Why You Need a Will

According to David Bach, author of SmartWomenFinishRich, 2 out of 3 Americans will die intestate, or without a will. When this happens, it is up to the court to make the important decisions of how a person's assets will be divided and who will take care of the underage children (if there are any). The person whose life is being divided no longer has any say in the values and priorities that others assign to his belongings. That is why it is so important to have a will, or at least a living trust.

A will is a legal document that allows an individual (the testator) to review her life and priorities. She gets to decide the arrangements of her funeral and burial and what is to be done with her possessions afterwards. In addition, if she has a child, it is through her will that her children are cared for, both through the naming of a guardian and by setting up ways to continue care for the child financially.

Not all property is designated by a will. Life insurance, for example, is paid to the stated policy beneficiary, no matter what the will says. And property owned jointly would automatically go to the joint owner(s). However, pretty much everything else does get divided by what a testator states in her will.

After the testator dies, the will goes to probate, which is the court process by which the will is reviewed and executed. It is the responsibility of the probate court to determine if the will is valid and to work with the will's executor (or to establish one, if the will does not or the person chosen is unable or unwilling to take on the responsibility) to close out the accounts, pay the bills, and manage the estate. Once the will is out of probate, it is up to the executor to complete the necessary tasks-closing accounts, selling property (if needed), paying bills, and dividing up the property. For this, the executor often gets a small percentage of the estate for a fee to compensate for his time (however, as this is taxable income, many couples who make their surviving spouse executor waive the executor fee, because the estate they receive will not be taxed in the same way). Probate often takes 6 months to 2 years, but it can also take longer.

If there is no will, then the property is divided by the state court. Each state has its own laws regarding probate, so the decedent's property is divided up according to the probate statutes in her state of primary residence. Generally, the estate goes first to spouse and children, then to parents, and then to more distant relatives. If the person who died was insolvent (her debts outweighed her assets), then the whole estate is sold and the proceeds are divided among her creditors, again according to the priorities set by the state's probate laws.

There are specific laws that need to be considered in drafting a will, so that it is valid according to the state. If these laws are not followed, the will becomes void and the estate is divided by the probate court. It is best to consult with an attorney familiar with probate law in your state of primary residence to make sure that all the proper procedures are followed. If that is a financial hardship, there are software programs and books to help draft a basic will.

There are other alternatives to hiring a lawyer to draft a will. A testator can also write out their will by hand. This holographic will still has to adhere to specific standards for it to be valid-it must be written by hand, not typed, for example, and the author cannot simply go through and cross out items when they change their mind. Instead, a whole new draft has to be written out and signed. A holographic will is more likely to be contestable if any potential heirs decide to question the validity of the will.

A will can be contested for several reasons. First, it can be deemed void if the testator was not in a "sound mind" when she created the will. However, again depending on the state laws, even people who are of sound mind only part of the time or even Alzheimer's patients can be determined to be of sound mind while writing their will. Wills can also be contested if there is reason to suspect fraud or undue influence.

Another alternative to a will is a living trust. This allows the author to make decision about her estate while she is still living as well as what happens after her death. Some people prefer this to a will because it will not have to go through probate, even after death, and is often more affordable. However, the best decisions on estate planning are made with input from an attorney familiar with probate laws in your state of primary residence, financial planner, and tax accountant.