8 Pitfalls in Writing Your Will
Writing a will doesn't have to be complicated. But it does need to be done carefully. Avoid these eight common mistakes.
Thinking you don't need a will, or that only rich people need a will.
Do you own property? Do you have any assets you'd like to pass on to loved ones? Then you need a will. Everyone needs a will. You've worked hard to achieve what you have, be it a little or a lot. A will gives you control to say what happens to your assets, and a will avoids delays and expenses that reduce the value of your estate.
Thinking you only need a will if you have dependents.
Again, anyone who owns property needs a will if they want to have a say in who receives it. A will avoids lengthy delays, reduces legal costs, and minimizes estate taxes.
Believing the state will take care of everything for you.
If you pass away without a legal will, you have no way of ensuring your assets will be distributed as you would like. Essentially, you are giving the state where you live the right to decide how to divide your estate. And since state law can't provide for every possibility, your assets will be distributed through a one-size-fits-all plan. Usually children receive equal amounts, and there are no provisions for special gifts for friends or favorite charities. Preparing a proper will is the only way you can be sure that your loved ones are taken care of and that your favorite charities are remembered as you wish.
Thinking you don't need a will because your property is held jointly with your heirs with rights of survivorship.
There can be advantages to this type of arrangement, but joint ownership does not reduce the need for a will, and it can even create unintended gift tax liability. It can also deny you control over your property while you're still living.
Writing your will by hand.
A handwritten will is not legal in every state. To be safe, it's best to have a qualified attorney draft your will. It generally costs only a few hundred dollars—well worth the peace of mind knowing your will is valid.
Not keeping your beneficiary designations up-to-date.
When you establish savings accounts, annuities, life insurance policies, and individual retirement accounts, you name beneficiaries as part of the process. These named beneficiaries will take legal precedence over any instructions in your will about distributing your assets. When you draft your will, be sure to review all of these types of accounts to make sure your assets will go where you want and benefit the people and/or organizations you choose. And then, because life happens and things change, you'll need to review your plans periodically. Tax laws change. Estate values grow or shrink. Children grow up, go to college, get married. Family members divorce. Friendships change. Philanthropic priorities shift. A review of your will from time to time ensures that your estate plan continues to match your state of mind.
Believing you're too young to need a will.
Actually, this is when you need a will the most. A properly drafted will is your way to provide detailed instructions for the care of young children in the event something should happen to you. A will provides you with the foundation you need to build a strong financial future. You can always update your will as needed to reflect changes in your financial situation.
Leaving everything to your spouse.
This is the obvious choice for many people, but there are a few issues to consider:
- If an accident claims you and your spouse at the same time, the state may be in control of distributing your assets.
- If your spouse is not the parent of your children, even if you both agree on what to do with your assets, there is always the possibility that unintended beneficiaries may receive your property.
- Your spouse may not feel the same way you do about an heir or charity. This may mean that your wishes may go unfulfilled.
So unless you have a crystal ball, an up-to-date will should be high on your 'to do' list. If you already have a will, make sure you review it every five or so years, or when significant events take place, such as a marriage, the birth of a child, the death of an heir, interest in a new charity, loss of a special friend, or acquisition of a major asset.
As you make your plans, please consider making a gift to Peirce College through your will or trust. It's a simple way to make support our mission far into the future without affecting your savings or cash flow.
By the way, you'll be glad to know that many of the changes you might want to make to update your will don't require writing an entirely new document. Often all that's needed is a quick phone call to your attorney and a simple one-page amendment to your existing documents.