If you don’t have a will, the probate court will distribute your assets following your death according to the laws of your state — possibly in ways you would not agree with.
Questions to Ask Yourself
For the preparation of a will, you’ll need to answer these key questions:
- Who gets what (naming of heirs along with amounts or percentages for each)?
- Who will take care of my minor children (naming a guardian)?
- Who will distribute my assets (naming an executor or personal representative)?
You should note that a will cannot guide the distribution of jointly owned assets. Wills also do not cover the distribution of assets in accounts in which you name a beneficiary, such as 401(k) accounts, IRAs or life insurance policies. For those accounts, the named beneficiaries receive the assets in the account after you pass away.
That’s why it’s important to review who you’ve named as your beneficiaries regularly — at least every five years. You should also review your beneficiaries after major life events have occurred, such as births, deaths, changes in the marital status of either yourself or your heirs, or changes in your attitude toward your heirs.
Also, remember that minors should never be named as direct beneficiaries of life insurance proceeds, work retirement plans or IRAs.
Next blog post, we will discuss the durable power of attorney, living will, and health care power of attorney.