A last will and testament is a key element of estate planning. Yet, according to a 2021 Gallup Poll, only 46% of U.S. adults have a will that directs how they would like their money and estate to be handled after their death.
Without a will in place, families have to shoulder the additional burden of going through lengthy court proceedings to settle an estate. Clearly communicating your wishes through a last will and testament is a responsible and generous act that protects your heirs from unnecessary hardship.
What Is a Last Will and Testament?
A last will and testament is a legal document that details final wishes regarding an estate. This is the document that will tell the courts who gets what after a person passes away.
The last will and testament clearly lays out the following:
- Estate executor. This is the person who will settle your final affairs and guide your estate through probate.
- Beneficiaries. These are the people who will receive the assets contained in the will.
- Directions for dividing the estate. This can include charitable gifts.
- Directions for managing accounts. These include financial interests or social media.
- Guardianship designations. These can include both minor and dependent children.
- Conservator. If there are minor children, the conservator will manage any cash or property left to them.
- Additional instructions. These instructions can include provisions for the care of pets, or special asset designations.
What Does a Will Not Include?
Some assets already identify a beneficiary or were designed to avoid probate. These can’t be included in your will. They include:
- Property in joint tenancy
- Property in a living trust
- Life insurance proceeds
- Retirement plan proceeds, including money from a pension
- Stocks and bonds held in beneficiary
- Proceeds from a payable-on-death bank account.
What Happens to the Last Will and Testament After the Testator Dies?
Upon the death of the testator (the person the will is for), the will’s instructions will be carried out through probate. This is the court-supervised process of closing out a deceased person’s estate. Probate court oversees your executor and follows through on your will’s instructions. If the will is deemed valid, the court’s interaction can be relatively straightforward. If the will is not valid, is contested, or doesn’t exist, going through probate can be a lengthy process.
How to Prepare a Will
To make a will, you will need to make a list of all of your assets that will be included and then have the will drawn up in an official legal document. There are several ways to go about having a will drawn up.
- Hire an estate planning attorney. While the most expensive option, hiring an attorney is also the best way to ensure that you’ve thought of everything and have created a legally valid will.
- Use an online service provider. For a lower fee than an attorney will charge, these services provide a template and assistance in setting up your own will and estate plan.
- Write your own will. This can be a fine option if you don’t have a lot of assets to distribute and you’re not expecting a challenge. It’s perfectly legal, but you need to research your state’s requirements to make sure you have done what’s required to make your will hold up in court.
How to Ensure a Will Is Legally Valid
The easiest way to ensure your will is valid is to work with an estate planning attorney. An online service provider will tell you what you need to do, but ultimately, you will be responsible for making sure it’s set up correctly. The laws determining what constitutes a valid will vary from state to state but in general, the following requirements must be met:
- The testator is of sound mind —in other words, conscious of what they’re doing and not creating a will under duress, or under the influence of another person, narcotics, or alcohol.
- The testator is an adult, 18 years and older.
- The will is signed by the testator.
- The signing of the will is witnessed by two people who are also at least 18 years old.
- The will is notarized.
How Is a Last Will Different from a Trust?
A trust, like a will, directs the distribution of assets according to your instructions. However, wills take effect only after a death. A trust is effective immediately upon signing and funding, and can also convey your wishes during your lifetime. Trusts do not require an executor, but they do require a trustee to oversee the distribution of assets. Most beneficially, trusts do not have to go through probate, which helps heirs access an inheritance sooner.
Do I Need Both a Will and a Trust?
Both a will and a trust aren’t necessary, but often people do have both because they offer different coverage. A trust provides for the management and distribution of your assets, while a will allows for the naming of guardians and declaration of final wishes.
A will is only one part of a complete estate plan. Whether you choose to hire an attorney or make your own, it’s always helpful to consult with an estate planning professional.
Seniority is published by Finance of America Reverse LLC. The views expressed in this publication are those of the author alone and do not necessarily reflect the views and opinions of Finance of America Companies. This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.
