By Andrew Housser
As the saying goes, death, like taxes, is one of the few certainties in our world. While relatively few Americans skip out on paying taxes, many more are not as vigilant about preparing for their deaths. A 2012 survey found that 50 percent of adults with children do not have a will. Even among Baby Boomers (adults age 55 to 64), 41 percent have not taken the time to draft a will.
People who earn less than $75,000 are more likely to skip drafting a will. This may be because they do not think their income warrants one or because they think they cannot afford to get a will drafted. But wills are not only for the wealthy or the old. Every adult should have one. If you are still not convinced, read on for answers to four major questions about this very important legal document.
What happens to my estate if I don't have a will? If you die without a proper will (called "dying intestate"), the state where you reside will decide how your assets are distributed. State rules vary considerably. In some states, your spouse may inherit everything. In others, the estate may be divided among spouse, children and sometimes even the deceased spouse's parents and siblings. This could significantly impact the surviving spouse's financial stability. In the case of unmarried partners, only a handful of states recognize such unions. Even then, you and your partner must be signed up on a state registry. A common-law marriage spouse may or may not be able to claim your estate. If you don't have a spouse, your parents and siblings usually are next in line for inheritance. Remember, a will not only ensures that your loved ones are properly cared for; it also keeps them from battling over possessions.
What happens to my children if I don't have a will? Children usually stay with the surviving parent. If that parent is unwilling, unfit or deceased, the state gets to decide your children's care. With a will, however, you can name the person you want to serve as guardians for your children. You also can establish trust funds for supporting and educating your children.
Isn't getting a will expensive? Depending on your circumstances, it may be possible to draft a will without incurring many legal fees. Online sites such as RocketLawyer, Nolo and LegalZoom are just a few of those that can guide you through the steps to create a basic will using their forms. Fees can be as low as $60. Do consider hiring a lawyer if your assets are significant, your situation is at all complex or you are uncomfortable handling the process yourself. The cost of a lawyer to draft your will can range from a few hundred dollars to a few thousand dollars, depending on your region and your situation. You can find a lawyer who specializes in estate planning via the American College of Trust and Estate Counsel or the National Association of Estate Planners and Councils. You also can find low-cost legal aid through your state's bar association.
How do I get started? Begin by compiling a list of your assets and debts. Remember to include investments, retirement accounts, insurance policies and family heirlooms. Think about who you want to inherit these things, including an alternate beneficiary. You also need to decide on an executor for your will. This person will oversee the selling of property, pay outstanding bills and taxes, and ensure that assets get transferred to the correct people. This can be a big job. If you want a relative or friend to be an executor, ask if they are willing to take on this responsibility before you name the individual in your will. Two witnesses who will not inherit from you must sign and date the will. You do not have to record or file your will with any government agency. However, you should make sure your executor knows where you keep your will, and it is wise to keep a copy in a secure place, such as a bank safe deposit box.
Once you have a will, be sure to review it annually and update it as needed. You may need to change your will due to marriage, divorce, the birth of a child or relocation to a different state. For the financial security of your loved ones, it is important that your will remains both legal and accurate.
Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.