Watch Out for Pitfalls in the Will Planning Process
Planning your will is a process, and like any process, there are certain things you should avoid:
1. Having a handwritten will:
A handwritten will is legal in only some states, but why take the risk when the cost of having a qualified attorney draft your will is just a few hundred dollars?
2. Not updating your beneficiary designations:
The beneficiaries that you name on applications for savings accounts, annuities, life insurance policies, or individual retirement accounts take legal precedence over any instructions in your will about the distribution of your assets. When drafting your will, be sure to review all of your savings or retirement accounts and life insurance policies to make sure your assets will go to the people or organizations of your choice.
3. Believing you don’t need a will:
Everyone needs a will. If you die without a will, you give the state the right to decide who will receive your property. A will is the only way to ensure that your loved ones are cared for and that a bequest to your favorite charities is included.
4. Thinking, “I’m too young”:
Actually, this is when you need a will the most. A properly drafted will provides you with the foundation you need to build a strong financial future. It also provides detailed instructions for the care of young children.
5. Leaving everything to your spouse:
On the surface, this appears to be a good idea, but there are a few issues to consider:
- If an accident claims you and your spouse beneficiary 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 property upon your death, 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 bequests you would like to make to go unfulfilled.