Protecting your assets with a will is one of the best choices you can make to protect your finances and family. A will, ultimately saves your family money, time, and stress in the long run by utilizing the time you have right now to create this powerful, legal, and binding document. This 10-minute read is designed to help you understand what a will is and what it can do for you and your family.
What Exactly is a Will?
A will is a binding and legal document that contains instructions carried out after your death.
Below are some examples of what your will names:
- Someone to care for your young children: You should name guardians for any children under the age of 18. Since your children can’t legally own property until they turn 18, your will can also name a guardian to manage and oversee the children’s assets until they become of age.
- People/organizations who will receive your assets and property: These individuals are known as “beneficiaries.” It’s possible to leave your assets to one beneficiary or divide your assets up among individuals and organizations by specific percentages. You can also designate gifts like jewelry and other possessions to specific people.
- Someone who manages your estates and carries out your wishes: This person is known as the executor. He/she will manage and collect your assets, pay expenses and debts, and taxes using the estate funds. They distribute your assets among your beneficiaries according to the instructions in your will. Since being an executor is an important job, you should choose your executor very carefully. You can also choose a close friend, family member, or a professional who receives compensation as your executor.
What Does a Will Contain and What it Doesn’t Contain
Your will contains assets that are titled to your name at your time of death and where there is no designated beneficiary.
Some assets not affected by your will include:
- Community property with the right of survivorship: Allows certain property to pass directly to a registered domestic partner or your spouse. In some states, you may discover the need to assign assets relating to community property as a right of survivorship. In other states, assets acquired during your marriage are automatically owned equally by both spouses, and your will would only affect your half of the community property.
- Life insurance, retirement plans (401k), IRA, and bank accounts for a named beneficiary: Note, if you name someone else or designate a beneficiary for these assets in your will, in most cases, the beneficiary whose name is on the account, supersedes the will.
- Living trusts: Which are typically distributed according to the trust regardless of the instructions contained in your will and without court oversight.
- Assets owned with a joint tenant: These get automatically transferred and are known as “right of survivorship.” Some common assets that have the right of survivorship include automobiles, real estate, bank accounts or certain brokerage and securities accounts that designate transfer upon passing.
Even if your entire estate consists of assets in any one of the categories above, you should still create a will. As an illustration, if your named beneficiaries or spouse passes away before you do, the assets would then be distributed according to the instructions in your will. Let’s say you receive unexpected assets such as an inheritance, it will impact your will. And lastly, for minor children, you should assign guardians to manage both their financial assets and personal care.
What Exactly Happens if Someone Dies Without a Will?
If you pass away without leaving a will (also referred to as “intestate”), the laws of your states will determine how your assets will be divided. If you don’t have a will, it will be mostly longer to ascertain how the assets will be issued lawfully and are known as probate. A continued probate time can be tiresome and involve costly legal fees. This decreases the quantity of your assets that are issued to your family members.
In most states, if the deceased didn’t leave a will, all the assets owned will be given to the spouse that is, if you have one. In other states, the assets you owned will be divided among your children, partner, and/or offspring of any passed away children. If you don’t have a spouse or children, your property will likely be distributed to any living family members.
If you don’t have family members your property will go to your state of legal residence. Perhaps most importantly, if you have minor children and you and your spouse die without a will, the court system would name the children’s personal-care and financial guardians.
Where To Go For Help
A search on the internet often provides a good first source of information about your state laws pertaining to wills. Once you discover the requirements for your state, you’ll be able to either write the will yourself or contact an attorney or estate planner to help you with the process of completing your will.
If you’re not sure where to turn or don’t have the time and resources to work through this process on your own, reach out to us here at Housing Solutions REI, LLC. We have both the knowledge and experience in helping many clients with how to find the appropriate help or guidance on what to do next.