Thinking about the end of your life is never easy, and it's natural to feel a bit hesitant about the process. However, creating a will isn't really about death. It is an act of love and care for the people you value most. By getting your affairs in order now, you save your loved ones from confusion and stress later, and you ensure that the legacy you've built goes exactly where you want it to go.
What is a will exactly?
A simple will, often called a last will and testament, is just a document that outlines what happens to everything you own after you pass away. It gives you the power to direct your major assets, like your home, vehicles, and artwork.
It also covers items that might not have high monetary value but hold deep meaning. For example, you can use your will to make sure that specific painting of you on a horse your parents commissioned when you were six goes to the right person. While some assets like life insurance proceeds pass to heirs automatically, other property needs a will to get to the right place. If you don't have one, the outcome might not match what you actually wanted.
Why having a will is so important
If you die without a will, two things happen that most people want to avoid. First, the state steps in as a judge to decide who inherits your assets based on intestacy laws. Second, your family may disagree over who gets what, which can lead to significant conflict.
There are many unfortunate cases where an asset was verbally promised to a loved one, but nothing was written down. For instance, imagine a parent promises their home to the adult child who served as their primary caregiver. If that parent dies without a will, the other siblings could argue that the home should be sold and the proceeds divided equally. These types of disputes have the potential to split a family apart.
Who gets left out without a will?
If you die intestate (without a will), a judge with no knowledge of your family decides how to divide your assets. While regulations vary by state, generally only spouses, registered domestic partners, and blood relatives will inherit assets. Unmarried partners, friends, and charities will get nothing.
Usually, a surviving spouse gets the largest share. If there are no children, the spouse often gets everything. If no relatives can be found at all, the state takes the assets. Most of us don't want that to happen, so let's look at how to fix it.
How to create a will in 7 steps
You might face some emotional hurdles when starting this process, but the actual mechanics aren't complicated. Here is your roadmap to getting it done.
1. Make a list of everything significant or sentimental
Start by listing big-ticket items like your home and vehicles. You should also list items with strong sentimental value, like jewelry or family heirlooms. Just remember that you can usually only bequeath assets you own entirely. Most assets owned jointly with someone else, like a spouse, cannot be left to a third party.
2. Decide who gets what
Determine who receives which assets. It is smart to name contingent beneficiaries just in case your spouse, child, or another heir passes away before you do. For example, if you leave assets to an adult child who predeceases you, you need to decide if those assets go to their children or someone else.
3. Choose a personal representative
Someone has to make sure your wishes are actually carried out. This person does not need to be a professional, but they should be someone you trust completely.
4. Choose a guardian for your children
If your children are minors, you need to decide who will care for them. Once your children become adults, this section of your will becomes null and void.
5. Choose someone to manage your children's assets
If you have minor children, you must name someone to manage their inheritance. This doesn't have to be the same person you chose as their guardian. You have three main options here:
- Name a property guardian.
- Designate a property custodian under the Uniform Transfers to Minors Act (UTMA).
- Make them a trustee of your child's trust.
6. Write your will
Most people hire a lawyer to create their estate documents. This is generally the best option if you can afford it and want personalized legal advice. However, there are other paths.
Some states - specifically California, Maine, Michigan, New Mexico, and Wisconsin - provide a standard statutory form you can use if you are a legal resident. Just keep in mind that these forms are for simple estates and come with zero advice. You can also use do-it-yourself software or services like Nolo's Quicken WillMaker, which can save time and money if your estate is relatively simple.
7. Sign and store your will
You must sign your will in front of witnesses, and they must sign it as well. Ensure your signature is notarized. Once it is complete, store the original copy in a safe place, such as a safe deposit box.
What isn't in your will
Not every asset needs to be listed in this document. If you have named a beneficiary for your life insurance, bank accounts, or similar assets, those do not belong in your will.
It is crucial to remember that designated beneficiaries override what your will says. You should review your life insurance policies and bank accounts periodically. This ensures those assets don't accidentally go to a former spouse because you forgot to update the paperwork.
How to make your estate planning more comprehensive
A will is a great start, but a full roadmap usually includes two other documents to protect you while you are still alive.
Durable (or financial) power of attorney (FPOA)
This names someone to handle your financial matters if you become incapacitated. They can take care of paying bills, debts, and taxes for you.
Advanced Medical Directives
Also called a living will, Healthcare Power of Attorney (HCPOA), or healthcare proxy, this allows someone else to make healthcare decisions on your behalf if you are unable to do so. It can designate whether you want certain end-of-life medical treatments. Some states separate these documents, while others combine them.
Depending on your situation, you may also want to speak with an attorney about creating a trust. This can streamline the distribution of assets, keep financial info private, and sometimes offer tax benefits.
The Facet difference
At Facet, we believe financial health isn't just about investment returns; it's about making sure every part of your financial life aligns with your values. That includes protecting the people you love.
Our team of experts, including the CFP® professional dedicated to your journey, works with you to look at the big picture. We don't charge asset-based fees that eat into your growth. Instead, we offer a flat membership fee that gives you access to comprehensive advice - from retirement planning to estate planning guidance - so you can feel confident that your legacy is secure.
