Top Reasons To Have A Will

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willI don’t know what’s taken us so long to get a will.  Actually, it’s probably because I was single for so long.  I figured my (very small) assets would go to my sister or parents.  So I didn’t really worry too much about what happened.  I figured that it would sort itself out.  

 

When I got married, I knew that my (slightly bigger) assets would go to my wife.  I had seen how that was a fairly smooth process when a friend of mine’s father passed away.  While his dad did have a will, nobody could find the original copy, which was needed.  So they had to file some extra paperwork with the court since there was no original will.  But, my friend insisted that it wasn’t that painful.  His mom ended up getting 100% of his father’s assets.  My friend basically told me that my wife and I really didn’t need a will.  

 

Planning with a Kid in the Picture

willNow that I have a one-year-old son, I’m not sure that the argument holds as true.  I have been thinking about all the estate planning that is needed, ie trusts, guardianship, etc., that probably needs addressing so that our son is set for the future.  

 

LegalZoom was something I considered, but it makes me a little nervous.  I have also perused a couple of local lawyers.  They seem a little expensive for what I anticipated a few fairly simple documents would cost.  

 

We don’t plan to be overly elaborate.  I hope to set aside the money until he is 18 to pay for college, and then hopefully he has enough common sense to not blow it.  I don’t want to withhold it from him until he is 60 because if I was around, and he had a great business venture or major medical bills, my desire would be to help him out.

 

So you may be thinking why is this on the forefront of your mind?

 

Estate Planning

willWell it has to do with a couple of things.  The first is that a lot of financial bloggers have been talking about estate planning recently, and I know I won’t be living forever.  

 

On top of that, I have helped facilitate the Dave Ramsey Financial Peace class for years now.  He has a module all about estate planning, and I always hear and say that I’m going to get around to creating a will but never do.  I guess that’s why I added it as one of my 2017 goals to accomplish.

 

Less Drama

willAnother reason is that I want to make sure that there isn’t a mess for him to clean up after we die.  I have read about too many wills that get contested or children and outside parties fighting over control of estates.  Just look at Prince’s estate.  There is/was some serious fighting going around.  While my wife and I are nowhere to close to that type of money, we’d love to avoid any drawn out problems.

 

Inheritance Stats

Interestingly enough, did you know that 56% of Americans are currently expecting to provide their children with an inheritance?  I have to admit that this seems a bit lower than I expected.  But then again, based on some of the debt numbers that people have, it makes a ton of sense.

 

For those that are receiving an inheritance, a survey conducted by HSBC found that the average American is in line to receive an inheritance of around $177,000.  This is a nice chunk to help when you get to retirement.  

 

willAccording to research done by Jay Zagorsky, he found that 1/3 of people who received an inheritance had negative savings within two years of the event.  I can’t imagine spending $177,000 in two years, but also in line with my lottery article, people find ways to blow throw money in a hurry.

 

This fact is further confirmed as the Williams Group wealth consultancy found that 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third.  As the old Italian proverb goes, from the stable to the stars and back again.

 

A Tricky Situation

Of course, my hope is that our children will not be part of those detrimental statistics above.  One of our relatives has recently shared that they like to include our son in their will.  When he initially told us, we felt very honored and grateful that he would include him.  This relative had indicated that his hope would be that my son would use this money towards further education.

 

However, recently this relative alluded that even if we have more children, that there would be no guarantee that the others would get any money.  I have to admit, this makes me a little nervous.  I grew up much differently.  My parents always stressed fairness and tried to keep everything equal between my sister and me.  So essentially whatever money that my parents spent on me, they tried to spend on my sister as well, and vice versa.

 

willI am slightly worried though that if my son received a sizeable amount of money from this relative while a future child did not receive anything, that this might cause a rift or jealousy between the siblings.  

 

My parents have had some first-hand experience with these types of issues, and I believe that it caused some resentment within the family.  It’s sad, but there are some distant relatives that we don’t know very well due to some of the fallout from inheritance.  Money can bring out such ugly sides of people.

 

Let me preface this with saying that people can give away their money however they see fit.  All I know from experience is that it has caused a lot of heartache over the years when people don’t understand why they received less than someone else.

 

My Parents’ Plan

willTo avoid drama, my parents have agreed to keep everything equal between my sister and me.  I am incredibly thankful that my parents, first off, to anticipate any sort of inheritance.  Secondly, I am grateful that there shouldn’t be any potential squabbles with my sister down the road.  

 

My wife has also seen unequal distribution of assets.  She tried to explain to me that my equal-mindedness was not as common as I had hoped.  In her experiences, people who have passed have left different amounts for different people.  Even in Biblical times, when a father passed away, the firstborn son inherited a double portion of the family property.  What seems “unfair” to us now was common practice back then, strictly because of birth order.  The concept of equal inheritances for children is not a tradition.

 

So readers, do you expect to receive an inheritance?  Do you think I’m overly concerned about it not being fair that children receive different inheritance amounts?  Share your thoughts below.

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52 Comments

  1. I’m right with you- I know the importance of wills, but haven’t gotten around to making one. One thought I’ve had is to leave a sum to whoever becomes caretaker of our kids. I have several relatives who I trust completely to but misuse this money and who would wisely use it in bringing up my kids.
    Daniel Palmer recently posted…Buying vs. Renting- What’s Right For YouMy Profile

    • Those are really good points Daniel. I think that’s probably a huge fear that if parents pass away that the guardian of your children will use the funds wisely. It’s definitely something I think about from time to time.

  2. Glad to hear you’ve been thinking more about the will! I definitely think you’re right to be concerned about equal distribution of assets. My husbands family is going to experience that- he has an older sister (and her kids) that have been financially dependent on my in-laws since before I met them. Not because of special needs or anything like that. They have a co-dependent relationship where my sister in law will spend all her money and then come asking for a car, food, help paying for cable/electricity/oil, and she even lives in a house they own! Guess who’s getting the bulk of their estate when they pass away? Yes, it’s the dependent sister-in-law and her kids, because “they need it”. The rest of the kids (there are 4 in total) all have kids of their own, but they’re all “good with money” while the ones that aren’t “need the help”. Notice my extensive use of quotation marks here. I have no doubt my sister in law will blow through whatever she receives in short order, and then come knocking at her siblings doors for more “help”. I find it sad, actually. She’s 43 years old, has two grown/almost grown children, and doesn’t live independently. And yes, I think it’s going to cause a lot of resentment when she and her family get everything and everyone else doesn’t get anything. Not my family though, so I don’t say anything (except to my husband).
    Liz@ChiefMomOfficer recently posted…Seven Ways To Have It All as a Working momMy Profile

    • I’m really sorry to hear that. Sounds like what should be a blessing for your sister in law is in short order going to be a huge headache for the rest of the family. If she hasn’t learned to live independently yet, it doesn’t sound like an infusion of assets is going to help. Sorry to hear about this situation and the potential riff it will create in the family.

  3. I actually think there is a much bigger reason to have wills with young kids. The reason we are going to a lawyer in fact, and not legal zoom which we used earlier in life. If both you die, where do the kids go? In some states they have to go to foster care while that’s figured out if there is no will. Even if that were not true if you have a decent amount of wealth someone you don’t want to have your kids may do so just to have access to the cash. We plan on redoing our will this spring or summer via a lawyer.
    Fulltimefinance recently posted…Penny Wise, Pound FoolishMy Profile

    • Thanks for sharing Fulltime Finance!!! That is one of the things that we have struggled with is whether or not we need a lawyer or if it’s something as simple as legalzoom. I want to make sure that our son doesn’t have to go into a holding zone while the state figures out something. So we probably will go the lawyer route.

  4. I would love to have a windfall once in my life when I don’t have to earn it. Just joking. That doesn’t sound like me and I am not expecting anything at all. If I do, I will give my share to my siblings and children as I am not used to getting free money (except from the government).

    In terms of fairness, I definitely agree that it should be equally distributed between siblings and I will try to do that for my children. However, I will tell them that they will get nothing from me as I want them to be disciplined with their money.

    Warren Buffett said that you should leave enough money for your children to do anything, but not enough to do nothing. I really like that advice that’s why I don’t want my children to expect any inheritance from me. I believe in passing on knowledge and discipline rather than money.
    Leo T. Ly @ isaved5k recently posted…The Fifth Step To Saving A Million DollarsMy Profile

  5. I was concerned about our Will and other related matters when we had our first-born as well. I did some research and found out that State law is what determines how assets are split up in the absence of a Will and in North Carolina a significant amount of my assets would go to my parents instead of entirely to my wife which I would have hoped. So putting a Will in place was definitely important to us.

    We looked into Legal Zoom as well but I think we ended up going with software from Quicken to help with our process. I’ll have to look that back up though since we’ll be re-doing it soon anyway as we are expecting #2 in a month.

    I’ll be curious what you end up deciding on! Thanks for the timely post.
    The Green Swan recently posted…Update on My Small Business: February 2017My Profile

    • Thanks for sharing Green Swan!!! That’s crazy that your assets would go to your parents instead of your spouse. That seems a little backwards to me but I’m sure they had a reason for it.

    • I just wanted to mention that for additional children, you can just create a codicil to your will, which is simply an amendment. If you have other changes to make as well, you should probably redo it, but if it’s just adding a child, this is the simplest way to do it. It will need signed and witness just as your original will.

  6. Creating a will has been on my to do list for a while now, and it’s one of my goals to get done in 2017. I started one a few years ago but got to the part where you have to decide what happens when you’re on life support (pull the plug or not) and decided I didn’t want to think about it. Definitely getting one done this year though.

    If you’re leaving an inheritance, I think it’s best to make it equal among those you’re giving it to if those people all have equal standing (i.e. they’re all your children or your grandchildren). If you decide to divvy it up unequally, I think it’s best to explain why you’re doing it that way when you’re still alive to avoid any surprises come will time.

    I’m not expecting to receive an inheritance from my parents. I know everything is split up evenly between my sister and I in their will, but my hope is that they’ll live long enough to enjoy all the money they’ve saved.
    Go Finance Yourself! recently posted…Tax Time: Do You Have a Business or an Expensive Hobby?My Profile

    • I think that’s a great point of view Go Finance Yourself!!!

      I would much rather see my parents draw down on the money and enjoy life instead of save every penny to give me and my family an inheritance 🙂

  7. What a terrific topic! We, too, waited way too long and finally wrote up our wills last spring using USlegalforms.com (as recommended by Dave Ramsey). We believe our families would work together well in the case of our both passing away, but it’s still key to assign guardians beforehand.
    It’s an interesting question, the idea of keeping things equal among siblings. In general, I think that’s best, except in cases where one child has special needs or disabilities the other children don’t. Since those added challenges aren’t their fault or choice, I’d lean towards unequal inheritance for those kids.
    Wow, I can’t believe those stats on blowing through inheritances! 1/3 at negative savings in two years…Wow. Maybe a lot of those only received very small amounts? We hope to leave funds to our kids, and it seems we’re on track to do so!
    Mrs. COD recently posted…Freelance Baby StepsMy Profile

    • Thanks for sharing Mrs. COD!!! I go back and forth with the special needs child. Part of me thinks they should get it all and then when they pass the assets can be split among the children.

      The other part would be nice for all the children to chip in and stay involved.

      But I may be too naive in thinking everyone would help out and chip in. So I think the first answer is probably best. 🙂

  8. No windfall coming our way! 🙁

    As far as a will goes, we had initially set one up through one of the online guys, but after a couple years of feeling uneasy about the whole thing, we went to an estate planning attorney.

    It cost us more money, but that became a huge burden lifted off our shoulders knowing we had something solid in place (and the results were much different and seemed more thorough). We ended up creating a revocable trust with a pour-over will and a couple of powers of attorney (healthcare and durable general).

    I would definitely recommend going the attorney route to anyone that is starting to accumulate enough in assets in order to ensure everything is correctly in place for their heirs.

    — Jim
    Jim @ Route To Retire recently posted…Get Paid to Get Laid Off – How to Engineer Your LayoffMy Profile

    • Thanks for sharing Jim!!! I think I might have the same doubts if I went with the online guys. So an estate attorney probably is in our future. Hopefully a good one that is affordable 🙂

  9. Add one more FPU coordinator to the list of those who don’t have a proper estate plan in place. Every year I facilitate the course, and every year I’m asked by students if I have a plan in place, and every year I offer the same sheepish response.

    At this stage in life, I think I’m OK with the lack of progress, ironically. When we have our first child, I’m sure that will change in a hurry. Establishing a will and trust will be high on the priority list at that stage.

    I’ve seen first hand that a proper will and trust simplifies estate settlement. My grandmother recently passed, and my uncle has had an easy job as executor due to how well everything was planned. Leaving a proper will and trust for your heirs is a great way to express your love for them.

    • I definitely agree having a will helps out a ton after you pass away. I have seen too many families scrambling trying to figure out the right thing to do and things getting litigated because of missing paperwork or contested wills. Seems like a no brainer when you think about it.

  10. THANK YOU for setting up a will. It’s so, so important, especially once you have kids. I keep meaning to set my own up now that Mr. Picky Pincher and I have a house.

    My mom died suddenly without a will and without life insurance. It was absolutely devastating because we didn’t know what her wishes were. There were no legal documents protecting assets or divvying up her belongings. It was very hard.

    So no, I didn’t get an inheritance. 🙂 But I’m the executor of my dad’s will and he has my sister and I and all of our current/future children included. He just wants to make sure we’re taken care of, and we really appreciate that.
    Mrs. Picky Pincher recently posted…Crock and Roll with Homemade SauerkrautMy Profile

    • That’s awesome to hear that your dad’s will is all set. It’s nice to know that paperwork is all done and it’s not something you need to worry about. I have heard of too many people that supposedly had wills but nobody could locate it. So hopefully as the executor you know where to find it 🙂

  11. I don’t think I’ll have any kind of inheritance and I’m fine with that. But question: in terms of bank account, brokerage accounts, money market, CDs, if I don’t designate a beneficiary (although I have designated my wife with all my accounts), isn’t the default person your spouse anyway if you are married?
    SMM recently posted…Spending on Lunch – A Personal ExperimentMy Profile

    • I believe that is the case although I think it depends on the state. The Green Swan seems to have thought that some of his assets might go to his parents. So I wonder if it’s unique in each state.

    • I’ve recently been researching this so I know a little about this, although there are differences in a few things across states.
      Jointly held accounts go to the remaining joint account holder without having to go through any sort of process (like probate). For other bank accounts, it’s best to designate a Pay on Death/Transfer on Death recipient (I’m assuming that’s possibly what you mentioned?), otherwise, it’ll go through the court process to determine who should inherit the money. Some states favor the spouse and others split more evenly among the spouse and children.

  12. Inheritance is a gift. From my perspective, no one should complain why they got less. If we receive anything at all, we ought to be thankful for it. The only thing we deserve is what we have earned by shedding our sweat, blood, and tears.

    It is totally up to the benefactor to determine what a beneficiary receives 🙂

    Yes, it is important to have a Will and a Living Trust when it makes sense.
    Michael recently posted…Personal FinanceMy Profile

    • I tend to agree with you Michael that an inheritance is a gift. Although gifts of varying amounts can definitely hurt siblings feelings. I’m just glad it’s something that I don’t have to worry about 🙂

  13. re: your son & his being named in someone’s will. I would recommend that they structure the will such that the inheritance can only be used for college tuition at an accredited school and other specified school related expenses. Also, I recommend they put some clause in to address the scenario of your son being a minor at the time of their death. Ideally, you & your wife would control the inheritance until your son reaches age 18 but the will should specify that to avoid any problems. Are they adamant that the inheritance should only benefit your son? Can you ask them to put some language in there “for the educational benefit of the child (or children) of Mr. & Mrs….”?

    The main downside of a will is that if the estate is large enough, it will have to go through probate…and that means delays & probate fees. My parents set it up like Jim – revocable trust with a pour-over will and some POAs. The healthcare POA is frequently called a living will.

    It’s more work because you have to re-title your assets to the revocable trust’s name but you can take your time in doing that. You can specify in the trust documents how the trust will be dissolved. Speaking from personal experience, I’m glad my parents had the assets in the trust because it made it much easier to handle after they passed away.

    • Thanks for sharing your experience Dan!!! You always provide incredible insight.

      I will definitely write down your and Jim’s recommendations when I go to meet with an estate attorney. I would love to make it as simple as possible if we were to pass away unexpectedly.

  14. I don’t know if I’ll get an inheritance or not. I’m not expecting one.

    Estate planning is on my to-do list as well for 2017. I’m leaning toward a revocable living trust at the moment, but I still need to do some research about it’s pros/cons over a will, particularly when it comes to California’s probate laws.
    SomeRandomGuyOnline recently posted…Paying Back Student Loans SUCKS!My Profile

    • Thanks for sharing SRGO!!! I definitely need to educate myself a lot more about the state laws when I pass. I’d love to come prepared when I meet with the estate attorney instead of getting steered by them 🙂

  15. We have a 2017 goal of getting our wills/estate in order. We’ve signed up for a legal service benefit provided by my megacorp. They deduct a small amount from my salary every month and in return I get access to a large group of lawyers at minimal rates. Others at my company have had good things to say about this, so we’re going to give it a shot. We decided when Toddler BITA was born that if anything happened to both of us when she was still a minor we wanted her to go to my sister and her husband. We asked them, and they agreed. Toddler BITA is a U.S. citizen. My sister is an Indian citizen, her husband is a Spanish citizen and they live in the Netherlands. In the absence of a legal document I am guessing that what we want to have happen probably isn’t going to happen.
    Mrs. BITA recently posted…Should I Get Divorced?My Profile

    • Thanks for sharing Mrs. BITA!!! It definitely sounds like your arrangement for your daughter would be a little difficult without a will 🙂

      That’s also amazing that you get these services for a small amount of your salary each month. Sounds like a really great benefit.

  16. I was actually just writing something about inheritances in a new post. I did receive a modest one from my parents, but I believe the stats that there’s less tendency to leave one these days. I’m in agreement with you on the equal inheritances. My grown children are receiving unequal inheritances (from their mother’s side of the family) and I think it does cause resentments.

    As for my own estate, I have a basic will, although I think it’s time for me to update it. It’s a task people don’t like to think about, but it’s so important, especially if you have minor children or you don’t want to leave your estate to the whims of state law.
    Gary @ Super Saving Tips recently posted…How Will You Handle The Final Affairs Of A Loved One?My Profile

    • Thanks for sharing your first hand experience Gary!!! I would hate to see money come in between children especially when you have no control over it. Seems like it can cause a lot of resentment. Thanks for your perspective.

  17. I am in the same position you were in. Although I know I need a will (and plan to finally work on this in 2017!), my husband and I haven’t worried much about it because it is just us and ideally everything is set up in both our names and should go to the other person. However, I know that a will would make an already stressful and challenging event easier on the other person.

    So in the next month or two it is my goal to not only write a will but also go through and set up our advance directive forms to handle any unforeseen medical situations. I am looking forward to having a peace of mind about both of these important items soon.

    Thanks for calling attention to this issue!

    • Sounds like I’m not alone in knowing what I need to do but haven’t quite executed yet 🙂

      I’m sure once I get it done that I’ll say what took me so long. That wasn’t nearly as bad as I thought 🙂

  18. Hey MSM! Great post. I expect a small inheritance in the form of farm land. My dad was a farmer, and his land will be split between … 6 kids! Geez.

    When my kids were born, we set up a Living Trust + a “pour-over” Will with an estate lawyer. I strongly recommend doing this with a lawyer. Yes it’ll cost a couple thousand bucks but it’s too important to DIY, in my opinion.

    Definitely do your research, here’s an article with a quick list of trust benefits to get started: https://www.estateplanning.com/revocable-living-trust-benefits/

    Just my opinion, but I think a revocable living trust and a pour-over will working in tandem provide the best protection for people with young kids. It avoids probate court and gives you a lot of flexibility in determining how your assets will be passed, and especially how they will be used. Good luck! –R
    Rich @ pennyandrich.com recently posted…The Squirrel Story: How Rich Plans To Increase His Giving (And Not Be An A-Hole)My Profile

  19. While I think it’s preferable to use an attorney to draft your will, I think overthinking it is why SO many people don’t have a will. There’s nothing keeping you from revoking your will and creating a new one at any time. So, my opinion is that everyone should at least get a “temporary” will from one of the online services (I’ve used RocketLawyer for other things and it seems fairly good plus offers a free week trial, so you could create it completely free during that time). Then, when you are able to do so, you can have an attorney look it over or create a new one.
    I did use an attorney to draft our will and it was a service covered 100% by our group life insurance through my husband’s job.
    Making Your Money Matter recently posted…ST401: Other Employment BenefitsMy Profile

    • Awesome tip on Rocket Lawyer. I’ll definitely check it out and then find a qualified attorney to take a look at it afterwards to here what they think. Thanks for sharing!!!

  20. Honestly, this isn’t something my wife and I have really considered. We have God parents for our son, but no will. We may have another child (our plan is two) at most, so I believe we would split everything between them equally. I see no reason to go another route.

    I am the oldest of three boys. Based on my parents’ spending habits (3 homes, vacations, leased cars, etc.), I’m not sure there will be anything to inherit. If there is, my mother constantly says it would be split equally among the 3 of us. My wife is an only child, so we’re covered there. Her parents have rental properties and a home that is paid off.

    Aside from the topic at hand, a few things stood out to me in your post:
    1. “This fact is further confirmed as the Williams Group wealth consultancy found that 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third.”

    I was always amazed at this. You see things like the Rockefeller family who have essentially none of the wealth John D. created. It’s sad how the latter generations don’t have the same financial knowledge the creator of the wealth had. But, then again, when it’s your business, it matters to you much more.

    2. “Money can bring out such ugly sides of people.”

    This is so true. The love of money is the root of all evil after all, as the Bible says. I think it comes from a scarcity mindset, which fosters greed and jealousy. My mother’s side of the family dealt with this and continues to do so after my grandparents passed. It’s sad.

    Clearly, this was a thought-provoking post. Thanks so much for sharing!

    • Thanks for stopping by and sharing!!! I’ve never understood how generational wealth can be squandered so quickly. In some ways it’s a testament to the Kennedy clan that they’ve been able to keep their wealth for so long.

  21. My dad always tells me I will be rich when he goes, but tbh I’d much rather he spent the money that he’s worked damn hard to earn on himself.

    I would not be upset about my sister receiving more than me, but if I had my own children, I would want them to be treated equally. It depends really on the individualm but my husband and I are proud that what we have is mostly what we have worked hard for so I don’t live in hope of expectation of money from others. If anything, there’s an even greater obligation to use inheritted money more responsibly, as someone else has worked hard and saved it.

    • Thanks for sharing Sarah!!! I never thought about the greater obligation to use the money more responsibility but that’s such a great thought. I definitely feel like it would be a disservice if I blew the money that wasn’t in keeping with their spirit. Great perspective and thanks for sharing!!!

  22. Thanks for this great article. We don’t have a will at all and it’s on our list for this year. I am hoping by continuing on our debt journey we will have something to leave them!
    Jennifer Connolly recently posted…Bright IdeasMy Profile

  23. Always a great topic. I’m always amazed when big celebrities don’t have a will and then they finally pass, everyone is fighting down to the pennies!

    Personally, I don’t factor any inheritance into my retirement plans. I’m sure I’ll get something, but it just feels weird to think about it…or plan for it.
    Andrew recently posted…Stock Market Basics: Understanding How To Invest Part 2My Profile

    • Thanks for sharing Andrew!!! I definitely agree it’s not something that I think about. I thought that the figures were way higher than I thought. Over 175k is crazy to think about.

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