FAQ: Do I Need a Will?
Creating a Will (sometimes called a “Last Will and Testament”) may be one of the most important things you can do for your loved ones and for yourself. However, it’s important to understand what a Will covers and how it fits into your estate plan. Whether you are preparing a Will for the first time or are considering updating your estate plan, there are a few things you should keep in mind. Here are answers to a few questions I frequently hear from clients.
Who needs a Will?
Most people would benefit from having at least a simple Will. For some, it may be the cornerstone of their estate plan. For others, it may be only a small component. Individuals with minor children can especially benefit, as they can use their Will to nominate a legal guardian for surviving children and avoid having a probate court make the decision for them. Your Will also allows you to identify the intended beneficiaries of assets you own when those assets don’t already have another joint owner or designated beneficiary.
What is covered by having a Will?
Property you own individually generally becomes subject to probate after your death, and your Will provides instructions on how you would like those assets to be distributed. You may name individual beneficiaries or charities. Without a Will, that property is distributed by a set of default rules known as “intestacy” laws.
It’s important to seek advice from an experienced attorney, especially if you live in a community property state, to understand how state laws may impact your Will. If you prefer to avoid your property passing through probate, this can be accomplished by adding joint owners to property, designating beneficiaries on accounts, or transferring ownership of assets to a trust. When these actions are taken, your Will no longer determines who receives those assets after your death. But some of these probate avoidance measures can have unintended consequences. Again, consulting with a knowledgeable attorney is important.
How is a Will different from a Trust?
As noted above, a Will covers only the property you own individually at the time of your death if no other co-owner or beneficiary is named. Any property included in your Will is distributed outright to the entitled heirs, with no strings attached. In contrast, a Trust can continue to hold property that you transfer to it and provide for desired beneficiaries long after your death according to the terms and conditions you establish.
Wills may be filed with the probate court and become part of the public record, while trusts are generally administered privately. If you create a trust as the main vehicle for handling your assets, you may still have a Will. Often a Will is used to make sure any property that was not transferred to a trust during your lifetime is directed to the trust after your death.
Who should I name as the executor?
The person you choose as the executor (sometimes referred to as your “personal representative”) of your Will – the person who will manage your estate and execute your stated wishes – should be ethical, responsive and responsible. Choose someone you know will be able to remain as neutral as possible and will execute your wishes exactly as you stated.
Many people choose a family member, although you should understand that this can be a difficult and time consuming burden for family members, particularly if they are grieving your loss and have careers or other demands on their time. Family members may also have a difficult time being impartial and they can easily become the target of criticism from other beneficiaries who don’t understand the time and work involved in settling an estate. For these reasons, you may consider appointing an attorney or a professional fiduciary, such as a bank that offers such services.
Where should I store my Will?
Whether you choose to keep the original of your Will with your own records or with your chosen executor, it should always be kept in a secure location. Some individuals choose to store their estate planning documents in a safe deposit box. Law firms and banks may allow you to store such documents in their fireproof files or a vault at no additional fee.
Your executor should know where to easily find your Will and other important, such as a list of your assets and beneficiary contact information. You may choose to share the contents with beneficiaries during your lifetime, but this is a personal decision and you should consider whether future changes could be made.
Do I need an attorney to prepare my Will?
You are not required to hire an attorney to prepare or update your Will but doing so is recommended to make sure you understand what assets are covered, coordinate with other elements of your estate plan, guard against unintended consequences, and ensure proper execution. This is especially important if you own property in multiple states.
Proper execution depends on state laws, which can vary. Generally, this requires your signature and the signature of at least two disinterested witnesses. Notarization may also be required or recommended. Many states now allow virtual witnesses and remote notarization.
What about Powers of Attorney?
As life expectancies have increased, it has become more important to not only plan for what happens after death but also what happens if you are unable to care for yourself during your lifetime. There are two types of powers of attorney that are often recommended as part of an estate plan: Healthcare Power of Attorney and General (or Financial) Power of Attorney. A Healthcare Power of Attorney names someone you trust to make medical decisions on your behalf. This sometimes includes, or is supplemented by, instructions for end-of-life care, such as “do not resuscitate” orders, life support, organ donation, and more. A General Power of Attorney gives someone the ability to handle financial transactions and pay bills for you, particularly if you are not able to do so yourself. This is generally a better approach than adding someone as a joint owner to your bank accounts.
How often should I update my Will?
You should review your Will and other estate planning documents at least once every decade, but once every five years is even better. You should consider revisions when you experience big changes in your life, such as welcoming new children or grandchildren, retiring, receiving a large inheritance, preparing to sell a business, or blending two families through marriage. To learn more about how often you should revise your estate planning documents, click here.
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Bankers Trust Company and its affiliates and their representatives do not provide tax or legal advice. You should consult with your tax and legal advisors regarding your unique situation and needs.