You've worked hard your entire life, so you should get to have a say in what happens after you pass away. However, if you were to die without a valid Last Will and Testament, state officials would be making these crucial decisions on your behalf.
What a Will Does
There are several reasons you need to have a will. For example:
- Name an executor for your estate. The executor is the person who is given the task of inventorying and distributing your assets. This is normally a friend or family member, but you could appoint a third-party if needed.
- Name a guardian for your minor child. If you're a parent, this is perhaps the most important reason you need to have a will. If you were to pass away without naming a guardian, the state would be forced to make this choice for you.
- Distribute assets that don't have beneficiary designations. Assets such as retirement accounts, life insurance policies, and annuities have beneficiary designations that determine who receives them after you die. All other financial assets should be distributed in your will to avoid having them passed to heirs via intestate succession laws.
- Distribute personal effects. You can specify which family members or friends should receive your prized possessions, regardless of their monetary value. This can help prevent your heirs from fighting over items that are one-of-a-kind, such as your wedding ring or an antique hutch given to you by your grandmother.
Why a Will Can't Accomplish All of Your Goals
Although a will is certainly an important part of your estate plan, this document can't accomplish all of your goals. Your will can't:
- Name someone to handle your affairs if you become unable to speak for yourself. You need separate power of attorney forms to choose a person to handle your medical and financial decisions if you become incapacitated. A will is only concerned with what happens after you pass away.
- Explain your wishes regarding end-of-life medical care. A Last Will and Testament shouldn't be confused with a living will, which is an advanced medical directive discussing how you feel about issues such as ventilation, tube feeding, and pain management.
- Provide instructions for your funeral. Your will won't be read until days or even weeks after your death. Funeral instructions need to be in a separate document.
- Avoid probate. If a will is your only estate planning tool, your estate will be required to go through probate.
Often, combining a will with a trust is the most effective way to plan for the future. Trusts come in different forms, but they can be used to reduce estate taxes, give gifts that come with conditions such as funds for a grandchild's college tuition, provide for loved ones with special needs without jeopardizing their eligibility for government benefits, or make ongoing donations to a favorite charity.
Why DIY Wills Are a Bad Idea
There are a number of online services offering inexpensive will templates, but the DIY approach can often result in costly mistakes that create unnecessary stress for your loved ones. Reasons to consult a professional include:
- Wills need to be written with precise language that avoids ambiguity to prevent accidental disinheritance or passing your assets to heirs in a way you did not intend.
- General templates don't take into account state-specific laws and may not be updated regularly.
- If you've been divorced, have stepchildren, live with a partner you haven't legally married, or have children who were born outside of wedlock, you need a Last Will and Testament that is tailored to your specific situation.
- It is unlikely a will template can account for important "what-if" scenarios, such as if you and the person you've named as executor pass away in the same accident or if your first choice guardian no longer can handle caring for your children.