Most Americans do not have a will, according to a recent Caring.com survey. The biggest reason? Inertia.
The annual survey found only 43% of U.S. adults have a will or living trust, and that number is much lower among younger Americans. Only about 18% of those ages 18 to 34 have a will, while about a third of those ages 34 to 44 have one in place. Overall, the No. 1 reason for not having a will was that most Americans simply haven't gotten around to it.
Yet more than a few companies are looking to change that by making the process more streamlined.
The latest effort comes from Fabric. Founded in March 2017, the company is hoping to make the process even easier by launching an iOS mobile app in Apple's App Store on Tuesday. Through the new app, the company aims to be a "a one-stop shop for family protection," according to co-founder and CEO Adam Erlebacher.
Erlebacher, who previously worked as the chief operating officer for the digital bank Simple, says Fabric was formed out of his own frustrating experiences trying to set up a will and get life insurance. The app aims to make these complex processes "simpler and quicker," he says.
On Fabric's app, creating a will is free and can take less than 10 minutes, assuming you have some idea of who would be in charge of critical tasks, such as serving as a guardian for your children. Fabric's team worked with leading estate planning law firms to create a template that's legally binding.
When using the app, you simply need to answer a few questions that give you the opportunity to name beneficiaries and an executor, as well as lay out any funeral and burial arrangements. Fabric then helps you coordinate with your witnesses as well, so all you'll need to do is print it out and get together with the two other people you've designated, to sign off and notarize your will.
You don't need to have the actual will notarized, but most states require you to include a document called a "self-proving affidavit" as part of your will. That affidavit usually needs to be notarized, which means that you'll need a notary public to be part of the process, when the will is being signed and witnessed. Usually the best place to do this is at a bank, real-estate office, or package-mailing service like the UPS Store, all of which generally have notaries on staff. Or there are even some online services, such as Notarize, which allow you to video chat with a notary.
The Fabric apps guides users through a questionnaire to determine which services they may need.
Once you have your will complete, Fabric also gives you the option of creating a "mirror will" with your spouse that parallels your choices for guardianship, beneficiaries and executor, saving you time creating a second one. While you can have a joint will, experts say that can be problematic for a surviving spouse and that having separate documents may be a better option. That's because joint will usually include a provision stating they cannot be revoked, making it nearly impossible for the surviving spouse to change the terms of the will to reflect life changes, such as remarriage or additional children.
This quick, simple will can stand alone as your will of record, or you can use it as a placeholder until you get in to see an attorney, Erlebacher says. "It's dependent on your own situation and if you do have more complicated needs, you should absolutely go to an attorney and get some advice." If you have a blended family or a previous marriage, for example, you may want to seek out some additional advice on how to distribute your assets. So this is best for couples in their first marriage, with a child or two who are under 18 and may need a guardian.
Of course, Fabric is not the only service out there that can help you create a will. Well-known legal sites such as RocketLawyer and LegalZoom also offer comprehensive services. However, both charge fees: $40 a month for RocketLawyer's services and a $89 flat fee for LegalZoom. Like Fabric, Do Your Own Will and FreeWill offer free, basic will templates by having users fill out a questionnaire, although neither company offers a mobile app.
It's also worth noting that while online wills are valid, they need to be correctly executed and abide by state laws, which can be convoluted. So while you could create a will completely on your own, it may be a good idea to run it by a lawyer to make sure that there are no mistakes or errors.
With the Fabric app, users can create a digital vault for all their financial account information that's accessible to their spouse.
The Fabric app also offers to act as your digital repository for all financial account information and documents. About 40% of couples say they would struggle to find and access family financial information, according to a poll Fabric conducted in conjunction with YouGov among couples 30 to 50 with kids under 18.
Called Fabric Vault, this free tool allows you to keep a record of your family's bank accounts, investment accounts, 401(k) plans, IRAs, credit card accounts, wills and life insurance documents. The service links to these accounts and provides access to spouses and partners so that in an emergency, you're not searching for the information.
To keep your information secure, the Fabric app uses bank-level security, as well as common safeguards such as two-factor authentication and signing out of the app if it's inactive. The app also has adaptive security features that learn to spot unexpected activity on your account and alert you if there are suspected issues, which Erlebacher believes is an innovative feature that will help protect consumers' data.
The Fabric app manages the process of buying term life insurance.
In addition to its free services, Fabric offers to make it simple and easy to buy life insurance. You can apply for term life insurance by filling out a short application and could be approved on the spot, with no health exam required for most users.
"These days, if you want to buy something online, the expectation is that you're going to be able to buy it and have it delivered immediately — life insurance should be the same way," Erlebacher says.
Yet it's not just Fabric trying to digitize the processes of buying life insurance. Several companies, including Ladder Life and Haven Life, have popped up in recent years aiming to make the buying process less painful. Like Fabric, these companies aim to deliver on-the-spot offers by making use of technology to have users fill out a digital application, pull other relevant data about the applicant, then run algorithms to calculate the risk of dying early.
Term life insurance is pretty much exactly what the name implies — it's insurance that covers you for a specific period of time, typically 10, 20 or 30 years. If you die while the policy is in place, you're covered. Once the term expires, you're no longer covered. There's also permanent life insurance — which includes universal life, variable life and whole life — but Fabric doesn't offer it.
For most people, term life insurance is the way to go, Barbara Ginty, a certified financial planner and host of the "Future Rich" podcast, tells CNBC Make It. Permanent life insurance policies may have more perks, but that typically bumps up the cost — up to 10 times more than term. That expense can lead to people missing a payment or abandoning them all together. About 45% of people surrendered their policies within the first 10 years, according to a comprehensive study from the Society of Actuaries.
Fabric isn't an insurance broker, but instead, manages the process. The actual policies are issued by Vantis Life Insurance Company, which is owned by Penn Mutual. Fabric makes money through an upfront payment from the carrier and also charges a flat administrative fee to manage the policy. Financial product research site ValuePenguin reports that a $250,000 term life policy from Fabric for a 35-year-old male in excellent health will cost about $16 a month in most states, which the company found was competitive. For larger policies, however, ValuePenguin found other online competitors Ladder Life and Haven Life had more competitive pricing.
Of course, not everyone needs life insurance, particularly if you are single, childess, debt-free and have access to an employer-based insurance policy, Ginty says. It's more than likely that you'll start thinking about needing a policy as you hit major life milestones, whether that's starting a business, getting married or having your first child. Fabric uses a questionnaire to determine if and what type of life insurance policy is best for you.
Fabric is just getting started, Erlebacher says. An Android version of the app should be coming soon, along with other services such as coordinating college saving accounts between relatives and working to make the wealth transfer process smoother.
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