- The Covid-19 has produced a rise in estate planning ... but not a large enough one.
- Most Americans still do not have a last will and testatment.
- Many believe that they don't have enough in assets to warrant a will, or that their money will automatically go to their next of kin. Both assumptions are wrong.
The Covid-19 pandemic has produced a rise in estate planning.
To that point, a survey conducted for LegalZoom.com found that 32% of young people ages 18 to 34 said they got a will because of Covid-19. What's more, 21% of that age group also drew up a will specifically because they or someone they knew had Covid-19.
Of Americans who do have a will, just over a quarter, or 26%, got one because they were fearful of serious illness or death related to Covid-19.
However, the majority of Americans still do not have a will.
The LegalZoom.com survey found that 62% of Americans don't have a will and, of those who do, 12% created them in the past 12 months — and 44%, in the last five years.
Many people mistakenly believe that they don't have enough in assets to warrant a will, or that their money will automatically go to their next of kin. Both assumptions are wrong. It is crucial to get the facts and put planning in place to protect those you love and ensure that you are the one to decide how your possessions and money will be distributed.
Fact #1: If you die without a will, the state writes one for you, according to the intestacy laws of the state where you reside. For example, in New York, the assets you own would be passed to a surviving spouse and your children, but in Texas, your assets would be entered into the state's intestacy probate process, and your property would be divided by your relatives. So, if you don't want the wrong person to have ownership of your estate, write up a will, now, while you are of sound mind.
Fact #2: You are never too young to have a will. It would be nice to live a long, long time, but there is always the chance that you won't. Unless you have a will, your heirs may be left with a tangled mess that they will have to unravel. If you own anything, at any age, you should have a will in place.
Fact #3: A verbal agreement is not legal and binding. You can let everyone know, clearly, that you would like your mother to take care of your kids, but what if your mother-in-law decides she wants them? Without a will, the decision of who gets the children is up to a judge. Choose your guardians wisely and put other choices in your will. You may want to appoint one person to care for the kids and another person to be in charge of their money.
Fact #4: Decisions are made according to the most recent, updated will you leave behind. If your circumstances change over time, you should update your will in accordance with the changes. Life insurance policies, retirement plans, and payable-on-death and transfer-on-death investments are all contracts. The beneficiaries you designate will inherit these assets regardless of what your will says. Be sure to remember to change these essential documents, too.
Fact #5: Legally, you do not need an attorney. If you use an online service, the cost of writing your own will can be less than $100. However, it is best to hire a lawyer in most situations. It could save your family from any misunderstandings and quarrels that could result in thousands of dollars in legal fees later. A complete estate plan should include a last will and testament, power of attorney and health-care proxy. Some clients will also want to consult with their lawyer about whether they need a living trust for assets that do not pass outright to a beneficiary.
The cost of your estate plan varies with which documents you need and with the complexity of your situation. On average, experienced attorneys may charge $250 or $350 per hour and, in urban areas, hourly fees can be closer to $350 to $600 a hour to prepare more sophisticated estate plans. Be sure to speak to a lawyer to get an estimated cost for your full estate planning package.
Here are some things to keep in mind when it comes to wills:
- Get a will or update your old will;
- Check your beneficiary designations on insurance policies and retirement plans;
- Review how assets held jointly are titled; and
- Consult a lawyer to review your estate plan and prepare the documents.
Talking about death is a difficult subject for many people, but a well-planned estate plan is one of the most thoughtful gifts you can give your loved ones.