Most people are far too busy living to think about dying. However, for grieving friends and family, taking care of all the details from funeral planning to working through legal matters can make the time of someone’s passing extra stressful.
Taking the time to make legal and financial preparations, like purchasing life insurance to cover end of life expenses, can decrease your loved ones’ mental and emotional burden, giving them more time and space to grieve.
Preparing a will or a trust is another important step to take because it clarifies your wishes and can make taking care of final affairs less stressful.
A 2017 survey by Caring.com found that 40 percent of adults in the United States have a will.
When broken down by age, the results show a clearer picture:
- Millennials: 22 percent have a will
- Gen X: 36 percent have a will
- 53-71 years old: 60 percent have a will
- 72+ years old: 81 percent have a will
Wills and trusts are how people can make their wishes regarding their assets, money, heirlooms, and custody of children legally binding.
The Basics Of Wills
Wills are legal documents that initiate legal processes that transfer ownership of assets from the deceased to the will’s beneficiaries. As part of this process, an estate tax may be collected by the government and creditors have priority access to the estate.
The legal terminology associated with wills can be unfamiliar, so here are some common terms defined:
- Testator: The person writing the will to express their own wishes after passing away.
- Estate: Everything that belongs solely to the individual writing the will. Jointly owned assets generally fall outside the bounds of an individual’s will.
- Executor: The person chosen by the will-writer to ensure lingering debts and bills are paid and the wishes expressed in the will are fulfilled.
- Witnesses: Individuals who sign the will and help it to be legally binding for more traditional wills. To avoid potential conflicts of interest, it’s a good idea not to ask any beneficiaries to be signatory witnesses. Some kinds of wills do not require witnesses.
- Letter of instruction: This document can accompany a will to indicate who will receive which family memorabilia items, like photos or letters.
- Probate: The process through which the estate is divided and the wishes of the will fulfilled.
Types of Wills
There are several different kinds of wills, but not all kinds of wills are recognized in every state. Before selecting what kind of will to write, be sure to understand the laws in your state.
A few common kinds of wills include the following:
- Simple Will: This kind of will is best for people who don’t have a complex estate.
- Living Will: This kind of will states a person’s wishes regarding medical treatment. This will is helpful in situations when someone is unable to make those decisions for themselves, like if the person is in a coma.
- Deathbed Will: This will is instructions or final wishes given shortly before dying. These wills are often contested because they are not as well documented as other types of wills.
Preparing Wills Jointly or Separately
People can choose to create joint wills together with another person or have two separate wills. The choice mostly depends on personal preference.
There are three kinds of wills that can be created by civil partners. These combined wills detail what happens when one of the partners passes away and what happens if both partners pass away at the same time.
Joint wills and mutual wills come with the caveat that the surviving partner cannot change the will later.
A reciprocal or mirror will allow couples to create a will together and gives the surviving partner ability to change the will.
The other option is for both individuals to have their own wills, which gives each party a little more flexibility.
The Basics of Trusts
Trusts are an alternative to wills. Trusts ensure that most of the assets go directly to the beneficiaries because they protect assets from creditors, by-pass some taxes, and do not go through the same transfer process that assets tied to wills do.
Trusts have different terminology:
- Trustor: The person who creates the trust, similar to the testator of a will
- Trustee: The person who manages the trust, similar to the executor in a will
Like wills, trusts can be created jointly by couples or created independently.
How to Prepare a Will or Trust
Lawyers have traditionally been tasked with helping people prepare their wills and trusts. With the advent of the internet and online legal services software, making a legally-binding will or trust has gotten cheaper and easier.
While working with a lawyer can be more expensive, there are some benefits. Lawyers can ask questions to better understand what an individual wants and help them think through different scenarios. Lawyers are also better equipped to handle complex wills or trusts and large estates.
Wills created online are a relatively new trend. These wills are much cheaper than paying a lawyer’s fee and very easy to create.
Online legal services have legal documents available. Some have software designed to help customers fill-out the forms. Some online legal services file the documents on their customers’ behalf, others do not.
There is plenty of debate about electronic wills because they are relatively new and can’t always be verified in the same ways wills have been traditionally.
However you choose to prepare your will or trust, it’s a good idea to think about who you want to name as your executor or trustee and have a conversation with them about it. In this conversation you can assess their comfort level and willingness in ensuring that your estate is taken care of properly.
What happens if you don’t make these legal preparations?
If someone doesn’t have a will, state laws determine how finances and assets are dealt with after someone passes away. Judges appoint a decision maker (administrator) and determine custody of dependents.
The appointed administrator with ensure that the estate is divided in accordance to state laws. This process can be take time and the end result may not be what the deceased would have wanted.
Making the proper legal preparations will decrease the decision-making responsibility placed on your loved ones as they grieve and take care of your final affairs.
These preparations will also help ensure that your final wishes are respected.