Most people understand the basic necessity of a Will, but approximately 55 percent of Americans don’t have one1. Perhaps it’s because many people are unsure where to begin or what to include. This article will give you the tools to get started with confidence.
What is a Will?
A Last Will and Testament, or Will, is a legal document that declares who will manage your estate and receive your property after you die. Depending on your assets, debts and specific wishes, a Will can be a simple document or may become very complex. No matter how complicated the estate, a Will must always address certain items.
What Should I Include in my Will?
Naming of the Executor
The executor of your Will is charged with managing your estate after you die. The executor uses funds from the estate to pay any remaining financial obligations and handles the distribution of assets to beneficiaries. Your Will should clearly identify your chosen executor. Failing to do so may result in court involvement.
You can name a single executor, co-executors and alternate executors. With co-executors, it is important to understand that both will need to make all decisions regarding the estate unanimously. Some of the disadvantages to co-executors may be delay and the potential for disagreement, especially if the co-executors live out-of-state and are unable to work together. In the event the primary executor is unable or unwilling to perform their duties, alternate executors may be named to take on the responsibility.
Payment of Debts and Expenses
Before any assets are distributed to beneficiaries, outstanding debts must be satisfied. If you owe money on mortgages or loans, the executor has the responsibility to notifying the lender. They also must pay any funeral expenses and taxes.
What happens if the estate’s debts are greater than the estate’s total value? Rest assured your debt will not be inherited. Depending on your state’s laws, the estate’s assets will likely be used to pay probate and funeral expenses first, then to pay remaining debts. At that point, if the remaining debts are still not satisfied, the heirs will not receive any money, but they will not be responsible for paying the debt either.
Guardianship of Dependent Children
If you have dependent children, your Will should convey who you wish to take care of them following your death. If there is a surviving parent, they are generally the default, but it is still a good idea to specify the other parent as the preferred guardian. Your Will should also name a secondary guardian, in the event both of you pass.
When choosing a legal guardian for your children, there are several factors to consider. People often look to their own parents as potential guardians, but keep in mind their age and general health to ensure they would be up to the task. You may also want to consider whether the prospective guardian could handle the financial burden. Taking on the responsibility for children is a huge commitment that should be discussed with your proposed guardians in advance.
If you have more than one child, make sure that it is clear in your Will whether you want the children to stay together. If keeping your children together is more important to you than the specific legal guardian, say so in the Will. If the court doesn’t approve of your choice of legal guardian or they cannot serve, but you still want your children to stay together with a guardian appointed by the court, make this preference clear as well.
Division of Assets
In addition to your Will, it would be helpful to your executor for you to include an inventory of all your assets: bank accounts, stocks, bonds, cars, furniture, jewelry, etc. Provide as much detail about each item as possible, even photos, so there’s no confusion. If you want to leave a certain item to a specific heir, make those wishes clear. For liquid assets, such as cash in bank accounts, you can assign ratios for distributing them to heirs.
The main thing to keep in mind is to be precise in conveying your intentions. Avoid ambiguous statements. Clarity in your Will makes things easier in both the short- and long-term by preventing legal issues and/or family disputes.