You’ve got contingency plans in place if the babysitter cancels, and and a laminated list of all 27 emergency phone numbers tacked to the fridge. But have you decided who’s going to raise your kids in case you‘re not around to do the honors?
Pondering life’s potential tragedies may not be a go-to, dinnertime topic. In fact, even the most basic estate planning tasks tend to fall off our radar: According to a recent survey by Edward Jones, just 24% of Americans have even designated a beneficiary for their financial accounts.
Yet, it’s one thing to forget to fill out the beneficiary paperwork for your bank and brokerage accounts. It’s quite another to leave your child’s future to fate. “Many parents put off this process because it is a very difficult conversation to have,” says Wesley Botto, a partner at Cincinnati-based Botto Financial Planning & Advisory. “There also may be a disagreement about who the guardians of the children should be.”
What happens if tragedy strikes and you haven’t put a few key estate planning documents in place? Short answer: A stranger will decide for you what happens to your money and your children.
What happens if you die without a will?
If you die without a will or a trust in place, your assets will go into probate, says Robert J. Forrest, a financial advisor with Jacobitz Wealth Management Group in Omaha. That means a court will be in charge of distributing your assets and, if no guardian has been designated, a judge will appoint one to manage the assets until the child is of legal age, A judge will also appoint a guardian to take care of your kids.
The court will attempt to act in the child’s best interest as much as possible. But a judge can’t know the nuances of your family’s dynamics. For example, “The judge might pick a relative who is more financially stable or has experience raising kids instead of a relative who is actually significantly closer to the child, but has limited financials and less experience with children,” says Avani Ramnani, director of financial planning and wealth management at Francis Financial in New York.
Take action: Your options for creating a will
It takes time and effort to put a will in place, and it’s easy for busy parents to put this task on the backburner as more time-sensitive issues arise. There are, however, options to help you complete the process in a way that suits your lifestyle and your budget (i.e. it can be quick and not too expensive.).
Through an attorney: Having an estate planning attorney create a customized will is the most costly option. In larger cities like New York, Ramnani says to expect to pay between $1,500 and $2,000. In less urban areas, the process ranges between $350 and $750, says Botto. The initial meeting should take no more than an hour, and once you approve the draft of your will, you’ll have a short follow-up meeting to sign the documents.
Although hiring an estate attorney is pricey, it’s money well spent if your finances and/or family relationships are complex. An estate attorney will ensure that your will is as airtight as possible to minimize the chance of anyone contesting your wishes. And if you’ve been dragging your feet, putting an appointment on the calendar can ensure that this important task gets done. Plus, Botto says, once you establish a relationship with an estate attorney, he or she will follow up with you to see if you’ve had any life changes that need to be addressed in your will.
Online options: If you simply want to get a will in place quickly and have relatively straightforward finances, you can draw up a will online. There are a number of cost-effective services to assist. Be sure to choose one that offers state-specific will-making.
- Quicken Willmaker & Trust is downloadable software that costs $89.99 and includes a lawyer review to make sure the documents adhere to your state laws.
- Do Your Own Will is a free online option that walks you through the will-making process. However, unlike paid programs, you don’t receive any kind of support if you have questions.
- Other popular DIY options include Rocket Lawyer and Legal Zoom.
Appointing a guardian: If you’re overwhelmed by the prospect of getting a will, just focus on this one important task: Naming a guardian. Trust & Will is a good online option that lets you appoint a guardian in under five minutes. Prices start at just $39. With that off your plate you can tackle other estate planning items one at a time.
Once you have a will, don’t forget to update it every few years as your children get older (or you have more kids) and your financial life evolves. If the unthinkable does come to pass, an up-to-date estate plan will help minimize potential financial hardships in the midst of grief.
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