If You’re One of the 70% of Americans Without a Will, Read On
Do you have a will? Between half and two-thirds of American adults don’t. Do you need one? Only if you answer yes to any of the questions below:
- Do you care who gets your property if you die?
- Do you care who gets your money if you die?
- Do you care who is appointed guardian of your minor children if you die?
Who Needs A Will?
Wills are not just for the rich. Regardless of how much or how little money you have, a will ensures that whatever personal belongings and assets you do have will go to family or beneficiaries you designate. Without a will, the court makes these decisions. A will is a device that lets you tell the world whom you want to get your assets. Die without one, and the state decides who gets what, without regard to your wishes or your heirs’ needs.
So-called intestacy laws vary considerably from state to state. In general, though, if you die and leave a spouse and kids, your assets will be split between your surviving mate and children. If you’re single with no children, then the state is likely to decide who among your blood relatives will inherit your estate.
Making a will is especially important for people with young children, because wills are the best way to transfer guardianship of minors.
If you do nothing else, please draft a will. If something should happen to you and your partner, this is the only legal way you can name a guardian for your child. Without this document, a judge decides who cares for your little one. While your family members may not be that interested in your pregnancy now, don’t be surprised if siblings and parents fight for custody of the baby.
You may amend your will at any time. In fact, it’s a good idea to review it periodically and especially when your marital status changes. At the same time, review your beneficiary designations for your 401(k), IRA, pension and life insurance policy since those accounts will be transferred automatically to your named beneficiaries when you die.
While not a necessity, a trust can be a very useful document. Again, should something terrible happen to you and your partner, a trust allows you more financial control over your assets versus a typical custodial account.
Most importantly, a trust allows you to decide when a child inherits the money outright. If you’re like me, you may not like the idea of your future 18-year-old or 21-year-old getting his hands on a lot of cash. (Can you say Ferrari?) In my trust, my daughter won’t inherit any assets until she’s 35. You may think this sounds extreme, but this way I know the trustee (the person who administers the trust) will make sure there’s enough money to pay for college. My daughter will also have an incentive to start a career since she can’t actually get her hands on her inheritance until later in life.
Finally, I’m a big fan of life insurance. Unless you’re really well off and have enough assets sitting in a bank account to support your partner and children for the next 20 or 30 years, this is something you should consider.