If you’re thinking, ‘Do I need a will?’ chances are, the answer is yes. Thinking about a will can feel morbid and unnecessary, especially when you’re young, healthy, and still growing your wealth. And it’s true that not everyone needs a will, especially if you’re single and growing your worth. What’s more, because the term “will” can be used to encompass end-of-life directives, it can confusing to know exactly what people mean if they say, “You should have a will.”
So, we’re here to clarify the topic. Read on to learn exactly which documents are needed if the worst were to happen and you were unable to make your end-of-life wishes known.
What Does a Will Really Do?
Simply speaking, a will dictates what will happen to your assets when you die. It can also be used to provide direction for who will care for any children and pets you have. Without a will, your property will be passed on according to state law, which means that your belongings may go to your spouse or nearest surviving relative, like a parent or sibling.
In some cases, this can be fine. But for people with children or people who own a home, this may not be ideal. Not only that, but dying without a will may put a burden on surviving relatives, leading to a costly and complex process.
In short, a will can communicate your wishes. For instance, it can:
• Dictate who the executor (the person who administrates the will) is
• Make a plan for how property will be distributed
• Make a plan for how children or pets will be cared for
• Make a plan for how debts and taxes will be paid
Creating a will does not need to be a long and complicated process. But it does need to be legal. While handwritten wills are acceptable in some states, they may be subject to additional scrutiny and may still need a signed witness to be valid.
Recommended: How To Make a Will: 7 Steps
What Does a Will Not Cover?
Let’s review some terms to see what different documents do:
• A simple will determines what happens to your assets after you die.
• A living will and other advance directives dictate what may happen if you were incapacitated and unable to make medical decisions. Both can be drawn up at the same time. These are legal documents that spell out medical treatments you would and would not want to be used to keep you alive. It typically communicates your preferences about other decisions, such as pain management or organ donation. In addition, if you have very specific wishes about whom you want to make financial and healthcare decisions if you were to be incapacitated, a living will can document those. This can be helpful if, for example, you’re not married but would want your partner (and not your parents) making these decisions if you were unable to make them yourself.
The guidelines and requirements for creating these documents can vary state by state. Attorneys, as well as online planning templates, can provide the documents to cover all potential end-of-life what-ifs, including creating a living will and advance directive, as well as a standard will to cover all bases.
Recommended: What Happens If You Die Without A Will?
When Do You Need a Will?
In a nutshell, you need a will if you have a spouse, children, or considerable assets. A will can take the guesswork out of matters if you were to die and can avoid legal complications.
Even if your life is relatively “simple” to unpack, a will can ensure there are no uncertainties and that your survivors are crystal clear about your wishes. Some times to consider a will:
• When you want to leave things to family and friends. These may not be valuables but could be meaningful, sentimental items
• When you own property
• When you have a spouse and/or children
• When you want to provide to a charity
• When you have a positive net worth
• When you have a complicated financial picture
In short, a will can help answer any questions your survivors may have, simplifying a process that may be emotion-filled. It can also help provide peace of mind that if you were to die, your loved ones will have a road map.
Are You Married? You Need a Will
You may think a will isn’t necessary if you’re married. After all, your assets will simply go to your spouse, right? It’s not that simple. State laws do differ. Typically, but not always, spouses, domestic partners and blood relatives are first in line when it comes to receiving inheritance. Having a will ensures that you direct where you want your estate to go, protecting the interests of those closest to you.
Another issue comes up when you pass away without a will, which is known as being intestate: the state gets involved in a potentially lengthy process called probate. A court-appointed administrator will identify legal heirs and determine how your estate is divided and bills are paid, according to the laws of your state. This can make for a complicated situation in which your spouse must wait for an inheritance, potentially causing financial hardship.
There’s another reason why a will is valuable if you’re married. It’s likely you and your spouse will create what’s known as a mutual will (these should be created with a lawyer’s help). After one partner dies, the remaining party is bound by the terms of the mutual will. This kind of document can, for example, be used to ensure that property gets passed to the deceased’s children rather than to a new spouse. In this way, a will can smoothe family dynamics in the future and ensure that your wishes are followed.
Recommended: Joint Will: What Is a Mutual Will?
Do You Have Kids? You Need a Will
One motivating factor for creating a will is when a couple has children. A will not only allows you to choose a guardian for your children, but it also allows you to name a guardian for your children’s finances — and they don’t necessarily need to be the same person.
It’s important to create a will even if the assumption is that the child’s other parent will look after the children. Not only can a will provide a template for a what-if situation if both parents were to pass away, but it can also ensure that your children will receive the share of your estate that you desire when they’re older.
Having a will can minimize disruption in case the worst were to happen and one or both parents were to pass away. If there is no will, the court will decide, and while the court will keep the best interests of the children in mind, the parents are the ones who know the kids best and may have the best solution.
In short, a will allows you to make sure:
• Children are cared for by the people you wish
• Children’s finances are cared for by the people you wish
• Adult children will receive the inheritance you desire them to have
• Any unique circumstances regarding child care is taken into account
Do You Have a Positive Net Worth? You Need a Will
Even if you’re single, a will may make sense if you have a positive net worth (aka, more assets than debt), which may include owning a house. Depending on your net worth, you may consider creating a trust. This can help your family avoid the probate process.
You can also be very specific about how you want your assets allocated in the future. For example, you may want to provide gifts to charity upon your death.
You also want to check your beneficiaries for any accounts, including retirement accounts and life insurance policies. The named beneficiary takes precedence over who’s named in a will, so it can be a good idea to double check that the named beneficiary is the person you want to receive those assets.
Are You Young, Single, Asset-free, or Without Kids? You Don’t Need a Will (Yet)
While you may not need a will if you don’t have any dependents, property, or assets, it’s still worth thinking through what you do own. For example, if you have a life insurance policy or retirement account, make sure the beneficiary you name matches who you would want to have those funds as time passes.
But a will can ensure there is no confusion over your wishes, especially if you have pets to be cared for or mementos you know would be meaningful to the people in your life.
How to Set Up a Will
A 2021 survey of over 2,500 people from Caring.com, a caregiver website, found that the past year made more people realize the importance of having estate planning documents. However, 2 out of 3 people don’t yet have a will. One big justification: Not enough time to create a will.
However, creating a will does not need to be complex. Online templates can walk you through the process. An online template may be free or may cost $100 and up, depending on the complexity. More expensive templates may be state-specific and detailed.
One critical aspect: Make sure the will is legal in your state. This may mean the will needs to be notarized and signed in front of witnesses. Once you have a will completed, it can be a good idea to make several copies and let the person you’ve named executor know where they can find the will in case you were to die.
If you have multiple, complex assets (such as several jointly-owned properties or properties jointly-owned with different people) you may need an attorney. This may cost $1,000 and up but can give you the peace of mind that everything is covered.
While creating a will may not exactly be a fun activity, it doesn’t need to be very time-consuming or expensive. It’s an important process that can deliver some valuable peace of mind for the future. It lets you know your “house is in order,” and that your wishes are clearly captured. With a will in place, your worldly goods go where you want them to go, and you ensure that loved ones are taken care of in the way you see fit. When you get these documents done, you’ll also save those nearest and dearest to you from having to deal with legal red tape during an emotionally challenging time. Yes, death and wills are a topic many of us would like to avoid. But being pragmatic and taking care of this important legal concern is the right, responsible step to take.
The Simple Way to Protect Loved Ones: SoFi and Trust & Will
To help you with this important process and make sure it isn’t arduous, SoFi has partnered with Trust & Will*, the leading online estate planning platform in the U.S. — to give our members 10% off their trust, will, or guardianship estate plans.
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