Ultimate Guide to Wills and Why They Are Important
Quality Verified
Updated: April 23, 2024
Quality Verified
Updated: April 23, 2024
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A will is a legal document that determines how properties and assets are distributed at the time of your death. Everyone can benefit from writing a will. It allows you to plan your legacy and protect the future of your loved ones.
Setting up a will is an integral part of end-of-life planning. However, it’s not a substitute for life insurance and other investment types. Learn the importance of a will, how it works, the steps involved and why it’s important to consider completing it sooner than later.
How Do Wills Work?
Writing a will is a way to control the distribution of your properties to your chosen beneficiaries. Proper execution is necessary for legalities, including signing the will while you have the legal capacity to do so and having two witnesses sign the same document.
When talking about creating a will, people typically think of a last will and testament (simple will). However, there are various types depending on what you want to achieve, who it’s for and how it’s constructed. Below are some of the terminologies you’ll find across the different types of wills.
From learning how to set up a will to choosing the best way to make a will, familiarizing yourself with these terms ensures you create a document that accurately reflects your wishes.
What Happens if You Die Intestate?
Dying intestate means passing away without making a will. If you die intestate, your state’s laws determine how to distribute your assets. They will typically go to your spouse or domestic partner if you have no children. If you have a child, your child and spouse will split your assets. If you have multiple children, one-third of your property goes to your spouse and your children will split the remainder. In most states, legal children refer to those born to the deceased or adopted by them.
If you don’t have a spouse or children, the state will generally give your assets to other relatives following the order of priority.
- Grandchildren
- Parents
- Siblings
- Nieces and nephews (if siblings are deceased)
- Grandparents
- Aunts and uncles (if grandparents are deceased)
- Relatives of your deceased spouse
Your estate will go to the state if there are no living relatives.
What to Include in a Will
Creating a will ensures you control how to distribute your assets when you pass away. However, knowing what property you should include in the document is essential. You should also note the types of property you don’t have, especially those that will automatically be passed directly to your beneficiaries.
Why Do You Need a Will?
There are various reasons someone would need a will. Without a will, you don’t control where your property will go after you die. Writing a will helps you protect loved ones. Contrary to what many people think, having a will isn’t only for the wealthy or those with complicated assets. Everyone can benefit from setting up a will.
Distribute estate
A will helps ensure the testator’s wishes are followed. You can also disinherit individuals you don’t want to inherit.
Decide who’ll manage your estate
You can appoint a personal representative to administer your estate when drafting your will. If you fail to do this, a court will likely appoint one.
Protect minor children
If you have minor children, you’d want to ensure they’re well protected. A will allows you to decide who’ll take care of them in the event of your death. A court will select a guardian if the deceased doesn’t appoint one.
Avoid legal issues
Creating a well-drafted will helps minimize delay in the probate process. It also prevents legal issues and challenges as it’s considered a binding document.
Make donations to the chosen charity
If you want specific charitable causes to receive donations from your estate, you can note them in your will. Additionally, gifts may help reduce estate tax as long as they’re within the set amounts.
Whether you're exploring how to set up a will for the first time or looking to update an existing one, learning the will writing process ensures that your assets are distributed according to your wishes, your loved ones are cared for and your legacy is preserved as you envision.
When to Create a Will
Many people put off writing a will. They do so for a variety of reasons, some being they think it’s too complicated, don’t know where to start or are young and think it’s not relevant. However, certain circumstances necessitate creating a will.
Steps to Writing a Will
Preparing a will requires careful attention — it helps to know the steps and what to consider. Typically, hiring a lawyer is your best option. It’s possible to draft a will on your own, but it must comply with state requirements. Below is a simple step-by-step guide to help you get started.
Decide what assets to include
Your estate consists of your assets, such as real estate, personal belongings and property. Determine which of these assets you want to have in your will.
Choose your beneficiaries
List people and organizations you want to benefit from your estate. Include their full names and specify what assets they’re to receive.
Determine if a trust is needed
Decide if you’d want a trust created after your death. You can include instructions in your will through a testamentary trust. This may be helpful in distributing valuable assets.
Pick key individuals
If you have a child under 18, it’s best to choose a guardian. Appoint a trusted person to care for your child until they reach the age of majority in your state. Pick an executor as well who will handle your estate upon your death.
Write the will
Once all necessary information is ready, you can proceed with writing the will. You can hire a lawyer to draft it for you. You may also opt to do it yourself. Make sure you properly execute the will based on state laws.
Choose witnesses
You’ll need two people to serve as witnesses. Typically, they have to be adults. Depending on the state where you live, there may be witnessing requirements.
Sign the will
Generally, your signature will validate and execute your will. The witnesses will also sign to confirm that you wrote it and had the mental competence.
Consider attaching a self-proving affidavit
This is not a requirement. But if it’s allowed in your state, it’s a good idea to have a self-proving affidavit. This makes it unnecessary for the witnesses to prove the validity of your will in court after your death.
Keep your will safe
Make a copy of the will. Keep the original and copy in a secure place. It’s important for a loved one or your executor to know where your will is stored.
Update your will if necessary
Circumstances change. So, keeping your will updated is crucial. Review it after major life events, such as the birth of another child or a divorce. If you decide to make changes, inform your executor.
Can You Write a Will Yourself?
It’s possible to write your will. It can help reduce your expenses. However, ensuring that your will complies with state laws is essential. Otherwise, your loved ones may be left with complications after you die.
Creating a will on your own is easy. You can download forms online for free. Service providers offering a will writing kit may charge fees, which are likely less than a lawyer charges. Having an attorney, however, will ensure that your will is valid and enforceable.
Getting Help Drafting a Will
There are certain circumstances when getting legal advice is necessary. Here are some of them:
- Federal estate tax is involved.
- Your estate may be worth more than $2 million upon death.
- Family conflict is possible, and someone may contest.
- You have a business or have more than 50% in a business.
- You’re recently divorced.
- You have children from previous relationships.
- You need to assign a guardian for a minor child or dependent.
- You want to delay the payment of inheritance to your children until a certain age.
Although hiring an attorney costs money, it’ll help you avoid legal issues.
There are various resources online to help you create a will. Some will offer services at a reduced rate, and there are free forms you can download and fill out. The following resources can help you get started.
- Do Your Own Will: Create a will based on the state where you live and download it for free.
- Free Will: Write or update your will online for free. Simply provide basic details and information to start the process.
- USA.gov — Legal Aid: This government website links various programs where you can get legal aid. You can also find resources for certain groups, including military members, veterans, seniors and people with disabilities.
How to Safely Store Your Will
After creating a will, the next step is determining where to store it. When deciding, make sure that the document remains safe. Additionally, it must be easy for your executor to find the original copy. They would need it to handle your affairs. Below are some options where you can safely store your will.
Do You Need Life Insurance if You Have a Will?
The short answer is yes. Although a will is an excellent estate planning tool, it doesn’t serve as a replacement for other financial instruments like life insurance. Setting up a will outlines how you want to distribute your existing estate, but a life insurance policy pays your chosen beneficiaries. Having both can help you maximize your estate planning.
How Are Wills Different From Life Insurance?
Understanding how life insurance works can help you better appreciate the importance of having a will. Generally, both are there to protect your loved ones. While a will deals with the assets and property you already own, life insurance provides future financial support.
3 Reasons Why You Should Still Purchase Life Insurance
For some people, having a will may seem enough. But other financial instruments may be necessary to ensure that your loved ones won’t have a hard time financially after you pass away. A good example is getting life insurance for estate planning.
Here are some reasons you should consider buying a policy:
It covers different expenses
A life insurance policy pays out a certain amount to your chosen beneficiaries upon your death. This gives them access to money they can use for various expenses, such as funeral costs, mortgage payments or college education funds.
It doesn’t go through a probate process
It’s easier to claim the proceeds of a life insurance policy. It may be available in a few days or weeks. Unlike a will, it doesn’t go through probate. That means the funds from your insurance can provide financial support while your loved ones deal with the probate process.
It can’t be accessed by creditors
Generally, the death benefits of a life insurance policy cannot be taken to pay for any of your debts. That means creditors can’t touch the proceeds. That said, if your policy beneficiary is your estate, creditors may be able to access the benefit payout.
How Life Insurance Complements a Will
The right life insurance policy and a well-drafted will can complement each other and ensure that you can support your loved ones. They allow you to maximize the advantages of end-of-life planning. Navigating both at the same time can be confusing for some people.
Below are some commonly asked questions about life insurance and wills that may help you better understand the purpose of these estate planning tools.
No, life insurance isn’t included in a will. Your will determines how you want to distribute your estate after you pass away. Life insurance cannot be considered part of your estate. That’s because it’s only payable upon your death. It also goes directly to the beneficiaries stated in your policy.
Generally, you can’t distribute your life insurance payout using your will. That’s because the death benefits go directly to the beneficiary named on your policy. Additionally, since the payout is only released after your death, the policy is usually not considered an asset.
There’s a situation where a will can distribute life insurance benefits. If the beneficiaries you named in the policy die before you, the proceeds are paid to your estate.
Your will is a separate legal document from your life insurance policy. In cases where the life insurance policy contradicts the will, the insurance policy is typically followed. A will can’t change the recipient of life insurance death benefits.
Unlike a will, life insurance doesn’t go through probate. That’s because the proceeds are directly given to your policy’s beneficiaries.
There are instances when life insurance goes through probate: when the beneficiaries die before the policyholder, and the insurance policy’s death benefits become part of the policyholder's estate.
No, it’s unnecessary to name the same beneficiary in your life insurance and will. You can name any individual or organization as your life insurance beneficiary. You may also choose to have multiple beneficiaries.
Creating a will and selecting life insurance beneficiaries are foundational to crafting a comprehensive estate plan. These decisions ensure your assets and insurance benefits are allocated as you wish, safeguarding your legacy and your loved ones' future.
When to Reevaluate Your Will and Life Insurance
Over time, your circumstances may change. You may build wealth or accumulate debt. You may also experience major life events. When any of these happen, it’s best to reevaluate your end-of-life plan, including your will and life insurance.
You can use the opportunity to review your beneficiary designations, asset distribution and the people with legal roles under your will. You may also check if your current life insurance policy is still suitable for your needs.
Resources for End-of-Life Planning
Writing a will is an excellent addition to end-of-life planning, which ensures the protection of your loved ones even when you pass away. However, the process involves legal documents and multiple steps. The following resources can help you prepare your end-of-life plan.
Estate Planning
- American Civil Liberties Union (ACLU): The ACLU has an estate organizer that can help document essential personal and financial information. You can also find links to various resources for estate planning.
- American Bar Association (ABA): The ABA offers different resources to help consumers understand estate planning, including wills and trusts.
- FindLaw: Learn about federal and state laws on wills, trusts and other estate planning procedures.
Legal Help
- 1-800-ATTORNEY: This is a national network composed of lawyers and law firms in various areas. Find an attorney near you or get free legal advice through the 24-hour hotline.
- ABA Free Legal Answers: The American Bar Association created the Free Legal Answers website to answer some legal questions from qualified individuals. You can also find links to state-specific programs and legal aid.
- LawHelp.org: Use the interactive map to find legal forms, information and programs in your state. The organization also offers referrals to local legal aid organizations for low-income Americans.
- LawHelp Interactive: Find legal documents and fill them out for free. Use the dropdown menu to ensure you’re getting forms used in your state.
- Legal Services Corporation (LSC): This nonprofit organization offers financial support to qualified low-income Americans in need of legal aid. Find a legal aid organization near you using the interactive map.
Life Insurance
- Coalition Against Insurance Fraud: Find links to state insurance fraud bureaus, which detect and investigate scams. Check how to report suspected fraud.
- National Association of Insurance Commissioners (NAIC): The NAIC is a non-partisan organization that provides data and expertise to help insurance commissioners with industry regulation.
- USA.gov: This government website provides basic information about different federal laws and regulations. These include those on insurance and estate taxes.
About Nathan Paulus
sources
- Caring.com. "2024 Wills and Estate Planning Study." Accessed April 7, 2024.