Your Essential Estate Plan Toolbox: A Will

A Will: What is it?

After you pass away, the courts must determine the distribution of your assets. A Will is a legal document that expresses how your assets should be distributed at death. Remember, each state has a pre-determined plan for your assets that they will use unless you provide other instructions. A Will does just that. A Will tells the state that you have a better plan for the distribution of your assets and that they need to distribute your assets according to your plan.

The Will is also the document in which parents can name a guardian for their children. The importance of this aspect of a Will cannot be overemphasized. If you pass away and your children do not have a living parent, the state decides who is responsible for raising your children. Your children may be sent to a relative who you might not think is ideal for this job. If you don’t have a Will naming a guardian, this could easily happen.

Who needs it?

The need for a Will is universal. Any adult with any assets at all, a spouse, or children needs a Will.

How long would you prepare if you knew you were going to be on business in China and unavailable for six months? If you’re a single parent, would you get a nanny or find a relative who could take care of your child? Would you make a list of the bills that need to be paid? Would you make sure there was enough money for your family to survive in your absence? At the very least, there would be 20 or 30 things you would do to prepare your family for your six-month extended absence. If you would take the time and energy to prepare so extensively for a trip, why not prepare and protect your family for the most extended absence of all?  Even if you’re single, childless, and have no living relatives, you still need a Will! Who would you rather get your estate on your death? Uncle Sam, or the charity or organization of your choice? A Will helps you ensure your impact on the world around you will continue after you. 

If you already have a Will, congratulations! Remember, a Will isn’t something you do and then forget about. As things in your life changes, your Will may also need to change.

There are several situations that should cause you to review and possibly update your Will:

• Change in asset values. If the value of the assets in your Will have increased significantly, you will want to review the Will and make any necessary changes.
• Family changes. Review and update your Will to reflect family marriages, separations, divorces, births, adoptions, or deaths.
• Move to another state. Since state laws can vary considerably, you should review and update your Will if you become a resident of a different state.
• Regulatory changes. In the last few years, federal tax laws have changed in ways that can impact an estate. Always review your Will after state or federal tax law changes to keep the language and provisions in step with current legislation.
• Personal changes. If the named executor—the person responsible for managing the process of distributing your assets—of your Will or if the guardian you chose for your children can no longer serve in that role, you should find someone that can and update your Will accordingly.

Luckily, changing a Will is pretty straightforward. You often need only use a codicil—or amendment—to the existing Will. Only if your life changes dramatically, will you want to revoke your existing Will and start from scratch.

How much should it cost?

Some states, such as California, have fill-in-the-blank Will forms. If you are single with modest assets and no children, this should be just fine for you. If you state doesn’t offer this, you can get by with a packaged software program to help you create your Will. Otherwise, I suggest using an estate-planning attorney. A Will should cost somewhere between $250 and $750.

The proceeding blog post is an excerpt from The Six-Day Financial Makeover: Transform Your Financial Life in Less Than a Week!, available now on Amazon.