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If you’ve ever watched a crime drama, you’ve probably heard of a will. In Hollywood, they can be sources of contention, confusion, and usually a hefty but mysterious inheritance.
However, wills function a little differently than they do in the movies. Maybe you’ve already (and unfortunately) encountered a family member’s financial wishes through their will. Amidst planning for a funeral and grieving a loved one’s passing, a will can seem like another confusing legal process that’s hard for the layman to grasp.
Most of us think of a will to be exclusively for the old and wealthy, but I’m here to tell you that they can be very useful for individuals who aren’t yet nearing old age because they can also be used to protect more than just money. And millionaires certainly aren’t the only ones who need to draw up a will.
Pushing past the uncomfortability that comes with thinking about your own death to ensure that your possessions and loved ones are taken care of is a task that you won’t regret. Thinking about planning for the future in a broad sense can be overwhelming, but a will can be a great start to getting your affairs in order for those you love.
So, what exactly is the purpose of a will?
Most wills contain just two main functions:
- Protecting and distributing your assets
- Giving authority to a guardian for any minors you might have under your care
The first purpose can either be straightforward (if you don’t currently have many assets to speak of), or a complicated process (if you have many different pockets of wealth to distribute).
You can outline who you would like to receive what amount of each asset. Some examples of assets you could hold would include:
- Your car
- Your home
- Your retirement account(s)
- Your investment accounts
- Your bank account balance(s)
- Any heirlooms or high value items you might hold dear
With some of these options, a beneficiary should be designated as part of the account set-up. However, detailing the beneficiary in your will as well can make extra sure that the account value ends up in the right hands.
If you passed away, the account value would be transferred to the beneficiary of your choice as an “non taxable event,” if the beneficiary kept the same investment holdings that you elected.
You can even detail at what time (or age) you would like a certain person to receive the asset! This can be helpful if you have children who are minors, or if you are looking to gradually give to a charity of your choice over a long period of time.
As for the minors you care for, if you have any in your life, it is vital that you spell out whom you would like as their legal guardian(s). In the case that you suddenly pass away, you don’t want family and friends scrambling to care for your children in their grief, and a court ultimately deciding who should care for your precious family.
Taking a few minutes now to grant guardianship will save everyone a lot of confusion later.
So if you have a good idea of the assets under your name, and the children you’ll want cared for, you are well on your way to having a detailed will! If you wish, have a conversation with the guardians and beneficiaries you are naming in the will, so they are aware of their potential responsibilities.
One important caveat to note, however, includes your state laws and your spouse. If you do have a spouse, your state might require that a certain percentage of your assets be left to this individual. Make sure you check to see what your state requires and act accordingly.
It’s also usually recommended that you prepare and sign a will in with a witness present. This is usually done by two individuals you are close with, or a third party such as an estate planner or attorney.
The step of witnessing ensures that that your will is seen as legitimate, and while it may not occur in a shadowy room within a mansion like Hollywood would like you to believe, it is important that your will has several eyes that see that you did indeed okay the plan of action for after your death.
Make sure the witnesses aren’t part of the preparation process, and they also shouldn’t have any stake or vested financial interest in the will so they can keep an objective point of view.
It’s also noteworthy to point out that where you keep your will matters. You’ll want it to be somewhere safe, but with a few key persons knowing where it is for accessibility. An estate planner or an attorney can provide safekeeping, and you can even keep a copy in a safe deposit box.
So, when should you draw up your own will?
It’s never too early to write your will.
If you’re reading this, you could probably use a will. And as you can tell by the main purposes of a will, if you have any possessions or family members under your care at all, a will can be vital to the proper treatment of these assets and people. It doesn’t hurt to start one today!
There are many programs online that can assist you in drawing one up yourself, and then all you need is a witness or two.
As the years pass, be sure to update and add to your will as-needed. This way, you can adjust the current assets you hold and members of your family that need to be cared for. You’ll be surprised how many assets or family members that come along in a short decade.
Whether you’re nearing your 30th birthday or entering your retirement, a will is a great idea. It’s part of a broader plan for protecting your hard-earned money and being prepared for the worst, although hopefully “the worst” won’t happen anytime soon.
Next time you’re watching a murder mystery on TV and a will comes into the storyline, you’ll know exactly what the characters are talking about, and hopefully you’ll even have a will of your own!
Contributor’s opinions are their own. Always do your own due diligence before investing.
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