Do I need a will? Yes. Yes you do. That’s usually my default answer when asked this question as it’s usually a safe one. But maybe the answer is “most likely.”

Talking about your untimely death is never as exciting as planning your next vacation, but making sure you have a will (and it is up to date) is an important piece to your family’s financial plan.

What is a will?

A will is a legal document that specifies how to distribute your assets and investment accounts to your family and others should you unexpectedly die. It’s important to understand what a will can do as you plan for your family’s future.

What happens if I don’t have one?

Your friends and relatives will not like you anymore. Just kidding. But you can sure make things a little easier on those that have to deal with the details of your estate if you do have a will in place.

Without a will in place, you’ll die intestate (without a will) and that turns those important decisions over to a state probate court judge who will follow standard procedures to distribute your wealth.

What does a will do?

Don’t leave all your important decisions after your death up to this guy.

A will allows you to name your beneficiaries and the amount they inherit, which might be very different from what the state considers “standard.”

A will can also specify who will watch over your kids after you die as well. This is especially important if you are a single-parent households with no obvious candidate to assume guardianship upon your death. You can designate a guardian in your will rather than leave the decision up to the state. Naming a guardian protects your children from state custody and ensures a trusted person looks after your children’s future.

A will can also establish trusts when you die. Your will can be uses to create trusts that start upon your death. Using trusts, you can address specific concerns, such as caring for a special needs child, managing your investment portfolio, or preventing a child from spending through an inheritance if they need some help with those types of decisions when you’re gone. You can fund trusts from various sources, such as life insurance policies, and set conditions for how the money is distributed after your death.

Your will can also plan out how to take care of your debts and your taxes. You can lay out how to replay and remaining debts and taxes and use your will to make charitable gifts (that can even reduce the size of your estate). In some cases, reducing the size of your estate can lower the tax burden that your inheritance might create.

How do I set up a will?

You can usually find an attorney in your town that will set one up pretty quickly. There are also online services out there – just make sure you do your research to make sure they will do what you need them to do. I always suggest shopping around a bit and if your financial picture is more complicated, interviewing a few attorneys and bringing your financial planner along might be a good idea as well.

Setting up and updating your will might not be the most fun thing to do, but when you consider the advantages provided by a will, the effort is a small price to pay.

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

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