Although none of us enjoy spending time thinking about the end of our lives, creating a plan for property and assets can save our loved ones a lot of stress in the future. A will is a legal document that does just that — outlines your desired plans for your property, dependents, and finances after you pass away. When a will is executed correctly, it provides important clarity about your estate.
How to Create a Will
There are several ways to create a will, but one of those ways is a testamentary will, which is a signed and witnessed document. This type of will is universally accepted as the gold standard in estate planning, and any trusts and estates attorneys can help you prepare it. Without a will, your assets are subject to being divided up according to your state laws, so it’s important to create a valid will to ensure your assets end up where you want them.
To get started, you’ll need to compile a list of your assets, properties, businesses, and debts. Don’t forget to include any sentimental items or family heirlooms, along with any other valuable asset that’s worth being itemized. After talking with your legal counsel, you may also want to include the following documents in your estate planning:
- A letter of instruction
- A medical directive
- A power of attorney
A will is not the only element of estate planning. Let’s talk about two of the other common options.
Will vs. Trust
A will and a trust are not the same thing — but you may need both. As we’ve mentioned above, a will specifically provides direction about your assets after your death. Trusts are financial agreements that transfer those assets from you, the trustor, to your designated beneficiary, the trustee. Trusts go into effect as soon as they’re signed and funded, while wills don’t take effect until death.
Writing a will may be the simpler option, but trusts give you a little bit more control over the timing of turning over your assets. For example, a will may dictate that your finances should be passed along to your children if you pass away. However, a trust can keep those finances safe if you were to die while your children are still minors. The money can be handled by a trustee in the meantime until your children become adults and are ready to receive that responsibility.
Will vs. Beneficiary
Simply put, a will covers all of your assets, while a specific beneficiary document is executed in relation to one specific asset. For example, your will might cover your property, family heirlooms, and bank accounts, while your beneficiary specifically designates who will receive your life insurance money or 401k payouts.
Who Needs a Will?
It’s a common myth that you won’t need a will until you’re older, or that wills are only necessary for people with considerable estates. In reality, a will is important for everyone. It can ease the strain on your loved ones at an already difficult time, and it allows for a smoother and faster reallocation of assets.
Even if you’re married, it’s advisable for you and your spouse to each create a will individually. Mutual wills prohibit the still-living partner from changing the agreement, and as circumstances change, your original will may not be the best fit for them in a future season. Instead, you can create separate (but often very similar) wills that name one another as the executor of your estate.
Even if you’re not married or don’t have dependents, a will can ensure that your assets are passed along to the right places, whether it be family members, trusted friends, or a charity organization.
Should I Revise My Will?
Your assets, property, and even relationships will undoubtedly change over time, and it’s important to review your will from time to time to make sure everything is up to date. In some cases, it may be necessary to create a new will that overrides your previous one, but most of the time, you can simply update your existing will. We recommend reviewing your will annually, making changes as needed.
For example, maybe you created a will when you had young children. You accounted for their care in the event of your death. But now, they’re grown and out of the house. At this time, they no longer need an appointed guardian — and if you set up a trust for them as dependents, it will likely need to be reworded or reworked.
A marriage or divorce will also change your will significantly, as will buying and selling businesses or real estate. It’s important to keep your estate plans up to date to make life easier for your family and friends one day in the future.
Planning for your death can feel uncomfortable, not to mention complex. But here at SageSpring, we’re here to help. As estate planning professionals, we can guide you through these decisions, helping you execute a plan with your legacy in mind. Contact a SageSpring advisor near you to get started today!
While we are familiar with the legal issues presented here, as Financial Advisors of RJFS, we do not provide tax or legal advice. You should discuss tax or legal matters with the appropriate professional.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of SageSpring Wealth Partners and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.
