While discussing end-of-life wishes can be difficult, working with your attorney to draft a will should be a top priority. However, far too many of us avoid this task: A Gallup poll last year found that fewer than half of U.S. adults have a will. Some may not have gotten around to it, and others may think they don’t need one because their families would know how to handle their estate.
Depending on where you live, dying without a will – the legal term is ‘intestate’ – means your estate will be distributed according to state law rather than your wishes. Donna Walton, Wealth Strategist in U.S. Wealth at TD Bank, recently talked about some of the more detailed reasons why everyone needs to consider having a will.
Your assets will be allocated according to your directions
Your estate includes any real and personal property, including bank accounts and investments, and other items of monetary or sentimental value. A will is a material legal document that outlines your specific instructions and nobody else can decide what to do with your assets. A will allows you to decide, determine, and control how your assets will be distributed when you pass away.
Among the assets that you should include in your will are digital assets. According to TD Wealth’s fourth annual estate planning survey, the digital content incorporated into estate plans in 2022 included blogs, social media and email accounts followed by passwords. This increase in digital content and tools is consistent with an increased interest in digital assets like Bitcoin and other cryptocurrencies.
Every state's intestacy laws are different. If you pass away without a will and your spouse and children or children from a former marriage or parents survive you, everything may not go automatically to your spouse, so a will specifically provides for the transfer of wealth to the individuals that you say. A will allows you to put everything in writing, so everyone knows your asset transfer instructions after your death.
Your most important relationships will be recognized
Because state law may not recognize relationships outside of marriage or immediate family, if you want to provide for a live-in partner, a close friend, or a family caregiver, you’ll need a will that explicitly states who should inherit your assets. If they're not related to you by blood or marriage, they may not be provided for under laws of intestacy in many states.
Parents can designate who will be the legal guardian
It’s horrible to imagine young children losing a parent, which is why many parents might put off designating a legal guardian. A will lets you specially name the person(s) you select to take care of your kids and look after them financially. You can also name guardians and set up trusts for those children with specifically named trustees under your will to manage assets for them until they can take care of their own finances. You can protect them from people who may not have their best interests at heart or set up a trust for a special needs family member so you can fund their care upon your death.
You can also stipulate that your assets are earmarked for a college education or you can decide to put a plan and funds in place for your beloved pet.
You will reduce the stress on loved ones
A will can spare loved ones the burden of guessing what you would have wanted. It helps guide them through this time of grief, offering peace of mind. Because your will dictates who’s in charge of managing and closing your estate, you can relax knowing your affairs are in the hands of someone you trust. You're naming one or more executors – the person(s) that will take your will through probate. That’s important because if you die intestate, the court will appoint an administrator for your estate.
If your attorney prepared your will when you got married or first had children, it should be updated as your circumstances change. Like any other planning documents, wills should be reviewed every few years with your estate attorney.
You can leave behind a charitable or legacy gift
Your will can stipulate your support of charitable organizations after your death, which can have a huge impact on a cause you’re passionate about. You can also decide to make legacy gifts to a cousin, or someone who's been a great caretaker or friend over the years. By preparing a will, these decisions will be specified by you.
Getting started
A will is a material legal document, and you must consult with a qualified estate planning attorney to help direct you in this process. Your financial advisor and your tax advisor can also work with you and your attorney to discuss your investments and any wealth transfer concerns. While attorney costs can be high to prepare a will, there may be county and state organizations to help those with lower incomes to find qualified estate attorneys, such as the Maine Volunteers Lawyer Project. To find out more information about estate attorneys nationwide, Lawyer Legion has a comprehensive list of sites.
For More on Personal Finance Topics
If you have more questions about other personal finance topics that matter to you, visit the Learning Center on TD Bank's website.
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