A will is a legal guide for how to handle your property when you die. Because it requires you to think about death, many people avoid writing a will. However, putting it off can create problems for your family.
Let’s go over the basics of a will and how it fits into a bigger estate plan.
What is included in a will?
Creating a will means making a list of your assets. Include any property, as well as any retirement, investment or bank accounts, as well as jewelry, art, and other collectibles.
List your liabilities including mortgages, auto loans, student loans, credit card debt, and even tax obligations. Your estate is responsible for covering these liabilities when you die.
You must choose an executor to carry out (or execute) your wishes. When drafting your will, determine which specific tasks the executor should handle. Not only should you make sure your executor is someone you trust, but you might also want to name an alternate just in case.
You should also consider who you want to care for any minor children in your care, as well as pets and other dependents. As with your executor, consider naming alternate guardians as a precaution.
You don’t need to notify or get permission from the executors or guardians you name in your will, but it’s a good idea to do so.
Next, consider your beneficiaries. These are people who receive, or benefit from, your assets. To avoid confusion and make the process easier, try to gather names, birthdates, and Social Security numbers for your beneficiaries.
Once you have this information compiled, a lawyer can help you construct a formal will.
How does a will work?
When a person dies, their will is filed with a probate court. Each state has specific laws governing probate, but it generally includes locating and valuing the deceased’s assets, settling their liabilities, and distributing the remainder of the estate (assets) to beneficiaries.
Depending on where you live, the distribution process may be as simple as a few filings and notifications. In other states, it may require a more traditional court proceeding and take more than a year.
Regardless of how long probate takes, it’s a public process. That means your assets at death may become part of the public record. Placing assets into a trust shields them from probate (one of the many benefits of using a trust to help transfer assets).
Probate is where problems tend to arise. If there are multiple versions of your will or if there are issues with how the will is notarized, it’s possible to challenge or even invalidate the will. As you age, accrue assets, and update your will to accommodate changing circumstances, the potential for this type of error increases.
The chance of running into problems may increase if you write your own will, even if you use legal software. You wouldn’t want an accidental omission, “cut and paste” error, or incorrect phrasing to forever impact your legacy. Working with a lawyer who specializes in wills and estate planning can help you avoid missteps.
Often, wills are created as part of a broader estate plan and work in tandem with the legal documents involved in creating a trust.
Do I need a will if I have a trust?
Clients often ask us if they still need a will once the trust is in place. The short answer is: Yes. Even if you place most of your assets into a trust, you still need a will.
Think of it this way: A trust is a tool for transferring assets, a will is an instruction manual for how your estate should be handled.
Here are a few examples of what can be included in a will but not in a trust:
Guardians: If you have minor children, adult dependents, or pets, you can name a guardian in your will.
Executor: An executor is legally responsible for handling affairs for your estate. This is different from a trustee, who only oversees the assets placed in trust. An executor can help ensure your personal belongings are handled correctly.
Sentimental items or personal belongings: Not every item you own will be included in a trust. Consider your baseball card collection or favorite piece of jewelry. In your will, you can specify who you’d like to receive individual pieces of property.
Debts: If you’ve lent money to others, you can forgive their debts in your will.
Final steps
It’s important to store your will in a safe place and make sure your executor has access to it. If you work with a lawyer, verify they have a copy.
Don’t include any plans for your funeral in your will; it can take time to access and probate a will, and your family will likely need those instructions sooner. Draft and store any such documents separately.
Finally, know that certain assets, including life insurance and retirement accounts, pass directly to the beneficiary and don’t need to be included in a will. (They also skip probate.) We can work together to ensure these accounts reflect your wishes.
When the time comes to establish or update your will, Bogart Wealth advisors work with your attorney as needed to craft a comprehensive estate plan that reflects your wishes. If you are not yet working with an attorney, we can provide recommendations in Virginia and Texas, or help you search for estate planning specialists near you. Contact us today.
Bogart Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. Bogart Wealth is not affiliated with and does not receive direct or indirect compensation for referral to an estate planning attorney.
