Why is a Will Important?
Many people do not think it's important to go through the process of making a legal will. They often ask themselves, "why is a will important?" and think that it's more of a hassle than anything else. For many, there is an assumption that their assets will simply be passed on after they die, or that they simply don't have enough assets to warrant making a will. Neither of these assumptions are true.
If you pass away without a will, your assets, regardless of how large or small they are, are held in the probate court of the state where you resided, and are distributed according to that state’s law.
Many people – both young and old – think that making an estate plan is not for them, but I believe that regardless of one’s assets, estate planning is something everyone should do. It’s one of the best gifts you can give the people you love. Your assets will be legally protected, your heirs will be legally protected and you will have the say, even after you die, on how you want your affairs to be handled.
Writing and Revising My Will
I wrote my first will just after my first daughter, who is now in her 40s, was born. There were certain possessions that I wanted her to have – nothing worth much money, but worth a lot in sentiment. Then, when her sister was born, I revised my will to account for both of my daughters.
I consider a will a living document. I’ve changed mine probably 25 times in 40 years, and I will continue to change it as my family continues to grow and as my assets change.
I wish I could see my dad today to thank him for what he did for two generations of our family. When I was much younger, I did not fully appreciate – or understand – what my Dad was doing for us, but every Christmas for as long as I can remember each family member would get a check.
Because of his generosity, my daughters didn’t have to worry about college loans, one of my nephews purchased a home he would not otherwise have been able to afford, a niece was able to start a business, and it has allowed his daughters to have a cushion for their retirement years.
Most financial planners I’ve spoken with suggest that a person should create a will as soon as they start acquiring assets or start a family. They also suggest that the will be reviewed at least every two years to make sure that there are no changes to be made.
Setting Up a Trust
As a person’s assets increase, they should look into creating a trust. In today’s world, a trust is not just the province of the wealthy country club set; it’s also for people whose net worth is in the $100,000 range, and who meet a specified set of circumstances.
To see if setting up a trust is a good choice for you, head to CNN Money for a good explanation of trusts, who they’re good for, why they’re good, and what types exist.
Parallel to the trust is deciding what type of will you’ll need, and that’s dependent on the complexity of your estate.
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Adding a Codicil
Many times, people create their will and then, if they want to add to it or change something, rather than redoing the entire will, they add a codicil, which is a document that becomes an addition to the will that explains, modifies or revokes a part of a will.
My friend’s parents’ wills provide an excellent example of how codicils can be used. She’s had an ongoing, 25-year dispute with her sister, much to their parents’ dismay. The sister threatened to sue my friend for her share of their parents’ estates for reasons I’m sure she thought were legitimate.
Their parents were well aware of their feud and decided that they would each add a codicil to their will stating in plain language that if any heir sued any other heir, the inheritance left to the person who sued would automatically go to the other person. Needless to say, the sister didn’t sue.
It's Never Too Early to Start a Will
As the old adage says, there’s no time like the present, so here are just a few of the top reasons financial planners give for creating an estate plan as soon as possible.
- Many people marry multiple times due to divorce or death. Let’s say that as a result of divorce, you’ve been remarried to your current spouse for 20+ years. That spouse brought children into the marriage and you pretty much raised them. You’re extremely close to them, even more so than a couple of your biological kids. And, you want to leave them part of your estate. Without a plan, that most likely won’t happen. With a plan, you determine who gets what.
- At our age, it’s not hard to imagine having a stroke or becoming incapacitated through another means. If you haven’t made provisions for this occurrence, the courts will select the person who’s going to handle all of your affairs.
- Do you own a business? What would happen to it if you die? Without a plan, you can’t choose who you want to run it.
- An estate plan is the best way I know of to avoid costly probate delays.
- If you want to make sure that your assets remain in your family, the only way to do that is with an estate plan.
I hope that if you don’t have an estate plan yet you will seek legal advice for your specific situation and create one now.