Think you don’t need a will? Think again. A will isn’t just about dividing your assets, it’s also about who cares for your children. If you don’t want a court to make these decisions for you, draft a will now. When your will is executed, all your wishes will be put into place when you’re gone!
A will is a legal document that allows you to express your wishes for distribution of your property, care for loved ones, and payment of your final expenses. It’s simple to create. But according to the 2017 survey by Caring.com, only 46 percent of U.S. adults have executed an estate plan, and only 36 percent of those with children under the age of 18 have a will.
What If You Die Without a Will?
The state in which you reside determines how your property will be distributed if you die intestate (without a will). In Indiana, here’s what happens:
- If you’re married, your spouse will receive one-half of your assets and your children/grandchildren will receive the other half.
- If you’re married without children, your spouse will receive three-fourths of your assets, and your parents will receive one-fourth.
- If you’re single, 100 percent of your assets go to your children.
- If you’re single without children, your parents will receive one-fourth of your property and your siblings, nieces, and nephews will receive the balance.
The court will also appoint an individual to take care of your children. Typically, this is a family member. That sounds like a good option, but the court’s criteria may not match yours. Wouldn’t you prefer to decide which family member? Maybe you’d rather bypass your family altogether and choose a friend to serve as guardian. Without a will, you forfeit your right to choose.
Drafting a Will
It’s best to work with an estate attorney when drafting your Last Will and Testament. This ensures your wishes are clearly articulated and minimize the potential for others to contest the terms. The cost of an attorney-drafted will ranges from a few hundred dollars to $1,000. The difference depends on the complexity of your financial and family situation (married, single, divorced, children, etc.).
Want to DIY? You can check out legalzoom.com, lawdepot.com, formstemplates.com and other legal websites. The DIY-approach works better if your family situation is simple and you don’t have a lot of assets. Some sites don’t charge for a will template, while others charge a modest fee.
You can write your own will, but is not advisable. If you do, make sure you sign it in front of two witnesses to strengthen its validity. Nearly half of U.S. states honor a hand-written will without a witness’ signature. Indiana is not one of them.
Appointing an Executor
An executor (also called a personal representative) is the person you appoint to carry out the wishes detailed in your will. This person also takes on the responsibility of settling all your affairs. It’s not a simple task, so think carefully about the person you select for this responsibility. You should also name a successor executor in case your first choice is unable to act.
An executor’s job includes:
- Determining what assets you have
- Contacting people you’ve named to receive property and distributing it to them
- Notifying the credit agencies of your passing
- Canceling your credit cards
- Opening a bank account for your estate
- Ensuring debt payments, utilities, taxes and other outstanding expenses are paid while your estate remains open
- Paying off debts
- Closing down social media sites
- Ensuring the will is filed in the appropriate probate court
- Filing a final tax return and possibly an estate tax return
Property that Won’t Pass Via Your Will
Retirement accounts, life insurance policies, annuities, and property that you own with another person (joint with rights of survivorship) are not distributed by your will. Instead, these assets transfer according to beneficiary designations or to the joint owner.
However, if you own property with another person as "tenants in common," that property will pass according to your will. It’s important to take the other owner into consideration when determining who will inherit your share of the asset, because the property will continue to be held as "tenants in common" between your heir and the other owner.
You never know when your last day may be. With a well-executed Last Will and Testament you’ll know who’ll receive your assets, care for your young children, and administer your estate after you’re gone. This should be ample motivation for executing your will now.
Kathy Hower, CFP, is Director of Financial Planning and Senior Wealth Advisor at Bedel Financial Consulting Inc., a wealth management firm located in Indianapolis. For more information, visit their website at BedelFinancial.com or email Kathy.