What Is a Will?
A will, or a Last Will and Testament, is a legal document that outlines your intention for the distribution of your assets after your death. It is an integral part of a comprehensive estate plan and helps your loved ones avoid legal and financial loopholes and know what to do with your assets. These explicit instructions are essential and can help everyone avoid a lot of headaches.
Wills vs Trusts
When you’re researching estate planning documents, you have likely come across both wills and trusts. While both documents can help dictate what you want to do with your assets when you’re gone, there is one main difference.
The primary difference is that a trust takes effect as soon as it’s created and signed, while a will does so only after you pass away. There are also two different types of trusts to consider: irrevocable and revocable.
- Irrevocable trusts are trusts that can’t be changed or canceled after they have been signed.
- Revocable trusts can be changed, and the grantor has the right to change the terms or even end the trust.
Some other differences are that a will requires probate to transfer items to beneficiaries, but trusts can avoid probate. In addition, wills are public record and trusts can remain private. Because a trust takes effect right when it’s created, it can be used if you become incapacitated and unable to make decisions independently.
Do You Need a Will?
We face so many financial obligations every day, so should creating a will be at the top of your list? Yes, it won’t take more than a few hours of your time and it won’t cost more than a couple hundred dollars at most.
The barrier to entry is very small, but that small effort can relieve quite the burden from your loved ones. Even if you don’t have substantial assets to transfer, having directions from you can help your family feel more confident about your wishes.
Now that you know what a will is and is not, here are the 8 reasons why making one is a good idea:
- It allows you to distribute your property and protect your loved ones after you pass away.
- It can provide peace of mind to you and your family.
- You can plan for those in your care (e.g. naming a legal guardian for your children or pets).
- It may prevent family conflict.
- It can eliminate confusion over assets.
- It can ensure that your assets go to the people you want to have them.
- It can help you build a lasting legacy.
- It can be used to help benefit a charity of your choosing.
How to Create a Will
Creating a will can be a straightforward process, or it can involve the help of attorneys and financial advisors. Also, the process depends on where you live because every state has different requirements.
Generally, the first step is to determine what you want to include. You should include instructions for passing along your assets after your death, including ownership and other instructions. You may consider working with an attorney to ensure that your will contains everything it needs.
Next, you sign the document in front of two witnesses, and these two witnesses also sign. Some states require a self-proving affidavit that you sign in front of a notary, other states require notarization, and some states don’t require any special self-proving documentation as long as you and your witness sign correctly.
Whether you have $10 worth of assets or $10 million, creating a will is a good idea to give your family more guidance after you pass.