The Importance of Having a Will – Seriously, Don’t Put This Off!
I decided to share the importance of this subject matter since it hit home during the current COVID-19 crisis, as my mother approached me wanting to discuss her wishes should she fall victim of this pandemic. To my surprise, my mother does not have a will! Is it any wonder people wait until death’s door to write a will? Nobody likes to contemplate their own death, and they act accordingly. A majority of wills are prepared for people over 70 years old.
The problem is, this kind of procrastination courts disaster. A study by Caring.com revealed that only 42% of more than one thousand survey respondents had wills. But for parents of young children—those most in need of a will—the figure dropped to an alarming 36%.
The fact is, preparing a last will and testament is a quick, easy thing to do and protects your family and your legacy in many ways. Here are a few of the most important ones …
First, Some Important Vocabulary
decedent (noun): A person who has passed away.
intestate (adj): A description of a person who passes away with no last will and testament. Noun: intestacy.
No Fight Over Assets
As if the passing of the decedent weren’t sad enough, dying intestate can instigate a whole different tragedy—the tragedy of a family lawyering up against each other.
Emotions run high at the time of a loved one’s passing. People come to equate the estate with familial honor and often have conflicting ideas about “what Mom or Dad would have wanted.”
The result—brothers who would have died for each other become mortal enemies. Families fracture into warring camps like something out of Shakespeare. Intestacy battles can drag on for years in court, while draining the inheritance.
No Fight Over Custody
If that weren’t tragic enough, minor children sometimes become casualties of intestacy battles. This is why it upsets me so much that so few parents of young children have wills.
Wills don’t just dictate what is to happen to your assets; they can also specify who will act as guardian for your children should you pass while they are minors.
Without a will, various potential guardians could come out of the woodwork, leading to a prolonged custody battle. The winner may not be the person you would trust with your child’s upbringing. Worst of all, your child could face the legal consequences while the court battle rages.
No “Intestacy” Proceedings
If a person dies intestate, the laws of their state of residence take effect. The court may appoint an executor to preside over the dissolution of the estate—possibly someone you don’t trust.
Some states have intestacy laws that impose a generic will on your estate. In some families this could be orderly, but things get messy if the decedent remarried or had children with more than one co-parent.
Meanwhile, if you intended to leave some of your estate to charity or start a foundation, forget it—it’s too late for that.
What is “Probate?”
Some people think that by having a will, they avoid a burdensome court process called “probate,” but that is not the case. Probate is a judicial proceeding by which a will is proved. Assets are located, debts are settled, and an executor is assigned to dispose of the estate. Probate happens whether there is a will or not. However, a will often makes the probate process much shorter and more painless.
One of the key functions of life insurance is to cover costs in the event of a long, expensive probate. Life insurance death benefits do not have to wait for probate—you get them much sooner, providing heirs with much-needed liquidity during the probate process.
How I Approach Wills with my Clients
I encourage my clients to view preparing a will as an aspect of financial planning, not some macabre whiff of the grave. You care about the fate of your money and, more importantly, the fate of your family.
For clients who want to avoid probate expenses, plan for estate taxes, and especially forced heirship in applicable countries, we establish a plan of donation of assets—to heirs, to trusts, to charities—before their death, so as little of the estate as possible is subject to government meddling.
Life insurance is a unique product that ties it all together and has favorable tax treatment in most countries around the globe. The survivor benefits not only fund before probate is completed and assets distributed, but also the benefits are not subject to estate or inheritance taxes, it the U.S.A. and many other countries. Life insurance can provide much-needed cash in case an estate’s assets are not liquid, allowing heirs to settle debts and pay probate and funeral costs, but mostly maintain their lifestyle while grieving the loss of a loved one.
I urge ALL my clients which notably do not include family members, to prepare a will while preparing a short, mid and long-term financial plan. They should most definitely consider life insurance and other financial and estate planning products. It’s quick, it’s easy, very affordable through online providers and it’s never too soon. Remember wills can always be changed, but having one is MUST. Check if off you list!