For those wondering if now is the time to create their first will, or update the instructions of a preexisting one, advisors share that the answer to that question is probably an emphatic, “yes.”
Major life events are often a sign that a will requires attention or needs to be put in place. Similarly, you should do the same if you have any confusion about where your assets would go upon your passing.
“I think a will is going to be most beneficial when you start to have assets where you don’t [automatically] name beneficiaries,” said Cady North, founder, CEO and financial advisor at North Financial Advisors.
Those assets could be properties, but also smaller items like a family heirloom, she said. A will should also be in place for those with children who would need guardianship, North added.
“My clients with wills tend to be parents and have started to accumulate certain assets outside of accounts where beneficiaries are named,” North noted. Retirement accounts would already have appointed beneficiaries, for instance, “and that would supersede a will anyway,” she added.
Nick Reilly, founder and wealth advisor at One Day LLC, similarly noted this point about retirement assets having named beneficiaries. He also emphasized the importance of updating that crucial information. That’s especially important if the information no longer aligns with current wealth and estate plans.
“There are people I’ve seen that haven’t updated their beneficiaries on [retirement] accounts in years,” Reilly said. “And they may have updated their will.”
A general rule of thumb is that if you are contemplating whether you need a will, “you usually do,” Reilly added. “A last will and testament is just one part of a full estate plan.”
Beyond the Will
Other plans can entail medical instructions on whether “you want them to pull the plug, or you want to be reliant on medical devices to keep you alive,” in the aftermath of an accident or health emergency, said Reilly.
“There’s the power of attorney for healthcare [related concerns] — designating someone to make decisions on your behalf if you are not in the capacity to do so. the most important one is, if you have minor children, is specifying guardianship and where the child would live, or who would make the decision of where the child goes. So you need a last will and testament, health directives, power of attorney, and nomination of guardianship of minors,” Reilly explained.
It depends on who drafts up your will, whether those directives or specifications would be included in the document, he said.
Adon Solomon, a partner at Fox Rothschild, noted a will is really only the first step in an ongoing estate planning process: “I usually tell clients that we recommend they review their will every three to five years.”
As an attorney, he advises families and businesses on wealth and tax planning matters, including wills, trusts and estates. Individuals should also revisit their will after any life event, like moving states, inheriting money, or a divorce or birth, he noted.
State Laws on Wills Can Vary
“If you move states, the states will respect a will from a previous state. But most states do have intricacies in their laws, where you might want a local attorney to review your will and advise you. You don’t want to go to another state and now your document is not efficient for that state,” Solomon explained.
For instance, in Florida, the probate process [which involves the probate court that governs wills and estate administration] is a more costly and time-consuming one, so reviewing plans ahead of time could help to avoid those frustrations, he said.
Additionally, he said: “In some states, you need an attorney to file your will with a court, and in other states, you don’t. Local laws may affect the administration of your estate. And you just want to make sure the plan you put in place is the one you end up with in your new state.”
Overall, Solomon noted that one of the biggest misconceptions about wills is that they are “only for wealthy people, or people with lots of assets.”
“It’s very important that really anyone has a will, because it really helps to make asset distribution efficient – and can potentially save money for beneficiaries. Oftentimes, those who aren’t wealthy are the people who need it the most, because they can’t afford to have something drag out or fighting. That would reduce the value [of their assets],” he explained.
Wills & the Digital Age
In the digital age we live in, you may need to leave behind pertinent instructions related to your online presence, including day-to-day responsibilities you would typically do on the web, advisors shared.
“A lot of people use a password manager for all their online accounts,” Reilly said. “There are services like OneLogin and LastPass that offer safe password management. A lot of times you can specify emergency access to certain individuals for these accounts, upon your death. That gets them access much faster. You could list that in a will, but you’d have to show a death certificate (to these providers), and it would take much longer.” Also, information like whether you have bills, a lot of that can be kept inside of a password manager.”
North said she encourages her clients to have a password vault: “With most password vaults, you can list a trusted contact who could get access to your passwords, only if they needed to. It’s a protective measure in case something happens to you. You can set up the same thing for your parents or grandparents.”
More Complex Family Situations
Blended families are another aspect of modern life that often comes up when considering a will.
“Oftentimes, [individuals] don’t want kids from a first marriage to be handled financially the same way as new kids from another marriage,” North said. “It’s really valuable to map out where your assets are located, and where they would go if something were to happen to you. It’s nice to do that, and not necessarily assume [your beneficiaries] will handle it correctly.”
“For instance, you would have to trust that your new spouse would share your assets with your child from another marriage. You won’t have any more say in the matter once you pass away,” she added.
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