benefits of having a will2:
- It allows you to distribute your property and protect your loved ones after you pass away.
- It can provide peace of mind to you and your family.
- You can plan for those in your care (e.g., naming a legal guardian for your children or pets).
- It may prevent family conflict.
- It can eliminate confusion over assets.
- It can ensure that your assets go to the people you want to have them.
- It can help you build a lasting legacy.
- You can use your will to benefit charity.
These are a few of the benefits we see but it is not an exhaustive list of the many benefits of having a will.
How to Create a Will
Although a will can be a straightforward process, we recommend the help of attorneys and financial advisors. Additionally, the process will depend on the state in which you live because every state has different requirements for creating a will.
Generally, the first step in creating a will is to determine what you want to include. You should include instructions for passing along your assets after your death, including ownership and other instructions. An attorney can help you ensure your will contains everything it needs.
Next, you will likely sign your will in front of two witnesses, and these two witnesses will also sign your will. Some states require a self-proving affidavit that you sign in front of a notary, other states require your will to be notarized, and some states don’t require any special self-proving documentation as long as you sign and witness your will correctly.3
Whether you have $100 worth of assets or $100 million, creating a will is a good idea to share your vision with your family and give guidance after you pass. Wills help make the transfer of assets easier and give you and your family more peace of mind.
If you would like to discuss your current situation schedule a free 20-minute call with the link below.