What is Scarier than Not Having a Will? The Government Creating One for You!

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When a person dies, their assets are given to their heirs. This raises a question: Who gets what?

That's why you need a will. Through it, you leave instructions for the disposition of your assets. Typically, wills tell us:

  • whether to pay off mortgages and auto loans;
  • what debts are to be eliminated;
  • what debts are not to be paid off;
  • what assets are to be sold, such as real estate or businesses;
  • to whom remaining assets are to be given, including family heirlooms and items of sentimental value, as well as financial assets;
  • when assets are to be distributed (immediately, at some specified time in the future, or upon satisfaction of certain conditions);
  • who is to be "legal guardian" and assume responsibility for raising minor children;
  • who is to ensure that all these instructions are implemented correctly (called the "executor" or "personal representative"); and
  • any other instructions you wish to leave.

When to Revise Your Will

Like financial plans, estate plans require periodic review to make sure they remain current and viable. You should review your estate plan – and your will – if:

  • your marital status has changed,
  • your state of residence has changed,
  • your income or net worth has changed,
  • your health has changed,
  • family members have died or been born, or
  • five years have passed.

Your Will or Theirs?

Do you have a will? If you answered, "No," think again, because the truth is that everybody has a will.

If you die without having written your own, your estate will use a standard one written by your state government. It's called dying intestate and, if you rely on it, you give up the opportunity to disburse your assets as you wish. Odds are, in fact, that you won't like what the state will do with your assets. For example, in some states, if you have children from a prior marriage, dying intestate means your spouse gets only one-third of your assets, the kids get two-thirds. In other states, intestacy means assets might pass to parents, in-laws, brothers and sisters, or even aunts, uncles, and cousins instead of the people you wish.

Furthermore, failing to write a will means you give up the right to name a guardian for your minor children. Do you really want a judge to make that decision for you?

Even Single People Must Write a Will

With no spouse or children, many single people think they don't need a will, but this is wrong. Why? Because even single people have debts, assets, and family members, and instructions still are needed.

Do you want your parents to receive your assets or would you rather split your assets among your siblings? What if you want to leave money for nieces or nephews for their college education? Without a will, your family won't know your intentions and, hence, your wishes will not be enacted.

Other Estate Planning Tools

The law provides for many solutions to estate planning needs. In addition to a will, some of the basic ones that most people need include:

  • Living Wills, which you use to declare your preferences for medical treatment in the event you become terminally ill;
  • Durable power of attorney for health care, which allows another person to make medical decisions for you if you are unable to make them for yourself; and
  • Durable general powers of attorney, which allow another person (usually a spouse) to sign legal documents for you. The key word here is durable, for ordinary powers become void if you become incapacitated. Be aware that you are granting the person you name in this document unlimited access and control to all your assets.

By executing these documents now, you avoid the risk that someone else might go to court to be named your guardian in the event you become incapacitated.

Originally published in The Truth About Money

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