What Is a Will? 6 Things to Know

A will is a legal document that outlines how a person’s assets, property, and belongings will be distributed after they pass away. It’s an essential part of estate planning, as it ensures your wishes are followed and provides clarity for your loved ones. But what exactly does a will do, and why is it important? This is what we’ll address in this article.

Key Functions of a Will

1. Designates Beneficiaries: A will allows you to specify who will receive your assets, whether that’s money, property, heirlooms, or other possessions. You can choose family members, friends, charities, or any other entities you wish to inherit your belongings.
2. Appoints an Executor: The will designates an executor, who is responsible for carrying out the instructions in your will. This person ensures that your assets are distributed according to your wishes and manages any necessary legal processes.
3. Names Guardians for Minor Children: If you have children under 18, a will lets you name a guardian who will take care of them if you are no longer able to. This decision can prevent family disputes and ensure your children are cared for by someone you trust.
4. Reduces Family Disputes: A clear, legally binding will can reduce confusion and disagreements among family members after your death. Without a will, the state will determine how your property is distributed, which may not align with your preferences.

What Does a Will Not Do?

While a will is an essential tool for estate planning, it does not cover everything. Here are some important things a will cannot do:

1. Avoid Probate: A will must go through the probate process, which is the legal procedure for distributing your assets after death. Probate can be time-consuming and costly, depending on the size and complexity of your estate. While a will ensures your assets are distributed according to your wishes, it doesn’t avoid the need for probate.
2. Distribute Assets Held in a Trust: If you have assets placed in a trust, those will not be governed by your will. A trust is a separate legal entity that allows you to manage and distribute assets outside of probate. Your will can specify how any remaining assets should be handled, but trust assets are not affected by it.
3. Override Joint Ownership: Assets that are jointly owned, like a house or bank account, automatically pass to the surviving co-owner upon death. A will cannot alter the fate of jointly owned property, as it bypasses the will and passes directly to the surviving owner.
4. Decide on Health Care Decisions: A will does not address decisions related to medical treatment if you become incapacitated. A living will or healthcare proxy is needed for these situations, allowing you to specify your preferences regarding medical care if you are unable to make decisions for yourself.
5. Cancel Debts or Liabilities: A will cannot cancel any outstanding debts you may have. Your creditors will still be entitled to payment from your estate before assets are distributed to beneficiaries. The executor of the estate is responsible for ensuring debts are settled before distributing any remaining assets.
6. Control What Happens After the Will Is Executed: A will only addresses what happens to your estate after you pass away. It cannot control how assets are managed or used after they have been distributed to your beneficiaries. For more specific control over assets, like long-term management of a property or ongoing support for a beneficiary, a trust may be more suitable.
7. Avoid Tax Liabilities: A will does not eliminate tax obligations related to your estate. Depending on the size of your estate, there may be estate taxes or other financial obligations that need to be handled before assets can be distributed.

Understanding these limitations is crucial when creating your will to ensure all aspects of your estate planning are addressed properly. For issues beyond the scope of a will, consider other tools like living trusts, healthcare directives, and financial powers of attorney.

Types of Wills

• Simple Will: A straightforward will where you list beneficiaries and decide how your property should be divided.
• Living Will: A document that outlines your wishes for medical treatment in case you become incapacitated and unable to communicate your preferences.
• Testamentary Trust Will: A will that includes a trust, providing instructions on how your assets should be managed for beneficiaries, especially for minor children or loved ones who may need additional care.

What Happens If You Die Without a Will?

If you don’t have a will, your estate will be subject to intestacy laws. The court will decide who inherits your assets, and this process can be time-consuming and more expensive for your family. It could also lead to unintended beneficiaries receiving assets, or even family disputes over who gets what.

How to Create a Will

Creating a will doesn’t have to be a complicated process. Here are a few steps you can follow:

1. List Your Assets: Start by making a list of all your significant assets, such as property, savings, investments, jewelry, and personal items. This will help you determine how to divide your estate.
2. Choose Your Beneficiaries: Decide who you want to inherit your property. This could be your spouse, children, other relatives, or organizations you care about.
3. Appoint an Executor: Choose someone you trust to execute the will and manage your estate after your death. This person will be responsible for ensuring your wishes are followed.
4. Name Guardians for Children: If you have minor children, you should designate a guardian who will take care of them if both parents pass away.
5. Consult a Lawyer or Use Online Services: While you can create a will yourself using online tools or templates, it's recommended to consult with an estate planning lawyer to ensure everything is legally sound and follows the law.

Do You Have to Update a Will?

There are certain scenarios (e.g. significant life changes) in which you should review and possibly update your will, such as:

• Getting married or divorced
• Having children or grandchildren
• Acquiring significant assets or property
• Experiencing a death in the family
• Moving to a different state (since laws vary by location)

Final Thoughts: What Is a Will & Why is it Important

A will is an important legal document that ensures your wishes are honored after your passing. It provides peace of mind for you and your loved ones by clearly stating how your assets should be distributed, who will take care of your children, and who will execute your estate. By creating a will, you help avoid legal complications and give your family the guidance they need during a difficult time.

FAQs About Wills

1. How much does a will cost?

The cost of a will can vary. DIY wills using templates or software typically cost $20 to $100. If you hire an attorney, expect to pay between $300 and $1,000+ for a professionally drafted will, with more complex estates potentially costing more. Estate planning packages, which include a will, trust, and other documents, can range from $1,000 to $3,000+.

2. What is the difference between a trust and a will?

A will outlines how your assets are distributed after your death and requires probate. A trust, on the other hand, allows you to transfer assets to a trustee who manages them, often bypassing probate, and can also be active during your lifetime. A trust offers more flexibility and privacy, while a will is simpler and only effective after death.

3. Are wills really necessary?

Yes, for most people. A will ensures your assets are distributed according to your wishes and appoints guardians for minor children. Without a will, state laws dictate asset distribution, which may not align with your preferences. A will is essential for anyone with assets or dependents.

4. What is the main purpose of a will?

The primary purpose of a will is to specify how your assets will be distributed after death. It lets you name beneficiaries, appoint an executor to manage your estate, and choose guardians for minor children. It provides clear instructions, ensuring your wishes are followed.

5. What are the disadvantages of having a will?

The main drawbacks of a will are the probate process, which can be time-consuming and costly, and that it becomes a public document. Wills only take effect after death and can be contested in court. They also provide limited control over assets after death compared to trusts.