According to a recent study, more than half of Americans age 55 to 64 do not have wills (the numbers are worse for those 45 and 54). I want to focus on the ramifications of why a will is necessary and why it is important to act now to discuss the matter with your financial planner.
A main reason to draft and execute a will is so you can choose who and when loved ones will inherit your assets, serve as the guardian for your children and make the financial decisions once you pass. Yes, your spouse and children will most likely inherit your assets if you pass without a will (“dying intestate”) but they may be subject to estate taxes and an expensive, lengthy process called probate. This is when you seek the courts help in sorting out a deceased person’s affairs.
A common reason people say they do have a will is the cost. However, if you have a less complicated financial situation, there are numerous online DIY sites such as Legal Zoom or Smart Legal Forms. They cost is approximately $40-70 for a will, living will, healthcare power of attorney and financial power of attorney. It is recommended to hire an estate lawyer if you have a large estate or complicated family dynamics.
A forgotten aspect of the estate planning process is to ensure you have the correct beneficiary designations. Retirement accounts and life insurance have special rules. All too often, we see parents or ex-spouses listed as beneficiaries when someone has children or gotten remarried. Although your will may specify your spouse and children are to inherit your estate, retirement accounts and life insurance flow outside of the will.
These are just a few of the many reasons to focus on drafting or updating your will. Your loved ones will thank you later!