About two-thirds of Americans don’t have a written will, according to a 2015 survey by Rocket Lawyer. For most people, it’s something they put off or haven’t gotten around to yet. Age, unsurprisingly, is also a factor. The 2015 survey found only 30% of Americans aged 45-54 had a will, while 46% of those aged 55 to 64 had one.
That makes sense if you consider that assets tend to increase as you age. If you have neither children nor any assets to speak of, and you’re comfortable having your closest blood relative -- a parent or sibling -- receive your property outright, then you can probably get away without having a will, says Alexander Bove, a lawyer and adjunct professor of law at Boston University Law School.
Not that he recommends it. For one thing, the definition of closest blood relative and the process for dividing your assets can vary dramatically by state. Legal site Nolo.com provides information on what’s involved in each state’s succession laws, known as intestacy statutes -- the rules that govern what happens to your property if you die without a will.
So if you've got plans for any of your assets, it can be worth the time and effort to develop some sort of plan, and get it all in writing -- even if you don't hire a lawyer. “I’d rather have a DIY will because at least gives the beneficiary named a fighting chance. If you die without a will, it doesn’t matter what your wishes were,” says Leiha Macauley, an estate planning attorney with Day Pitney in Boston.
1. Understand Your State Rules
If you are going the DIY route, you'll need to research your state’s laws. The rules can be quirky: Handwritten wills may not require any witnesses, for instance -- but only half of states accept these wills as binding. A newly drafted, typed will now requires two witnesses’ signatures to be valid, wherever you are -- but an older typed will that was executed in a state like Vermont or Georgia, which used to require three witnesses, will be subject to the old requirements unless it is updated.
You may also want to know if your state has an estate or inheritance tax and how to plan for it. About six states impose an inheritance tax, to be paid by any heirs who live in that state, while a dozen states impose an estate tax, which gets paid on your overall assets. (That’s on top of the federal estate tax, which affects only the wealthiest estates.) For instance, if you are dividing assets evenly between heirs, and one lives in a state with an inheritance tax, you'll need to decide whether to set aside additional assets to cover the tax hit.
2. Designate Beneficiaries
A will won't cover all of your assets. “A lot of people make up a will thinking it disposes of the whole estate. But it doesn’t,” Bove says. Anything that’s in joint name or payable to a named beneficiary, such as life insurance policies or 401(k) balances, is outside the scope of a will, he says.
Before you even start a will, you should assign beneficiaries for as many accounts as possible, Macauley says.
You can also create transfer-on-death or payable-on-death designations for checking, savings, and money market accounts, as well as certificates of deposit and U.S. bonds. For example, Vanguard allows investors to enroll in transfer-on-death benefits through a form in which you provide information about you, the eligible account, and the beneficiary contact information. You should also be able to set up a payable-on-death account -- which lets your beneficiary collect the funds without having to go through probate court -- at your bank, or add designations to existing accounts. The requirements vary by institution, though, so it’s worth making a call to find out what's needed.
Almost all states also allow you to name someone that will inherit any stocks, bonds or brokerage balances upon your death. And over a dozen states allow you to set up transfer-on-death stipulations for vehicles and real estate.
3. Spell Things Out
Once you've taken care of beneficiary forms and checked out your state law, write out your intentions. A few guidelines:
- Use the right language. You need to spell out who you are and the purpose of the document. Statements like “I declare that this is my last will and testament” and “I declare that I am of legal age to make this will, and that I am sound of mind” are not just for the movies. They’re critical to ensuring your will is taken seriously by your heirs and the courts, according to the New York County Lawyers’ Association.
- Be specific. If you are using a will to pass on your house, for instance, include the full address when identifying the property. For personal items, include a complete description. And use the full names of beneficiaries, rather than just referring to them as “my wife” or “my child.".
- Name an executor you trust -- and tell them where to find your will. This is the person who will be wrapping up your affairs after your death and eventually distributing your assets. The American Bar Association recommends naming a secondary executor or a co-executor, in case your first choice is unable to carry out the task or predeceases you.
- Appoint a guardian for minor children. For each child, you should name one person as a guardian and another as an alternate, says Bove. It’s perfectly legal (but not necessary) to pick different guardians for each child. The Massachusetts Volunteer Lawyers Project has a form that can help you appoint a guardian in case of your death.
- Spell out contingencies. Perhaps the most difficult aspect of a DIY will is thinking through all the contingencies, Macauley says. Say you’re leaving everything to your sister. But what if your sister predeceases you: Do you want the property to pass to her children? Or do you want to go to your other siblings? Describe the contingencies for each portion of your will.
4. Consider an Upgrade
While a DIY will is better than nothing, lawyers argue that a professionally drafted document can do far more to protect your heirs -- particularly if the beneficiaries you'd choose aren't those provided by your state's intestacy law.
It might even cost less than you'd imagine. While a handwritten will won't cost you a penny, in most states, a fill-in-the-blank formatted will, downloaded from a site like LegalZoom, will set you back about $100 -- while a will drafted by an attorney can cost, on average, only about $375, says LegalZoom. (For a larger, more complex estate, with federal estate tax considerations and specific trusts or entities such as family limited partnerships, the price tag will be $1,000 or more -- but complex estates should not be relying on DIY wills in the first place.)
And at many firms, Macauley says, a will is billed as a flat fee, rather than an hourly rate. So if cost is a concern, you can call ahead to ask what the fees are.
Don’t know where to start? Many bar associations, including the Boston and New York Bar Associations, offer a lawyer referral services. Under such programs, lawyers have agreed to provide initial half-hour consultations that are generally free or cost less than $50.
Paying a bit more now for a good, legally drafted will can also save your heirs money -- particularly if they are not the beneficiaries designated by your state intestacy statutes, Macauley says. If your surviving family or friends are not the designated successors, they may have to spend thousands (or hundreds of thousands) of dollars fighting for what they are entitled to.
“People like these do-it-yourself wills because they don’t like to pay legal fees,” Bove says. "But the DIY will can become the most expensive 'bargain.'"