• Legacy & Estate Planning

9 Things You Need to Know About Creating a Will

August 13, 2018 | Jason Largey

August is National Make-a-Will Month. To honor this pillar of estate planning, Personal Capital will be releasing a series of articles to help you navigate the basics of creating a will. To read our National Make-a-Will Month primer from 2017, click here.

Making a will is an unpleasant task to consider. 2 in 5 Americans over the age of 45 don’t have a will at all, which is a shocking statistic given the crucial role this document plays in estate planning.

More than ever before, you need a well-executed will and other estate planning documents. In this article, we will cover 9 basic considerations that are crucial to preparing a will. However, the probate laws governing wills vary from state to state, so it’s important to contact a local estate planning attorney to assist you with your specific situation.

The Basics

Let’s start with the basic definition of what a will actually is. A will is a legal document that will allow you (the testator), to assign someone to manage your estate after you die, declare who will become the guardian for any children, and/or who will receive specific items or property from your estate. The person you name in the will to manage your estate is called the executor. In some states the executor is called a personal representative.

While drawing up a will makes some people uncomfortable, procrastinating can be costly. Adults who die without a will subject their property to disbursements made by a probate court in accordance with state law. This is called being “intestate”, and different states have different intestacy laws. Without a will, there is no executor, so a judge will appoint an administrator to preside over your estate. The appointed administrator is often not the same person whom you would choose as your executor and may not always act in accordance with your wishes. Typically, an “intestate” probate process directs the assets in your estate to pass to your next-of-kin, and you might have different intentions about the beneficiaries of your estate.

To avoid that fate, we recommend creating a will. In this article, we’ll cover 9 basic principles of drawing up a will.

9 Things You Should Know: Creating a Will

  1. Determine who will draft your will. With the wealth of information available online, some people are beginning to opt for “do-it-yourself wills” or “online wills”. If you choose a DIY approach, there are digital tools that can help you ensure you have all the basics elements of writing a will covered. Some popular online services include legalzoom.com and nolo.com. However, beware that wills are legal documents, so most people need professional input to ensure that their wishes are correctly communicated and both federal and state laws are satisfied. Given the potential pitfalls and the complexities of estate planning laws, it is recommended to hire an attorney who specializes in estate planning. Sound legal advice can help you navigate the complexities involved in this process.
  2. You will need witnesses. If you take the DIY route, you’ll need to find your own witnesses. State laws vary, so a little research will be needed. In many cases, witnesses cannot be heirs, for example. An attorney is aware of the legal requirements necessary to properly “execute” (or “sign”) a last will and testament.
  3. Select your executor. The executor (or Personal Representative) is the person you choose to administer your estate. The executor does not have to be a beneficiary of the estate. You can select a friend or family member or choose a “corporate executor”, such as an attorney or bank. If you select a professional, compensation will be mandatory, but many people also arrange for the estate to compensate a designated friend or family member, too, since the process can be time consuming. An executor is often conflated with a power of attorney, but they are different roles: an executor is the person you name to take care of your estate after you die, and a power of attorney handles matters for your estate while you are alive in the event that you become disabled or incapacitated.
  4. Be specific. Your will should include specific instructions for the distribution of your estate, including detailed lists of unique items or specific instructions for selling or otherwise liquidating your assets. For substantial assets like investment accounts, large bank accounts, certain insurance policies, and real estate, you might have selected beneficiaries who are too young (minor children), suffer from a disability, or have shown financial irresponsibility. Your attorney could recommend that your executor transfer assets to this type of beneficiary to a trust, so that a trustee of your choice could distribute smaller installments of the inheritance to your beneficiary at certain times of your choosing. Increasingly, people are including a separate letter of instruction which further outlines their wishes but doesn’t require a public filing. This is for personal reasons and to create more intimate communication with loved ones during a difficult time.
  5. Don’t neglect your digital assets. A letter of instruction may be a good place to address your digital assets. Your will could authorize the person you wish to have responsibility for handling those accounts and give details about where your access credentials, such as usernames and passwords, are stored. Never include access information directly in your will. A will is a public document, and you don’t want your passwords to be exposed when your will is filed with the courts.
  6. Consider who to include as your beneficiaries. This may seem simple on the surface, but for non-liquid or non-traditional assets, choosing beneficiaries can be complicated. For example, do you have a prized 1965 Corvette in the garage, a Steinway piano in the family room, or your grandma’s china in storage? You can’t divide these items, unless they are sold, so perhaps one person would inherit a unique asset. Who will that be? How will you decide?
  7. Communicate with your heirs before you die. It might seem awkward to have these conversations but talking through your estate plan early can save a lot of heartache. For example, a conversation might reveal that your choice for grandma’s china doesn’t want the burden, but another family member would be overjoyed to inherit it.
  8. Keep your will current. Life is about change, so your will needs to keep pace. You don’t want your assets going to the spouse you just divorced, for example. Review your will every few years or whenever you have a significant life change. Also, keep the details of your digital accounts updated, which may require much more frequent reviews.
  9. Store your will in a safe place and let people you trust know how to access it. You don’t want your will to languish in a hidden location while your heirs scramble to figure out what to do next. Let more than one person know where and how to access your will.

Our Take

Creating a will is a key part of a successful estate plan and will help you protect your legacy and your loved ones when you are gone. Staying on top of estate planning requires proactive, ongoing actions, but it can ease estate management burdens after your death. Consider it a final gift to your family during what is likely to be a high-stress period in their lives.

The first step to a successful estate plan is staying organized. Download our free Financial Life Organizer to record important information on the documents that are important in your life.

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