Last Will and Testament
A last will and testament is a legal document that defines who will inherit your property and other assets after you die. It can also address other important issues, such as guardianship for minor children. Drafting a will is an important part of the retirement planning process.
What Is a Last Will and Testament?
A will is a legal document that defines who will receive your assets after you die. It is the cornerstone of estate planning.
- Real estate
- Jewelry, art and collectibles
If you have minor children or dependents at the time of death, a will can also nominate a guardian.
A will also appoints an executor, or a trusted person who oversees your will as it travels through probate.
Probate is the public legal process of validating a will. It may take weeks, months or even years to complete.
Primary beneficiaries are your first choice to receive assets. You should also consider designating secondary or contingent beneficiaries as well.
You can create your own last will and testament with online documents for under $100.
However, most experts agree that it’s best to consult with an estate planning attorney.
According to the American Bar Association, “Mistakes made in the drafting of such an important document can profoundly alter familial relationships, leaving our family members at best confused or disappointed and at worst locked in hostile litigation.”
Many lawyers can draft a simple will on your behalf for $300 or less.
Requirements of Wills
A will must meet certain requirements to be deemed legal and valid.
In most states, you must be at least 18 years old to create a legally binding will.
Your will must include explicit language such as, “This is my last will and testament.” This helps avoid doubt or confusion about your intentions.
You must also be of “sound mind” when drafting a will. This means that you’re aware of your actions when the document was created, and no one pressured you to sign it.
Finally, nearly all states require the presence and signature of at least two adult witnesses when you sign your will. Some states, like Vermont, require three.
When a witness signs a will, he or she is affirming that you appear to be of sound mind and that the document is intended to function as a will.
If any conflicts about the will arise after your death, these witnesses may be called to testify about the will signing in court.
Types of Wills
A traditional last will and testament is the most common type of will, but there are alternatives.
- Joint Will
- A joint will is created by two people who leave their assets to each other. Usually, it is between a married couple. In this type of will, the couple agrees that when one spouse dies, the other inherits the entire estate. When the second spouse dies, assets are transferred to someone the couple named together. A joint will is a single document signed by two people. In contrast, a mutual will serves a similar purpose but involves two separate wills that both people sign.
- Living Trust
- A living trust isn’t a will — but it may be used in place of one or in addition to one. Like a last will and testament, a living trust passes along assets to beneficiaries. However, trusts allow you to place conditions on how and when heirs receive an inheritance. These documents also avoid probate, which may save time and money.
- Pour-Over Will
- If you have created a trust, a pour-over will ensures that any remaining assets are automatically transferred to the trust when you die. Without a pour-over will, assets you forget to include in your trust will be subject to intestate laws, which may complicate matters.
- Living Will
- A living will is not the same as a last will and testament. Instead, a living will is a document that details your wishes for end-of-life medical care if you become incapacitated and are unable to make decisions for yourself. Laws governing these legal orders vary by state, so make sure yours aligns with your state’s requirements.
Do You Need a Will?
Everyone may not need a will. Some assets — including life insurance policies — can be directly transferred to a named beneficiary without a will.
But for many people, creating this legal document is an integral part of retirement planning.
A last will and testament is especially important if you own property, run a business, have a blended family or minor children.
Without a will, the state determines where your belongings go and who receives them after you die. This is known as dying “intestate.”
State laws vary widely, but assets will generally be split evenly among your closest living family members.
Your loved ones won’t have a say on who receives what. This can lead to conflict, confusion and costly court battles.
A will also designates a guardian for your minor children. Without one, a judge will make this important decision on your behalf.
9 Cited Research Articles
- The People’s Law Library of Maryland. (2020, August 20). Frequently Asked Questions About Wills. Retrieved from https://www.peoples-law.org/frequently-asked-questions-about-wills
- USA.gov. (2020, July 8). Family Legal Issues: Creating a Will. Retrieved from https://www.usa.gov/family-legal#item-212733
- Carlson, B. (2018, December 2). 7 Reasons It's Time To Update Your Estate Plan. Retrieved from https://www.forbes.com/sites/bobcarlson/2018/12/02/7-reasons-its-time-to-update-your-estate-plan/#27cbfd505ebf
- Reeves, J. (2017, January). The Ultimate Guide to Estate Planning. Retrieved from https://www.aarp.org/money/budgeting-saving/info-2016/the-ultimate-guide-to-estate-planning.html
- Jones, J. (2016, May 18). Majority in U.S. Do Not Have a Will. Retrieved from https://news.gallup.com/poll/191651/majority-not.aspx
- American Bar Association. (n.d.). Do It Yourself Estate Planning. Retrieved from https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/diy_estate_planning/
- Caring.com. (n.d.). 2019 Survey Finds That Most People Believe Having a Will Is Important, but Less Than Half Have One. Retrieved from https://www.caring.com/caregivers/estate-planning/wills-survey/2019-survey/
- DaveRamsey.com. (n.d.). Types of Wills: Which Is Right for You? Retrieved from https://www.daveramsey.com/blog/types-of-wills
- Khalfani-Cox, L. (n.d.). Cost-Effective Wills: Online software and ready-made forms make creating your own will a snap. Retrieved from https://www.aarp.org/money/estate-planning/info-03-2011/cost-effective-wills.html