Without a will, there is no guarantee that your wishes will be followed when you pass away.
Yet around 60% of Americans don't have one, which will leave the disposition of their assets up to the courts.
Every adult will gain peace of mind by laying out their wishes. Here are five things to consider when writing a will.
1. Make Sure Your Children Are Taken Care Of
Your children's guardianship and the protection of the assets that pass to them is too important to leave to chance. A will can name your preferred guardian and a trustee to manage your children's affairs. If you lack a will, a court will appoint them.
You can lay out how the guardian should be compensated and if they can live in your family home to provide stability for the children.
A trustee will manage the assets that are held in trust for your child until they are an age you designate. This arrangement protects children from spending unwisely and from creditors.
“Kids may get in some credit card debt, or have a bad business, or get divorced," says Sara Butcher of Butcher & Smith Law LLC in Portland, Oregon. “Having those assets held in trust protects those assets from those kinds of claims."
2. Ensure Your Tax Situation Is Set up Advantageously
Thinking about taxes can help you leave as much as possible to your children or other beneficiaries. Your state may have an exemption for taxes on inherited assets, but if the exemption doesn't cover the entire estate, the inheritor can be liable for a lot of taxes.
“Estate tax planning is an important thing that you should have in wills," says Butcher. “If one married spouse dies and leaves it all to the spouse, that surviving spouse will be taxed on all of those assets."
Estate tax planning can mitigate this potential problem. For example, says Butcher, the assets of the deceased partner can be used to form a credit shelter trust to defray that tax burden for the surviving spouse.
3. Legally Define What Should Go to Your Domestic Partner
If you are unmarried and want a domestic partner to inherit your assets, you must put that into a will.
Dying without a will puts your estate “intestate," which triggers legal statutes that define who will receive the assets, which usually goes in order of blood relation. If you don't have a will, your parent or sister may inherit your assets instead of your domestic partner.
You can exert some control over the disposition of your assets by laying out beneficiary designations or by jointly owning assets with your domestic partner. Not all assets allow for beneficiaries, however, and joint ownership has its limits.
4. Spare Your Family Heartache and Stress
Questions of inheritance are notorious for tearing families apart. Even if most family members want to avoid discord, a single challenge from an unexpected quarter can cause agony.
“It becomes a big debate if you haven't laid it out," says Mark Nicholson of personal finance site Match Financial. “Anybody who wants to step forward can. It can cause additional stress when your family is grieving."
By making your wishes clear, you're caring for those you love, even in death.
5. Lay out Your Charitable Giving Wishes
Speaking of caring for others, you may want some of your assets to pass to organizations that you value like charities, schools, or churches.
You must put these wishes in writing even if you have been a long-time, regular donor. Otherwise, your estate's inheritor can stop those donations at will after your death.
It's clear that a lot of what goes into a will are questions of how you want your assets to contribute to others' wellbeing. Having a will to define how your estate can be used to enrich the time left for those you care about is a powerful statement of support and love.