What is a will and how does it work?

Death is inevitable, and while it’s not pleasant to think about, planning for your eventual passing is important. A will, also known as a last will and testament, is a crucial legal document that allows you to detail your wishes for your assets after you’re gone.

In this article, we’ll explore why it’s important to have a will, how much it costs to create one and how to avoid common pitfalls along the way.

Here’s everything you need to know about how a will works.

What is a will?

A will is a formal document that outlines your wishes regarding the distribution of your property, possessions and finances upon your death.

This document lets you decide who inherits your belongings, including real estate, vehicles, bank accounts, investments and personal items. A will also allows you to appoint a guardian for minor children and designate an executor, the trusted individual responsible for carrying out the instructions laid out in your will.

“When choosing an executor, make sure to pick someone you trust 100 percent to follow the instructions in your will,” says Jamy Barreau, an estate planning attorney in Port St. Lucie, Florida. “Also, you want to pick someone who will actually qualify to serve under the law. For example, in Florida, a convicted felon cannot serve as a personal representative.”

Barreau adds that it’s equally important to name a successor in case the primary executor in your will doesn’t want to serve or is unable to carry out their duties for whatever reason.

A will covers several important things, including:

• Distribution of assets: A will specifies who receives your assets after you die. You can name beneficiaries for individual items or distribute your entire estate according to percentages.
• Guardianship of minor children: If you have children under the age of 18, you can designate a guardian in your will to care for them if you and the other parent are no longer alive.
• Care of pets: For pet owners, a will can designate a caretaker for your furry companions, ensuring they’re taken care of after you’re gone.
• Debt payment: Your will can outline how you want your debts to be settled after your death, including specifying accounts for their payment.
• Charitable donations: If you want to make a bequest to charity, a will allows you to specify the nonprofit or organization you’d like to support.

How much does a will cost?

The cost of a will can vary depending on multiple factors. A straightforward estate with minimal assets will generally require a less expensive will compared to a complex one with numerous beneficiaries and property. You can expect to pay about $150-$300 for a simple, do-it-yourself will.

If you enlist the help of an attorney, be aware that legal fees differ by geographic location. It will cost more to draft a will with the help of a lawyer in New York City than it will to create one in rural Indiana.

While creating a simple will yourself is an option, consulting with an estate planning attorney is a smart move to ensure a will is constructed properly. But be aware that hiring an attorney can increase the price of a will by $300 to $500 or more.

Types of wills

There are several types of wills, each with its own advantages and limitations. Here’s a brief overview of some common options.

• Simple will: A basic will suitable for individuals with a modest estate and straightforward wishes. It outlines asset distribution and appoints an executor.
• Testamentary trust will: This type of will establishes a trust within the document, allowing for more control over how assets are distributed and managed, particularly for beneficiaries who may not be financially responsible with their inheritance.
• Holographic will: A handwritten will, typically considered a last resort due to potential legal challenges regarding its validity. It’s crucial to check your state’s specific requirements for holographic wills if you choose this route — the document may not hold up later in probate court.
• Joint will: A single will created by two spouses that outlines their combined wishes for asset distribution and appoints guardians for any minor children.

What happens if you die without a will?

Dying without a will, also known as intestacy, can lead to a lengthy and potentially messy legal process.

The state will step in and distribute your assets according to intestacy laws, which may not align with your wishes. In most states, the spouse is the first to inherit assets, then the deceased’s children, and then any surviving immediate family members, such as siblings or parents.

This can cause complications and conflicts among family members.

“Intestate estates tend to be more litigated as heirs fight over who gets what and who should be in charge,” says Sean Williams, a certified financial planner and principal at Cadence Wealth Partners in Concord, North Carolina.

Without a will, the state’s intestacy laws might distribute your assets to unintended beneficiaries, or exclude other family members.

Williams says he’s seen firsthand how family tensions can boil over in these situations. About eight years ago, his wife’s father passed away without a will. Due to intestate laws, all of the man’s assets passed to his second wife, and his adult children received nothing.

“It caused a lot of fighting and has irreparably broken what was already a strained relationship,” recalls Williams.

If you’re a parent, dying without a will could leave your child in legal limbo. The court will determine guardianship of any minor children. While the court will always work in the best interests of the child, it can make a gut-wrenching time even harder.

“Specifying guardianship can help avoid siblings and grandparents fighting over what they believe is the best interest of their nieces, nephews or grandchildren,” says Williams. “It can also appoint a close family friend, outside of immediate family, which might not otherwise be done if left to the courts to decide.”

Your estate may go through probate — a court process that can be time-consuming and expensive — whether you have a will or not. But having a will can streamline the process and make it easier on your family members.

“If everything is documented appropriately in a will under the relevant laws of the state, the estate is typically bound by those terms regardless of how much any particular person, like a family member, may be unhappy with it,” says Barreau.

Will vs. trust: What’s the difference?

While wills and trusts are both estate planning tools, they function differently.

Wills focus on distributing assets after your death, but those assets must still go through probate. Wills are relatively simple to create but offer limited control over how assets are managed after they’re inherited.

Meanwhile, trusts allow you to transfer ownership of assets to a trustee who manages them for the benefit of designated beneficiaries. Trusts can provide more control over asset distribution and, if structured properly, avoid probate. However, trusts are more complicated to create and almost always require help from an attorney to establish.

Choosing between a will and a trust depends on your individual circumstances and the complexity of your estate. Consulting with an estate planning attorney can help you determine the best option for your needs.

How to create a will

Creating a will is a relatively straightforward process, but it’s important to ensure it’s completed correctly so that the document is legally binding.

Here’s a breakdown of the steps involved.

• Gather information: Before drafting your will, compile a list of your assets and liabilities, including bank accounts, investments, real estate, vehicles and any debts you owe.
• Consider your wishes: Determine who you want to inherit your belongings and in what proportions. Reflect on who you’d like to appoint as your executor and guardian for minor children.
• Choose a will format: Decide on the type of will that best suits your needs. Simple wills are readily available online, but consulting with an attorney is recommended for a more complex estate or for unique circumstances.
• Draft the will: If you choose to create your own will, ensure it adheres to your state’s legal requirements. Most states require wills to be in writing, signed by the testator (the person creating the will) and witnessed by a certain number of people (typically two).
• Sign with witnesses: Once the will is drafted, sign it in the presence of your witnesses. The witnesses should also sign the document, acknowledging their presence during the signing. Make several copies of the will.
• Store your will securely: Keep your original will in a safe and secure location, such as a safe deposit box or with a trusted friend or family member. Inform your executor of the will’s location.

Bottom line

A will is an essential estate planning tool that empowers you to make informed decisions about your legacy and assets. It provides peace of mind knowing your loved ones will be cared for and your belongings distributed the way you want. While you can create a simple will on your own, consulting with an estate planning attorney is recommended to ensure it’s valid and complies with state laws.