Note: I wrote this blog post before COVID-19 came to the U.S. I decided to share this post now, not because I want to heighten your anxiety or feed into the hysteria, but because I think estate planning can actually be a good project for you to work on if you’re stuck at home. It’s something we all know is helpful that we just don’t have enough time for. Putting together our estate plan is one of the projects my husband and I hope to tackle during “shelter in place.” However, if this post hits too close to home for you right now, feel free to skip it and come back to it another time.
You generally hear about wills in the media when celebrities (like Prince or Amy Winehouse) die without one and people begin to wonder what will happen with their estate. Or, consider one of my favorite movies, The Grand Budapest Hotel: After an elderly rich woman dies, a late addendum to her will is found bequeathing a famous art piece to someone outside the family. The rest of the movie is spent with characters fighting over who will receive that art piece. These situations may make for an entertaining diversion, but wills are not just for the rich and famous. Wills are for everyone.
Curious why you might need a will? Check out these reasons below:
· Ease the Burden on Your Family: Passing away without a will can add confusion, frustration, and additional hassle to an already difficult time for those who care most about you. The process can get complicated quickly. What happens to your assets and your minor children depends on your state’s rigid “intestate” laws. There will likely be a court appointed executor. It also may delay your immediate family’s receipt of and access to specific assets and benefits (like life insurance) they may need in the short-term.
Tip: Creating a will doesn’t have to be time consuming or overly expensive. Talk to a local estate planning attorney or create a will yourself using online resources. Also, check with your employer — they may offer free or reduced-price consultations with a lawyer as part of your benefits package.
· Decide How Your Estate will be Distributed: Don’t think your possessions constitute an “estate?” You may have more than you think. Consider these things that could be included: your bank accounts, any property you own (including your home), jewelry, artwork, cars, furniture, even that small business side hustle. You may also want to leave instruction about how to handle social media accounts and where to find passwords. Taking inventory of all of your assets, even if you don’t have much, may feel a bit overwhelming. Instead, focus on the things you’d like to pass down to specific people. You can leave the rest in a “residuary estate” to one specific person.
Tip: Remember that some of the biggest parts of your estate — employer retirement accounts, investment accounts, and life insurance policies — will have specific beneficiaries that you designate. You may have designated them when you opened the account but haven’t changed them since. As you create your will, check in on these beneficiaries to make sure they are current and keep them updated as life changes occur.
· Guardianship: One of the key reasons to have a will is to name the guardian of your minor children. In most cases, if the child’s other parent survives you they will assume full guardianship of the child. However, you’ll want to create provisions for what would happen if you both were to pass away. You’ll also want to allocate money from the estate to provide for the child’s basic needs, as well as outline any preferences for things like health care or education. Consider these questions when naming a guardian for your children.
Tip: Don’t forget the other members of your household: your pets. You can name a trusted caretaker for your pet and leave them money to be used for the pet’s care. While they are not legally obligated to do so, hopefully they will follow your wishes, especially if you discuss the possibility with them in advance.
· Make Gifts or Donations: If you’re hoping to leave something to a cause or organization you care about, your will is one of the best places to make sure it happens. If you die without a will, your assets will be distributed according to state laws and it is unlikely that your favorite charity will be on the list to receive a portion of your estate.
Tip: While I plan to include some of the causes I care about in my will, another place I’m doing that is through my beneficiary designations. Just like my husband and I do with our everyday budget, I’m earmarking a percentage of the assets in my retirement accounts and a portion of my life insurance benefits toward these causes.
· So Your Final Wishes will be Respected: Not matter the size of your estate, you probably have opinions about who should inherit what, who should finalize your affairs, how you’d like to be buried, and what your funeral might be like. These are things you can add in as part of your will and broader end-of-life plan. I’m guessing you’ve seen (or even experienced) funerals and asset distribution processes that matched the intentions of the deceased and others that did not. Don’t leave your family guessing — let them know your preferences.
Tip: While it’s important to outline these wishes in your estate plan, I think it’s even more important to talk about them with the people you care about while you’re still alive. Wondering how to begin? Use this Conversation Starter Kit from The Conversation Project.
In response to the ongoing coronavirus pandemic, I’m offering free access to my favorite money dates from my Date Night Club. I hope these casual, insightful, and even fun series of questions and activities can help you and your partner get on the same page about where you are and where you want to be. I guarantee you it will be an hour well-spent.