The staff of Boomerang thank Erik Brown, New York Life Insurance Agent, for contributing this article.
A will is one of the most important documents you can create in your lifetime. Think of a will as the financial blueprint for the distribution of your assets after your death. Your will can clearly state who will be the guardian of your minor children and cherished pets, and who will inherit your assets when and under what conditions. Despite the importance of an estate plan that includes a will, 65 percent of Americans do not have a will, according to Lawyers.com's "Wills & Estate Planning Survey."
If you die without a valid will, the court has no way of knowing how you may have wanted to distribute your assets. In these cases, the state will make the decisions for you, according to the distribution schedule set forth in law, not necessarily what is best for you or the people closest to you. Without a will, your loved ones will likely have to hire an attorney and incur delays to determine who will receive your assets.
There are many myths that keep people from creating a legally binding and comprehensive will.
Myth: My assets are so small that a will is not necessary.
You generally are worth more than you realize. Even if some possessions do not hold great monetary value, they could hold an enormous amount of sentimental value. Failing to indicate in your will who receives these treasures can cause friction among family members that lasts for decades. Have discussions with your family members about which items are precious to them, and ensure everyone has something to remember you by.
Myth: When I die, my spouse will get all of my assets.
Any assets held jointly with right of survivorship automatically pass to the joint owner. However, assets with a beneficiary designation, such as IRAs, life insurance, and annuities, pass as stated on the beneficiary form. Questions to answer in your will include: What happens when your surviving spouse dies? What happens if your beneficiary form is outdated? Does your spouse have the financial skill to manage the family wealth?
Myth: My final wishes need to be set in stone.
The terms of a will can change as often as needed. Legal experts agree that you should reexamine your will periodically to make sure it is up-to-date. A will should receive a "checkup" whenever there is a substantial change in your life.
Myth: I can create a will on my own and save money.
"Do-it-yourself" wills often do not contain all of the components required by laws in your state, leaving it open to be challenged. If your will is challenged, not only do your wishes not get followed, your estate may have to pay for the legal costs of the challenge. The few extra dollars you spend now to make sure your will is done right can save thousands later.
Drafting a will is not an endeavor you want to tackle single-handedly. An estate-planning lawyer can help you:
- Determine what type of will you need;
- Make the right decisions as to how your assets should pass;
- Change the terms of an existing will, if appropriate;
- Save on estate taxes; and
- Take advantage of estate planning opportunities people often overlook.
Creating a will forces each of us to come face-to-face with our own mortality - and dealing with death is difficult. But it will be much more difficult for your loved ones if you don't have a will.
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