Estate Planning: Why You Need a Will
One of the most sobering facts about life is that every life must end. Because death is a sad subject, most people avoid thinking about it, much less planning for it. Depressing though it may be, the failure to prepare for death – known as estate planning – can have disastrous and expensive consequences for the loved ones left behind.
Despite their importance, only 42 percent of American adults have wills. Worse, only 32 percent of African Americans have engaged in estate planning. Surprisingly, compared to other communities, African Americans may have more to lose by not planning ahead.
The Basics of Why You Need a Will
When a person dies, her property can pass on in one of two ways. In option one, a person writes a will or creates a trust. (For clarity, this writing will focus on wills.)
A basic will specifies how real property (houses, land, etc.), personal property (jewelry, clothing, etc.), and money will be distributed. The person making the will (the testator) decides how much property – if any – each family member will receive.
Though most wills focus on property divisions between families, wills can do much more. A parent’s will can name a guardian for a minor child. Wills can provide continuity for a family business. Wills can also give instructions on how debts should be paid, how property should be maintained, and even how pets will be cared for. Though most testators leave money to people, a will can leave a gift to a favorite charity, college, fraternity or sorority.
Each state has laws that must be followed to create a will. For a will to be valid in that state, these laws must be precisely followed. Because wills are governed by state law, a will is only valid in the state where it is drafted. If you move to another state, you must update your will. Major life events such as marriages, divorces, adoptions, births, or deaths may also trigger will revisions.
In option two, a person dies without a will. Because this is common, states have laws on the subject. However, these laws allow a judge – not you – to decide who will receive your property. The judge will decide what happens to your property, business, and even children after her death. Without a will, this process takes much longer. (Family infighting and lawsuits can make the process even longer.) As the process drags on, the judge may sell assets to pay debts, taxes, and fees. Finally, by planning your estate, you can use your will to reduce the taxes your family will pay on the inheritance. If there is no will, the family will pay the full tax bill. In sum, without an estate plan, loved ones receive less and wait longer to get it.
Everyone Needs Estate Planning – Not Just the Rich
While many think only wealthy families need wills, every family needs one. Estates of all sizes can cause arguments. A good guideline to remember is, “small items can lead to big fights.” While families can (and do) fight over money, items with sentimental value such as clothing, jewelry, and the like are equally likely – and often more likely – to be the subject of an argument. A will can end this fight before it starts.
Additionally, many people think that they can’t afford a will. Lawyers charge by the hour, so a will for a complex, multimillion dollar estate will be expensive. But for a person with few assets, a will may be surprisingly affordable. Ultimately, the peace of mind that comes with knowing that there is a plan in place for your loved ones is priceless.
Black Families Need Estate Plans Too
African American families need wills as much as white ones – perhaps more. Black elders may have their reasons for avoiding estate planning. As one scholar wrote, “The failure of African Americans to prepare wills is likely attributable to distrust of government, a belief that their children will ultimately inherit the land and reluctance to cause division within the family.” However, as explained, dying without a will makes family friction more likely.
In addition to reducing friction, wills keep wealth in families. Without a will, there is no guarantee that the family will get the property. The failure to use estate planning has caused the Black community to lose wealth. For example, studies have found that lack of estate planning is one of several factors that lead to land loss in the African American community. In the absence of a will, the land becomes vulnerable to partition and sale. When this happens, families lose property and wealth built by previous generations.
What Else Do I Need to Do?
A successful estate plan goes beyond a will. Medical documents such as an advanced directive or durable power of attorney can make your medical wishes known when you can no longer speak for yourself. Funerals are expensive, so life insurance is also a necessity. Loved ones should not have to beg and scrape to provide a proper burial. Beneficiaries on insurance policies, retirement funds, and other documents should be updated often.
Estate planning is difficult. Complex laws must be followed to the letter to create a valid will. While many sites offer cheap estate planning services, remember the adage, “you get what you pay for.” A simple online will may work for those without children or with few assets, but those with children and those with significant assets such seek the advice of an attorney. An attorney will not only draft a will or trust to your specifications but will also work to keep the will updated and valid. You may also want an attorney to oversee your estate after your death. Use the African American Attorney Network to find an estate planning expert in your area.
DISCLAIMER: Nothing contained herein should be construed as legal advice or the creation of an attorney-client relationship. Should you need legal advice please seek the assistance and advice of an attorney in our directory or one that you locate by other means.