Once you hit adulthood, you may be asking yourself, “do I need a will?” Wills always reminded me of my grandma and grandpa. They are older and closer to death, so it made sense for them to have a will.
While I am not a lawyer, nor am I giving any legal advice. But It is a crucial tool to have for financial planning, and it is essential to know the benefits of having a will no matter what age you are. So here is why you need a will and what benefits there will be to you for having one.
What is a will?
A will is a legal document by which a person can designate how and to whom their property is distributed upon death. This property includes money, land, houses, cars, and any other items you have. It also tells who you want to care for your children if they are minors.
If you want more information about wills and trusts, You can check out this Wikipedia article.
Why Do I Need A Will?
There are many reasons to have a will, but not every person needs a will early in life. So how do you answer, “Do I need a will?” Here are the reasons you would need to spend the money on a will.
If you are married, you need a will.
If you have any kind of money in savings or positive net worth, you need a will.
When you have children, you need to make a will.
If you have any assets, even just a car. You should get a will.
If you want a say in where your money goes and how it gets spent, you need a will.
Why is it important to make a will?
There are so many legal reasons you should have a will in place. But like I said before, I am not a lawyer, so I am not going to go into those things. But as a mother, wife, and person who values her money, I can tell you the reasons we felt it was a valuable use of our money and resources.
If you die without having a will state law rules.
That means that whatever the state deems as necessary will happen with your money and assets. The state’s decisions can be confusing for your family, and the important stuff may fall through the cracks.
Having a will avoids conflict with your family.
When someone dies, there are lots of motions. Some of them are focused on assets and money. Having a will keeps those emotions from ruining relationships. It sets up your assets and money to go to who you feel comfortable with. Then this plan is carried out after your death.
You can disinherit individuals who would otherwise stand to inherit.
While we hope this never happens, there are moments in our life where we need to cut someone off from there inheritance. I would say this is extreme, but if they are involved with lots of drugs, you don’t want them inheriting thousands of dollars to enable their addiction. So a will gives you the power not to give them that money or asset that they would use inappropriately.
You need to elect someone to handle your affairs after you pass on.
Picking someone you trust is essential because the executor of your will handles all the court documents and other legal needs. They also ensure that your assets will be distributed how you designated in your will. Without this person in place, the state is in charge of your estate. They will decide how it gets spread or if it sold.
A will establishes legal guardianship of your children if they are still minors.
If there are children involved, a will designates who you would prefer your children’s guardian to be. This designation gives the courts a place to send your children if they find that those people will be good people to care for your children. It also financially protects them by leaving them money that their guardian has to care for them. If you have life insurance, you can designate it to go with your children for their care.
Financial benefits of having a will
So you now see the importance of a will, and you’re no longer thinking, “Do I need a will?” But what financial benefit is it to you now? Here are the economic benefits as you do your financial planning. These things help you and your posterity.
Having a will protects your money and assets that you worked so hard to have and keep.
You work hard to maintain the things you have, so you don’t have to spend a ton of money replacing those things through your life. You scrimp and save so you can afford something nice, don’t you want that thing protected so it goes to someone who will treat it with the same respect as you? When you create a will, you do just that? Assign your assets to the person you think will treat it the best.
If you have a family, it is insurance for them.
Insurance on your family can cost lots of money. It is crucial to have life insurance, but what happens to that insurance money when they receive it? Who takes care of your children and manages the money you leave for them? When you create a will, you assign a caretaker for your children, and you designate what happens to the funds you leave for your children? All of this ensures others use your money the right way.
After you die, having a will eliminates a lot of the cost of probate court.
Probate court is a lengthy and costly process. If you do not have a will, it is even longer and more expensive? You have to hire a lawyer to take you through the process and to manage everything in court. A Lawyer is the most costly part of probate. But when you have no will, that lawyer has to take all the information to the court to get someone assigned to manage the estate, and then the lawyer takes that person through the process. That process adds time, stress, and money. Some lawyers that do estate wills and trusts cost around $300-$500 an hour, so it could be costly to have them put in the extra time.
You should have a will so you can minimize estate taxes.
A will minimizes estate taxes because the value of what you give away to family members or charity will reduce the value of your estate when it’s time to pay estate taxes. So less of your money is lost to taxes if you have a designated person to receive your assets.
It gives you peace of mind so less to think about, and less is more.
In frugal living, less is more. When you have less to worry about and to contend with your life it saves you lots of money. If a will does nothing else in your life, it gives you peace of mind, knowing that everything will be ok and that your money, assets, and all that is important to you will be protected and used as it should.
Now you know the answer to “do I need a will?” Having a will is essential and can be a pivotal part of your financial planning. The benefits of a will are not all financial, but the peace of mind you can have is priceless.
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