We just had our first wills made up and seeing as it is getting closer to Halloween, I thought this would be an excellent time to have a spooky post. So gentle readers, if the thought of your own demise is too unsettling for you, then you should probably keep reading!
You know the old saying, “nothing is certain except death and taxes”. So why is it that only 44% of adults have planned for the inevitable with a last will and testament? Well, according to this article, the majority of people don’t want to think about their mortality and prioritize estate planning below present day concerns. Perhaps if the one out of two procrastinators knew what happened to their lives work when they passed away without a will, they would be better motivated to draft something up.
For example, in our home state of Illinois when a single person with no children passes away, any positive net worth will go through a court and eventually end up with their parents. If the parents are deceased, then it goes to siblings. If there are no siblings, the court will widen the family net and keep trying all while paying themselves with your money for the time spent settling your estate. Did you want to help out a charity or perhaps see your niece through college? Too bad, so sad, you should have spelled that out in a will.
Circumstances get uglier when children are thrown into the mix. No will and no surviving spouse, guess who the minor kids get raised by? Who knows, it’s entirely up to a judge who does not know you, your children, or your family. In Illinois, a judge will first see if any grandparents are willing and capable to raise children. Failing that, then aunts and uncles are decided upon. Do you think your alcoholic brother-in-law would make a terrible father figure? Welp, it doesn’t matter what you think because you didn’t write down your wishes. If he shows up to court and no one else does, he may just get the job.
What about a less gloomy scenario where your spouse and kids survive. Your spouse will be in for a rude awakening when they discover that all of your assets have been split between them and the kids. Have two kids? Now your spouse has a 75% stake in the house and the 1 month old and three year old own the other 25%. Good luck refinancing or selling the house (and have fun sitting in court waiting for a judge to look out for the best interests of the kids stake).
Going along with the theme of things going terribly wrong, here is another scenario to ponder. That car wreck that should have killed you, but the awesome first responders managed to get you to a hospital pronto, only to have the surgeons say that the deer antler stuck in your head has penetrated your brain and turned you into a vegetable, ya you’re technically not dead so without a living will and without being able to ask you (because you’re drooling and pooping yourself) the doctors have to leave you hooked up to life support. Indefinitely. A living will, can spell out your wishes and you can name person(s) to make medical decisions for you when you cannot speak for yourself.
Yay, you’ve decided to make a will. You’ll need a his and a hers (two identical (ish) but separate wills). Here are some things you’ll need to ponder.
This person or person(s) that you name in your will are responsible for carrying out the instructions in your will. They need to distribute assets to your beneficiaries, settle any debts, and close your financial life. There are two popular choices for executor. A family member or a legal professional (lawyer, CPA). There are pros and cons to each. A family member will be cheaper than a professional, but it is no small job and can cause resentment from other family members.
We chose to use a lawyer to act as our executor in the case that we both perish. The small additional cost is well worth it in our eyes to let our families grieve without having to spend days sifting through paperwork and canceling Netflix subscriptions.
If you have minor children or think you may have children in the future, it is important that you figure out who will raise them in the event that both your spouse and you perish. Often times this will be family, but it could be a very good friend. Make sure that you talk with them beforehand so they don’t get an unexpected delivery.
We spent a lot of time thinking about this one and all of the possibilities. I have quite a large family which is both a blessing and curse. If a family reunion went awry, some sorry sap could end up with a HUGE amount of responsibility (think World War 1 treaties). In the end, we asked Shae’s parents if they’d be willing and they happily accepted.
Trust or Not to Trust
Going along with the previous point, you will have to decide when descendants will inherit your wealth. If you do not setup a trust, then a probate court will manage a child’s inheritance until the child turns 18 years old. At that time, the child gets his or her’s full inheritance. If you want an inheritance to be managed and paid out in a different manner, you will most likely need to setup a trust.
In our case, the legal guardians are not the same people that handle our children’s money. The two are kept separate. Sorry grandma and grandpa, no spending sprees! Instead they will have to get together with the trustee for “child support” payments out of the trust. Also, our children will not receive their full inheritance at the age of 18. We’ve set up the trigger a bit differently. The trigger(s) can be as vanilla or esoteric as you want. A great movie about a crazy trust is Brewster’s Millions (I think it’s on Netflix right now).
While you’re working on a last will, it is a good idea to do a living will as well. Your state probably has some generic forms that cover this type of will. In Illinois, you basically get to make 3 simple decisions. 1.) will you donate organs? 2.) who will make decisions for you if you cannot? 3.) to what extent do you want your life to be prolonged?
Making up two wills, two living wills, and setting up a trust was about as painless an experience as it could be. We talked with an estate planning lawyer that we know and met with him twice. All of the above set us back $500, a small price to pay for putting an epilogue on our life’s story. Any future changes that we make will cost a fraction of the initial work. You could almost certainly make up a valid will for less money. Depending on your state of residence, a hand written will would be accepted by a court of law.
Five minutes, a piece of paper, and a pen is all you need to leave the unprepared majority. Do you have you will done? How about now? Now??