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A last will and testament tells the world how you want your assets distributed after your death—and can provide you with a voice while you are alive but unable to communicate.
You know the saying about the two things we can’t escape, so why not protect your wishes and your heirs when that fateful day arrives? (No, not April 15.) Everyone will die at some point, which means that everyone needs to have a will. Wills give you a voice after your death—and sometimes before—to help protect your wishes and those you care about.
Why you need a will
If you die without a will, also known as dying “intestate,” state law will determine who gets your assets. And, if you have young children, the state will determine who will raise your kids.
Even if you already have established a trust, which puts conditions on how a specific asset is to be distributed after your death, you still need a will that covers your estate as a whole.
What is a living will?
A living will sets out your wishes for medical care in the event you become incapacitated. It tells what kind of life-sustaining medical serves you want if you should ever be unable to understand the choices available to you or communicate your wishes.
Name your executor
Unless you want the state to appoint an executor for your estate, you will need to do so. An executor is the person who sees to it that your wishes are carried out after your death. This person is responsible for paying your remaining debts and taxes and ensuring that your assets are properly distributed. The person you name as executor should be someone you trust, and can be a friend or family member.
Depending on your situation, serving as an executor can be a big responsibility. So make sure that the person you’ve selected is up to the challenge before naming him or her in your will. You will also need to settle on payment to this person, if there is any.
Do I need to grant financial power of attorney?
Granting a power of attorney enables your financial affairs to continue uninterrupted should you suddenly become incapable of managing them yourself. A power of attorney is different from an executor in that the person you grant power of attorney will manage your financial affairs while you are alive. As with an executor, you’ll want to choose someone you trust who is willing to take on the task.
There are two types of powers of attorney: durable and springing. A durable power of attorney goes into effect as soon as your sign the document, which means that should you suddenly find yourself incapable of handling your finances, the person you’ve granted power of attorney can take over immediately. A springing power of attorney “springs” into effect when you become incapacitated, which often must be proven with a doctor’s letter or, sometimes, court orders.
A power of attorney ends at your death, or if you revoke it, get a divorce, the court invalidates your document, or the person you named as power of attorney is no longer available.
To create a legally valid power of attorney, you’ll need to fill out a Power of Attorney form and sign the document in front of a notary public. State laws can vary so check with a local estate planning attorney to ensure your power of attorney is properly signed and filed.
How to create a will
A basic will is fairly simple and straightforward to create. If you’re under 50, are in pretty good health and don’t expect to owe any estate taxes at your death, then a basic will is probably all you need.
You can hire an estate planning lawyer to create one for you, which will likely cost a few hundred dollars, or you can purchase one of the many software or online programs available to do it yourself (such as Quicken’s WillMaker Plus or Nolo’s Online Will). All are legally binding and enable you to leave your property to the people you chose, name guardianship of your minor children and name the executor of your estate.
You can always go back and amend your will at any time—and you should if your marital status changes or any other major event occurs in your life.
Where should you begin? Before you create your will, determine all your assets, including investments, retirement savings, insurance policies and other interests. Now is also a good time to look at the beneficiaries you’ve designated for your investments and policies to determine if those should change.
Then decide who should inherit your assets and how. Talk with those you would like to name in your will, including those you want as guardians for your children, executor of your will and power of attorney for your finances. You should also talk with the heirs of your estate to explain why you have written your will as you have to help prevent future disputes.
If you have a large or complicated estate, or want to talk through your options, speak with an attorney or trusted advisor to determine what type of will is best for you.
This article contains general information. Individual financial situations are unique; please, consult your financial advisor or attorney before utilizing any of the information contained in this article.
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