6 Reasons You Need to Make a Will Now
Less than half of Americans have a will. Here's why it's critical to be among those who have taken the time to draft this important document.
Talking about and thinking about death can be very uncomfortable. But avoiding the issue altogether and leaving yourself-or more importantly, your family members-unprepared for such a reality is even worse.
According to the latest Gallup poll, released on June 23, slightly less than half of Americans (46 percent) have a will that details how their money and estate is to be handled after their death. Shockingly, the results of this particular Gallup survey have been nearly the same since 1990, with the share of Americans who have wills consistently hovering between 44 and 51 percent.
Further data from the Gallup survey shows that upper-income Americans are much more likely than lower-income Americans to report having a will. In addition, the younger you are, the less likely you are to have a will (not shocking). For instance, about three-quarters of Americans 65 and older have taken the time to craft such a legal document, while those who are 30 and under are largely unprepared, with just 20 percent having established a will.
If the pandemic has taught us anything at all, it is that life is full of curveballs. It's never too early to engage in estate planning and outline your final wishes in a will. Here's a look at some of the many reasons you should have a will in place, no matter what your age.
Not having a will often leads to undesirable outcomes
One of the most common misconceptions is that a will is unnecessary if you want all of your assets to simply go to your family. Every state has laws surrounding what happens if you die without a will, and those laws generally do leave everything to family members. But what if that's not exactly how you want your estate to be distributed?
"Many state laws divide assets among your spouse and children. That may seem OK, but it might leave two-thirds of your assets to your children and just one-third to your spouse," says Patrick Hicks, head of legal for the online estate planning company Trust & Will. "That might make it hard for your spouse to maintain a standard of living or remain in the family home."
The battles that ensue in these types of situations, when there is no will present or assets appear to have been dispersed inequitably, are legendary. Of course, this is particularly true among the rich and famous or those with a large estate. Who among us hasn't seen (gawked at) the headlines?
"We all know about Michael Jackson, or have heard about Aretha Franklin not having had a will and countless other wealthy or famous names whose estates wound up in a huge battle that can go on for years," says registered financial advisor Pam Krueger, creator and co-host of the MoneyTrack on PBS, and the podcast Friends Talk Money, on PBS Next Avenue. "A no-will situation is a no-win situation for a family, and can tear apart even the closest of relationships."
Wills allow parents to name a guardian for children
Yet another critical reason for creating a will is ensuring that any children are properly taken care of, continues Hicks.
"Creating a will allows you to nominate guardians to care for your children and pets after your death. It can be hard to think about, and it may seem very unlikely, but it is critical to have a plan in place," Hicks explains.
Not designating a guardian, on the other hand, can mean that a judge will be tasked with deciding where your children go if you die. Obviously, this would not be ideal.
"This judge will likely have never met you and will have no idea how you want your children to be raised," says Hicks. "Not having a will is opting in to let a stranger make this life-changing decision for your children."
Care and maintenance of pets
Many among us treat pets like family (or in some cases better than family). It's important to understand, however, that state laws do not view Rover with the same dedication and affection as you do. As far as the law is concerned, pets are nothing more than property-a reality that has a variety of ramifications if you do not have a thoughtfully planned will established.
For instance, because pets are considered property, you cannot leave money to your pet, explains Mary Kate D'Souza, co-founder and the chief legal officer of gentreo.com, a boutique online estate planning software solution.
"You can, however, leave your pet and money for its care to a person whom you designate as the caregiver for your pet if it survives you," says D'Souza. "A will allows you to give your pet to a chosen loved one, which helps to prevent your pet from going to a shelter."
Moral of the story: Do the right thing for Rover before it's too late.
Paying taxes is about as fun as undergoing a root canal. Creating a will, on the other hand, rather than leaving your estate to be sorted out by the courts, can help minimize this burden for your heirs, reining in the estate taxes they may be responsible for addressing.
"You'll be able to direct funds to charitable causes and make gifts to your heirs that are not taxable," explains Krueger, of Friends Talk Money.
Properly structured estate plans may reduce exposure to as much as 40 percent of federal estate tax and state-level taxes that can hit larger estates, adds Mary Lago, a CFP and executive vice president with Ferguson Wellman Capital Management.
"You've already paid taxes on your income. Why do it twice?" says Lago.
A will provides loved ones with peace of mind
In case it hasn't been made abundantly clear by this point, wills are not just for your benefit, says Hicks. Your family and loved ones are the people who will ultimately be most affected by whether or not you took the time to draw up this important document.
"Creating a will is an easy way to give them some peace and comfort during a difficult time," says Hicks. "Not having a will leaves them with no guidance as to your wishes and can add to their burdens. This can lead to stress and tensions that can affect families long after they deal with the grief of your loss."
You can't put it off forever
We're all invincible when we're young right? Superman, Wonder Woman, we see you.
A will can seem totally unnecessary when you're young and healthy. And you're usually right. Until you're not.
"Of course, we all hope for long and healthy lives, but that doesn't mean we shouldn't prepare otherwise," says Hicks. "Creating a will won't magically reduce your life expectancy. Creating a will most often gives you peace of mind and helps you relax knowing that you have a plan in place."