Having a will is considered by many to be the cornerstone of estate planning. This document can be used to designate who gets your assets, your property and even your minor children if you pass away.
It’s not always the most significant estate planning document since you can transfer assets like retirement accounts simply by naming beneficiaries. But still, having a poorly written or out-of-date will can be costly and derail an otherwise well-planned estate.
Experts typically advise that individuals get their basic estate planning documents in order after major life events such as when they get married or buy a home — and then revisit them regularly, especially during retirement.
Learn how to complete your will using the following 11 simple steps:
1. Decide How to Make Your Will
When it comes to creating a will, you have two choices. You can use an estate planning attorney or try the do-it-yourself route with software.
Individuals or families with relatively simple financial situations may be able to use a reputable online software program to complete their wills. Some software programs to consider include:
— Quicken WillMaker & Trust
— Fabric by Gerber Life
— LegalZoom
Many situations, however, require using an estate planning attorney. “There are so many rules that come into play,” says Patrick M. Simasko, elder law attorney in Mount Clemens, Michigan. Online resources can be great, but you have to know how to use them.
“(People) don’t know how to fill them out right, sign them right, notarize them right, so they don’t mean anything,” he adds.
Hiring an attorney to create basic estate planning documents may cost a few thousand dollars, while an online software program can cost $100 or less. Experts warn, however, that improperly prepared documents can be costly down the road.
2. Select Beneficiaries
One common mistake people make when planning their estates is failing to name or update beneficiaries on key accounts. Beneficiaries are individuals designated to receive ownership of a specific account, such as a retirement fund, upon your death.
“What’s listed on all of the bank accounts, the life insurance, the house — that controls what goes where,” Simasko says. “The beneficiary listed supersedes the will.”
3. Choose Your Executor
The executor of your will is responsible for carrying out your wishes. This person is often a family member or an outside individual, and they should be responsible and detail-oriented.
“If you have no children, no nephews or nieces, you can always name your attorney or CPA,” says Brian J. Decker, owner and founder of Decker Retirement Planning, which has offices in Washington, Utah and California.
Another option would be to use a corporate trustee to fill the role of an executor. But, according to Decker, that can be cost prohibitive.
“They charge 1% of the estate every year even if they do nothing, and they require you to have all your assets with them, so it’s a double dip,” he says.
4. Choose a Guardian for Your Children
If you have dependent children, it’s essential to name a guardian in your will. You technically don’t have to ask permission before naming someone, but it’s a good idea to do so. You should also specify multiple guardians in case one isn’t able to accept the responsibility.
Likewise, you can stipulate in your will if there is someone you do not wish to have guardianship of your children.
5. Be Specific About Who Gets What
One of the most time-consuming aspects of creating a will may be deciding which assets to include and determining who will receive what. As part of this process, consider the needs of your heirs.
For instance, young grandchildren may not be in a position to manage money for years, or even decades. In that case, someone may decide to leave a smaller amount to these grandchildren with the understanding that investing the money will help it grow substantially before it is needed.
On the other hand, if you want to fund a young adult’s college education, there may not be time for them to invest their inheritance and watch it grow. In that case, you may want to leave them a larger amount to cover the entire expected cost of their degree program.
6. Be Realistic About Who Gets What
Think practically about how you’ll distribute your assets. A top reason children stop speaking to each other after a parent’s death, Decker says, is the presence of a will stating that assets should be divided equally among them — even when that’s not possible.
“If you have three kids who all play the piano and (you) have this boilerplate language, the first one is going to pick the Steinway,” he says. “You can’t divide tangible assets equally. You will have kids who have strained relationships after the estate is distributed because of this.”
This reinforces the previous step and being specific about who gets what. Anticipate where heirs might have disagreements and try to head those off by distributing valuable assets individually rather than asking that they be divided equally.
7. Attach a Letter to Your Will
A personal letter or memorandum to your will can also be helpful in avoiding family disagreements and hurt feelings. This document can provide an explanation for why you decided to divide your assets as you did.
If you have chosen not to share your assets equally among heirs, this document can provide clarity about your wishes and may deter an unhappy family member from trying to contest the will.
8. Sign Your Will Properly
Incorrectly executing a will may lead to a judge deeming it invalid. Witnesses must sign your will and, in many states, they can’t be people who stand to inherit. Your witnesses also must be at least 18 years old.
Ideally, they’ll be people who are likely to be around when you aren’t. If something goes wrong and a court contests your will, the judge may want to call a witness to testify. The number of witnesses a judge needs to call may also vary by state.
9. Store Your Will Safely
Make sure someone you trust knows where to find your will, as well as any other important papers and passwords to financial accounts. Consider storing the original copy in a fireproof safe.
In some cases, you can execute and store wills electronically. These electronic wills, or e-wills, are valid only if they meet certain requirements — they must be in text form, not audio or video, and meet state rules regarding whether witnesses are physically present or remote.
10. Review and Update Your Will
Generally, you should update your will every five years, says Daniel R. Bernard, founder of Bernard Law P.C. in Shoreham, New York.
“Similar to getting your car’s oil changed every 3,000 miles, this doesn’t always happen,” Bernard said in an email.
“Another good rule of thumb is, any time you have a major life event, the birth of a new child or grandchild, a divorce, or the death of a spouse or parent, for example, it is a good time to review your documents,” he added.
11. Add Other Estate Planning Documents
A will alone may not meet all of your estate planning needs.
Trusts, for example, are another estate planning tool that enables you to transfer assets when and how you want. There are many different types of trusts, but one is a testamentary trust, which you can create within your will to transfer assets after you die.
Other estate planning documents — such as a living will that communicates your desires for medical treatment or a power of attorney that allows a third party to make financial and legal decisions for you — should be the next thing you tackle after you write your will.
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11 Steps to Writing a Will originally appeared on usnews.com
Update 10/15/24: This story was previously published at an earlier date and has been updated with new information.
