- If you don't leave a will, the state decides how to distribute much of what belonged to you.
- Even if you don't have expensive assets, you might have personal items that your family and friends want to keep after you're gone.
One in three people who don't have will or a living trust claim it's because they don't have enough to leave behind, according to a new survey by Caring.com. It's wise to draw up a will anyway, though, since it serves as a guide for the people who survive you, says physician-turned-financial-advisor Carolyn McClanahan, a CFP and the founder of Life Planning Partners in Jacksonville, Florida.
"When you lose someone you love, it's a lot of emotional anguish," she says. "You want to have things tidied up because they are already going to deal with enough with you being dead."
There are also practical reasons as to why writing a will is smart, even if you don't feel like you have a lot of assets.
Any asset that you own jointly will be given to the survivor. You can title or name beneficiaries to certain assets without writing a will as well. (Keep those updated: The beneficiaries listed on certain accounts trump even what's written in your will, if you have one.)
Anything that doesn't fall into this category and isn't in a will, will be distributed by the state, says Mark La Spisa, a certified financial planner and president of Vermillion Financial in Barrington, Illinois.
"Every state has laws of intestate, which is a will for those who do not have a will," he says. "These laws will determine who inherits someone assets if they did not draft a will."
"Personal items, such as family heirlooms, family pictures, assets in your name only," along with bequests won't necessarily be passed down for you and are best laid out in a will, La Spisa says.
Contents of a safe deposit box, for example, might not automatically be passed down. Even if you give someone authorization to access the lockbox, that's not the same as a joint title, which means the box passes to them.
"If you have a bunch of gold sitting in a lockbox, that's where you would need a will," McClanahan says.
The same goes for bank accounts only in your name. "People have multiple jobs now so they might have multiple 401(k)s or outstanding retirement plans," she says. "People don't know everything they have floating out there." In a will or with named beneficiaries, you can allocate those funds to family members.
You can also write a blanket statement such as "all assets should be passed to my sister." This serves as a catch-all for items you might have forgotten you own.
If you die and your family does want something that is not assigned to them by the state, they will have to probate it, McClanahan says. And that can be a burden. "Probate costs can be pretty expensive," she says. "Some assets get lost to the ether, because it's too time-consuming or expensive to probate them."
By having a will or living trust, you can alleviate some financial stress for those who survive you.
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