COVID-19 has produced a rise in estate planning; however, the majority of Americans still do not have a will. In fact, a survey conducted for LegalZoom.com found that nearly 75% of parents do not have a will. Many mistakenly believe that they don’t have enough in assets to warrant a will, or that their money will automatically go to their next of kin. Both assumptions are wrong. It is crucial to get the facts and put planning in place to protect those you love and ensure that you are the one to decide how your possessions and money will be distributed.
Fact #1: If you die without a will, the state writes one for you, according to the intestacy laws of the state where you reside. For example, in New York, the assets you own would be passed to a surviving spouse and your children, but in Texas, your assets would be entered into the state’s intestacy probate process, and your property would be divided by your relatives. So, if you don’t want the wrong person to have ownership of your estate, write up a will, now, while you are of sound mind.
Fact #2: You are never too young to have a will. It would be nice to live a long, long time, but there is always the chance that you won’t. Unless you have a will, your heirs may be left with a tangled mess that they will have to unravel. If you own anything, at any age, you should have a will in place.
Fact #3: A verbal agreement is not legal and binding. You can let everyone know, clearly, that you would like your mother to take care of your kids, but what if your mother-in-law decides she wants the kids? Without a will, the decision of who gets the children is up to a judge. Choose your guardians wisely and put other choices in your will. You may want to appoint one person to care for the kids and another person to be in charge of their money.
Fact #4: Decisions are made according to the most recent, updated will you leave behind. If your circumstances change over time, you should update your will in accordance with the changes. Life insurance policies, retirement plans, and payable-on-death and transfer-on-death investments are all contracts. The beneficiaries you designate will inherit these assets regardless of what your will says. Be sure to remember to change these essential documents, too.
Fact #5: Legally, you do not need an attorney. If you use an online service, the cost of writing your own will can be less than $100. However, it is best to hire a lawyer in most situations. It could save your family from any misunderstandings and quarrels that could result in thousands of dollars in legal fees later. A complete estate plan should include a Last Will and Testament, Power of Attorney, and Health-Care Proxy. Some clients will also want to consult with their lawyer about whether they need a living trust for assets that do not pass outright to a beneficiary.
The cost of your estate plan varies with which documents you need and with the complexity of your situation. On average, experienced attorneys may charge $250 or $350 per hour and in urban areas hourly fees can be closer to $350-$600 a hour to prepare more sophisticated estate plans. Be sure to speak to your lawyer to get an estimated cost for your full estate planning package.
Checklist:
1. Get a will or update your old will.
2. Check your beneficiary designations on insurance policies and retirement plans.
3. Review how assets held jointly are titled.
4. Consult a lawyer to review your estate plan and prepare the documents.
Talking about death is a difficult subject for many people, but a thoughtful, well-planned estate plan is one of the most thoughtful gifts you can give your loved ones.
