No one likes to talk about the what-ifs of what might happen if something were to happen to them. However, accidents do happen and you should think ahead. Read on to find out the importance of creating a will.
What is a Will?
A will is a legal document that provides direction on what to do with your money and property after you die. It can also give direction on who you want to care for your children after you die.
Both are brutal things to think about, but ultimately both are important.
Why Do you Need a Will?
If you do not have a will, the distribution of your property and assets will be left up to the government. Similarly, if you have minor children, the state will decide who their guardian will be.
If you have a will, these things can be predetermined exactly how you’d like instead of leaving it up to the courts.
Knowing that these things are taken care of can bring peace of mind.
How Do You Create a Will?
There are a few different ways to create a will. One way would be to reach out to a lawyer and have them assist you in drawing up the documents.
A lawyer will help walk you through everything you need for a will. They can also provide guidance on setting up any trusts you may need and various powers of attorney.
The other method would be to find some do-it-yourself templates online or via software to fill out on your own. Some employee assistance programs may also offer guidance on creating a will.
Key Parts for Creating a Will
There are three key parts of a will.
Beneficiaries
A beneficiary is a person who will receive the benefits or assets of your estate. In your will, you can be very specific as to which beneficiary receives what.
Typically, if you have children, you would list them as the beneficiaries.
However, you could also designate specific parts to others if you wanted to.
In this part of the will, you can list out your assets or property and list who will receive what. This would include bank accounts, life insurance, your house, vehicles, or any other substantial property you may own.
One of the ways to make this process even smoother is to make sure that you have beneficiaries listed on each individual account as well. For example, you can have your bank account assigned as payable to someone after your death.
Similarly, on all life insurance policies, you should have someone listed as the beneficiary there.
Executor
The executor is the person who will make sure that the wishes listed in your will are carried out as stated within the will.
If you have older children, this could be one of them. You could also choose a sibling, parent, or another person whom you trust. As an alternate, you could choose to have your attorney.
Guardian
The guardian is the person who will care for your children after you pass away. You can pick whomever you want for this.
As a rule of thumb, you typically let the guardian know you have chosen them ahead of time, however it isn’t required.
When we were picking our guardians, our lawyer was adamant that we have at least two different options listed.
In addition to this, our lawyer wanted us to have someone listed who was similar in age to ourselves. For example, if you want to list one of your parents, you could. However, you should then also list someone closer to yourself in age, such as a sibling.
Picking a Guardian
Picking a guardian to care for your child is one of the most difficult decisions you’ll have to make.
A few items to consider while making the decision:
- Consider the parenting style you want to use on your child and who in your life may align with that
- Consider who your child is most comfortable with
- You may want to consider the financial situation of the person whom you are picking to make sure they can handle the additional expenses
- Consider whether your child would have to relocate based on who you pick
- Whether the person whom you are picking as guardian wants to have children
- The age of the person you are picking
Additional Aspects of a Will
When we talked to our lawyer about creating our will, they also suggested we create the following documents.
Marital Property Agreement
A marital property agreement states how property owned by each of the spouses will be split as of a certain date.
When this is coupled with a will, it states who will own the property of each spouse and the joint property at the date of the death of either spouse. This agreement will help avoid probate, which is where a court verifies your will and approves your Executor.
Typically, this agreement would state that upon the death of one spouse, the other spouse would own all of the property and assets.
However, there are instances in which you could change the wording if you want. An example of this would be that you could direct a portion of your property to go to your children from a previous relationship.
Durable Power of Attorney
A durable power of attorney gives someone else the ability to handle your financial affairs during your lifetime.
This is typically used for the instance in which you may not be able to make your own financial decisions. An example of when this would come into effect would be if you ended up in a come in the hospital.
Make sure that you pick someone you trust to have this ability. Typically, if you are married, it would be your spouse. Otherwise, you could pick a family member or close friend.
Health Care Power of Attorney
A health care power of attorney gives someone the power to make health care decisions on your behalf if you are unable to do so.
You can have one permanently set up, such as when you create your will.
The other option is that typically if you are undergoing major surgery, the doctor’s office will require you to have a form filled out before that surgery so they would know who to turn to in the case they would need someone to make decisions on your health care.
In addition to having a health care power of attorney, it can be helpful to write down your wishes for your health care to help them make decisions on your behalf. This could mean defining what “quality of life” means to you so if they need to make that difficult decision, they know what you want.
A good example of this can be found here.
Other End of Life Factors to Consider
Briefly mentioned above, make sure that you have beneficiaries assigned to your bank accounts, retirement accounts, investment accounts, and life insurance policies. Also make sure that you have information on all of those accounts and policies stored somewhere, perhaps with your will, so that if someone needs to know them, they have the information they need.
Similarly, make note of any safe-deposit boxes you may have and the whereabouts of the key. That way it can be accessed to be cleared out at the end of your life.
The other thing to consider after you die is your social media and email accounts. Make sure you store your passwords somewhere they can be accessed.
Then, make a note for the executor of your will what you want to be done with them. Some people may choose to have their social media accounts closed down completely. Others may want them left up as a memorial.
Another item to take into account while creating your will is who will care for your pets if you have them. Make sure you assign someone to care for your pets as part of the process so they have somewhere to go after you die.
Should You Create a Will?
Whether you determine to create a will is up to you. The importance of creating a will is different for each person.
Personally, I didn’t create one until after we had our daughter. However, looking back on it, it probably would have been smart to do so earlier on.
Typically, if you are young and do not have much property or assets to distribute, you wouldn’t need to have a will.
However, as you get older and grow your portfolio, it makes sense to create a will to ensure that it goes to who you want after your death.
If you have children, creating a will should be a high priority since it is how you determine guardianship for your children.
Take the time to evaluate your own situation and make the best decision for your family and your circumstances.
