60% of Americans lack a will or any estate planning. No one wants to think about death or what will happen to your finances and assets when you pass.
But writing a will is vital if you want these assets in the right hands after you die.
To ensure your estate is taken care of after death, you should consider preparing a will with the help of an estate planning lawyer. Here are 8 considerations when preparing your will.
1. Identify Your Dependents
If you have financial dependents, you’ll want to ensure they’re supported after your death. Identify your dependents and your plans for their care.
You’ll not only want to include the dependents’ names but also their relationship with you. For example, do you have children? Do you support your spouse in a specific way, such as financially?
You’ll also want to identify the amount of support, what type of support you’re providing, and how much support you provide.
You should also differentiate how much of your estate goes to your dependents. If your dependents are under 18 years old, identify a custodian who can co-sign on any bank accounts such as IRAs.
2. Identify All Aspects of Your Estate
When we think of an estate, we usually think of essential assets such as a house, car, and all finances. However, all of your belongings make up your estate. That’s why it’s important to list all aspects of your estate.
Common examples include:
- All property (your home, a vacation home, etc.)
- Fine jewelry
- Your car
- Life insurance
- Your finances
- All sources of income (including passive income or royalties)
- Smaller items such as your clothing and furniture
In addition to identifying your estate, you’ll also want to identify your debt and how you want your executor to pay off your debt.
3. Identify Different Beneficiaries
Sure, you may want your spouse or children the majority of your estate. But unexpected problems may occur. For example, what if your main beneficiaries die with you, such as in a car accident? You’ll want to identify different beneficiaries.
You should also specify what they’re entitled to and how much of your estate is theirs.
The only fact to be careful of is your estate stretched out between multiple beneficiaries. That’s what you should also clearly state who your primary and secondary beneficiaries are.
Your beneficiaries don’t have to be a person. For example, you can donate your existing funds to a charity if you don’t have any family or close friends in your will.
4. Be Clear About Allocating Your Estate
You shouldn’t only name your beneficiaries but you should also be clear about what each beneficiary is gaining.
You can divide your estate based on percentages, especially when finances are involved. You can also name a specific possession to a beneficiary or specific sums of money.
If you only have one primary beneficiary, ensure 100% of your estate is going to that beneficiary. However, if you have multiple primary beneficiaries, you’ll want to allocate your estate as equally as possible.
As stated previously, your beneficiary doesn’t have to be a person. You can allocate a certain percentage of your finances and possessions to go toward a charity or similar institution.
5. Express Additional Wishes
Your will isn’t only limited to your estate and beneficiaries. You should also state your last wishes. For example, what do you want to be done with your physical body after death? Do you consider cremation services? Do you have any funeral plans?
These wishes are known as your letter of wishes. Unlike your will, the letter of wishes isn’t legally binding. The executor isn’t legally required to follow these wishes.
That’s why it’s important to talk with your executor about your letter of wishes to ensure they’re fulfilled.
When expressing these wishes, always use clear language so the executor can fulfill these wishes.
Speaking of your executor…
6. Name Your Executor
The executor enacts your will. This includes distributing your estate and paying off your debts. You can have up to four executors. However, it’s recommended you have either one or two executors.
Your beneficiaries can also be executors; however, they have to be at least 18 years old. You should also only assign the executor role to those you trust and who are closest to you.
You should clearly identify your executor in your will. If you can, inform the executor of their role before your death.
7. Don’t Forget About Estate Tax
An estate tax is applied after the estate holder dies and before the estate is allocated to the beneficiaries. Before the executors pass the estate to the beneficiaries, they must pay the estate tax.
However, most don’t pay estate tax. That’s because the estate tax is only applied to assets worth greater than $5.3 million. However, this is only on the federal level. There are also state estate taxes you need to consider.
15 states and the District of Columbia have an estate tax and six states have an inheritance tax. New Jersey and Maryland have both. Washington state has the highest maximum estate tax rate at 20%.
8. You May Need a Lawyer
You may not consider hiring an estate planning attorney. But keep this in mind — if there’s one minor error, it can change the whole estate. That’s why it’s a good idea to hire an estate planning attorney.
First, hiring a lawyer gives you the peace of mind that your will is legally valid. In case your will isn’t legally valid, it may cost your loved one thousands of dollars to validate your will after your death.
Depending on the state you live in, hiring an estate attorney may also be crucial. Some states require probate when your estate is worth a certain amount. Visit here to learn more.
Preparing a Will Checklist: Ensure Your Estate Is in the Right Hands
After your death, you want to ensure your estate is allocated to the right people. That’s why preparing a will checklist is necessary.
For more legal topics and advice, continue reading our blog.