The Last Word: Wealth Club Tells You Why You Need a Will
You owe it to yourself and your loved ones to make sure that your wishes are carried out in a timely and proper manner.
In our financial advice column for the centsless, Michael Fleck fields questions on how to get your money right. Leave your fortunes to wealthclub@goodinc.com.
We recently passed the one-year anniversary of the tragic death of Tom Bridegroom—get some tissues before watching. He had been with his partner, Shane Bitney Crone, for six years. They traveled together, lived together and started a business together. They lived in California, yet had never been married.
Unfortunately, Tom’s parents were not accepting of their child’s homosexuality or his relationship with Shane. When he died, all of Tom’s assets passed to his parents, even though to any outsider looking in, Shane was clearly his closest survivor. However, neither one of them had end-of-life documents. Shane had no legal right to any of Tom’s possessions, not even the ones with little monetary value, but exceptional sentimental weight. Nor was he able to hear firsthand from the doctor the circumstances of his partner’s death.
I didn’t really want to write about end-of-life considerations and how they pertain to young people’s finances, mainly because it’s a morbid topic. But Tom and Shane’s story struck a chord with me. As a gay man myself, I know I could be faced with a similar living arrangement. Luckily I have a wonderful family who accepts me, but I know that’s not the case for everyone. And today’s Wealth Club is by no means just for LGBTQ couples who aren’t legally joined. It’s for anyone who takes the following two questions seriously: What is going to happen with all my stuff after I pass away (last will) and who’s going to make the end-of-life decisions for me if I am not be able to make them for myself (living will). They’re tough questions, and it should take you some time to come to a complete and comfortable answer.
I don’t have a will. Frankly, I never thought too much about it until recently. After a little investigating in how to create a last will, the first three questions I was always asked were if I was married, if I had kids or if I owned any property. Answering no to all three confirmed my suspicion that creating a will is a bit less important for me than for those who’d answered affirmatively.
Nevertheless, I do own various assets, many with sentimental value to others. At this point in my life, I’d want my monetary assets to pass to my parents; however, in the event of my death, I know I’d want some of these sentimental items passed to specific people. I know my parents would honor these wishes—but only if they know what they are. Creating a valid last will allows me to accomplish all of these things, and lessen the burden on the people I would leave behind, including the executor, the person in charge of administering the will. Regardless of your financial situation, estate planning is important.
Your estate is divvied up after your death through the probate process, which is overseen by a court, and the intricacies differ state-by-state. Most states allow for funeral and legal costs to come out of the estate first. After these are paid, it’s common for states to have family allowances paid to your loved ones to cover basic living expenses if your estate is tied up in the probate process for over a year. If the estate has more money than outstanding debt, that’s great, and the remainder gets parceled out per your wishes. If debt exceeds your estate, the rest of your personal debt gets forgiven, provided there’s no cosigner. If you, for example, had private student loan debt cosigned by your parent, they become solely responsible for it.
Now we come to the division of your estate. You can bequeath whatever you like to whomever you like. It’s not just about money. It’s about clothing. It’s about pets. It’s about that stuffed animal your childhood sweetheart won for you at a carnival. You know they should have it. If you pass without a will, everything will go to your successor, someone with blood relation to you, usually starting with your children, then parents, then siblings, and so on. It’s important to write it all down, because your executor cannot follow your wishes if she doesn’t know what they are. Creating a last will allows you to leave a legacy with those you loved the most. And you can create a new last will whenever you like, as long as it nullifies any previous ones.
There are some exceptions to this process. Life insurance, retirement accounts, annuities, and pensions all do not fall under the purview of the probate process, namely because they’re not yet viewed by the courts as yours. In all of these cases, you’ve been asked to name a beneficiary in the event of your death, and these accounts gets transferred to them. You can generally change the beneficiary on these accounts whenever you’d like.
The other important part of this discussion is a living will. The living will is a type of advance directive to define your preferences for end-of-life care: In the event that you enter a coma, vegetative state, or other form of incapacitation, you can spell out exactly what treatments you do or don’t want performed, and you can name a health care power of attorney to help you carry out such preferences. It’s important to have both a living will and designate someone with power of attorney, since you cannot list every possible treatment that might prolong your life. Your primary care doctor is tasked with determining when you cannot make such decisions on your own, and when the living will and power of attorney decisions go into effect. Of everything mentioned in this column, perhaps the most important is designating the right person as power of attorney. It’s a deeply personal decision, and it is paramount that you and that person come to an understanding of what your wishes are.
There are two routes to creating these all important documents; you can go through an estate planning lawyer, or you can use certain online services like Legalzoom.com, Nolo.com or Rocketlawyer.com that have DIY documents and legal advice; given the importance of the issue, it’s probably best to go through a real-person lawyer. Your parents probably have all of these documents; find out who they used to create them.
Even if you don’t get this paperwork in order this week or month, it’s smart to give at least a little thought to how you want your belongings divided in the worst case scenario. You owe it to yourself and your loved ones to make sure that your wishes are carried out in a timely and proper manner. It would have made a situation like Shane and Tom’s just a little bit less heartbreaking.