Creating a will is one of the most important things you can do to gain peace of mind and ensure your wishes are honored after you pass away. A will puts your affairs in order and helps prevent confusion and conflict among your loved ones during a difficult time. However, creating a will requires making several important considerations. This guide covers your key considerations when creating your estate plan.
Important Considerations to Make When Creating a Will:
Understand the Basics of a Will
A will is a legally binding document that says how you want your property and assets distributed after your death. It names beneficiaries to inherit your estate. A will appoints guardians for your minor children, names an executor to handle your estate, specifies how you want your property divided, and can create trusts for beneficiaries. You should always have a will regardless of income or family situation. A will ensures your wishes are specified and followed.
Take Inventory of Your Assets and Debts
Note financial assets, real estate, vehicles, investments, retirement funds, insurance policies, valuables, etc., that make up your estate. Document any mortgages, loans, credit cards, medical bills, or other debts that must be paid off from your estate. Decide who should inherit what parts of your estate based on their needs and relationship to you.
Choose an Executor
An executor is responsible for distributing the assets specified in your will and ensuring your final wishes are carried out. They handle paying off debts, filing paperwork, and closing accounts. Typically, a close relative or friend is organized, responsible, and impartial. You can also name co-executors and consider naming a younger person as executor if needed. Be sure the person you name is willing to serve as executor of your estate before listing them.
Decide on Your Beneficiaries
Anyone you choose, including family members, friends, charities, or organizations that are meaningful to you, can become your beneficiary. Provide for minors and dependents or those with special needs. This can be in the form of a trust fund or a property in their name. Name secondary beneficiaries in case your primary beneficiaries predecease you.
Consider Tax Implications
Consult an estate planning attorney for options to minimize taxes like grantor retained annuity trusts (GRATs), limited family partnerships (FLPs), gifts, and trusts. With the help of the internet, you can easily find an estate planning attorney near you. For example, if you live in Austin, TX, just search for estate planning attorneys in Austin online and you’ll find plenty of options to choose from. Federal estate taxes applied to estates over $11.7 million in 2021; some states also have their estate taxes at lower thresholds. Assign properties and accounts in a tax-efficient manner. Strategies like giving gifts tax-free and taking advantage of exemptions can help reduce the tax burden on your beneficiaries.
Make Provisions for End-of-Life Decisions
A living will can help guide medical decisions if you become incapacitated. It outlines what lifesaving measures you do or do not want to use to prolong your life. If you won’t be in the state of mind to make healthcare decisions, you must appoint someone as your healthcare agent. Your proxy can decide on procedures, care options, and treatment based on your living will. Talk to family members and your healthcare proxy about your preferences for end-of-life care so your values and priorities are understood.
Keep Your Will Up to Date
Revisit your will every 3-5 years, or if there are any life changes—update as needed to reflect circumstances, tax laws, wishes, etc. Many life changes will impact the existing will. Things like births, deaths, marriages, divorces, new assets/property, children becoming adults, moving to a new state, etc., should prompt a review of your will. Meet with your attorney to revise your will. Be sure to keep older versions of your will for your records.
Communicate With Loved Ones
Let close family members know your preferences for the distribution of assets, guardianship of children, end-of-life care, executor choice, etc., to avoid potential conflict. Mediate disagreements with your proposed plans and be open to compromise when possible. Conflicts can lead to challenges to your will. Share details of your will with those affected so your intentions and reasons behind certain decisions are understood. Provide updates when you make any changes.
Creating a comprehensive will is one of the most considerate and responsible things you can do for your loved ones. While the process requires facing difficult topics, a well-crafted will gives you peace of mind knowing you have established guidance and oversight for your estate and dependents after you’re gone. With open communication and professional guidance, you can create an estate plan that honors your values and priorities.
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