The importance of making a will can never be overstated. A will is the only way to ensure that your wishes and desires are carried out after you’re gone. Unfortunately, many people tend to make mistakes when drafting their wills, which can lead to a variety of issues down the line.
Taking the time to understand the process, and outline what your assets are prior to making a will is essential. It can be the difference between a successful will or one that leaves your loved ones fighting and possibly break up many relationships. Even among siblings.
From not including enough detail in the will to not understanding the tax implications, these mistakes can have serious consequences. Here are the 6 most common mistakes to avoid when making a will, so you can be sure that your wishes are followed.
1. Not Including Enough Detail in the Will
Will-making is one of the few areas where people tend to be extremely general and vague. They draft a will that says, “I leave everything to my wife” or “I leave everything to my children.” When writing a will, it is important to assign certain personal assets, called “specific gifts.” If you have a special piece of jewelry, or art collection you want someone special to have, make sure you specifically name that gift in your will. You need to be as specific as possible. Try to include as much detail as you can, so there is no doubt about how you want your estate to be distributed when you’re gone.
Make a list of everyone you want to be included in your will. Include their relationship, the amount of money, property, or other assets you would like given to them. Be as specific as possible and be certain to not to forget the sentimental items, like the necklace you wear everyday. For example, if you want to leave a certain amount of money to your sister, specify it in your specific gifts by saying, “I leave $20,000 to my sister Mary.”
2. Not Understanding the Tax Implications of the Decisions You Make
One of the biggest issues people run into when making a will is that they don’t understand the tax implications of their decisions. Making a will is really a way to choose who gets your assets when you pass away. You can leave those assets to whomever you choose, which can be your spouse or children, friends or relatives, or even a charity. It’s important to understand that when you leave assets to another person, you’ll be paying gift taxes on that transfer. If they have to pay a certain amount of taxes on that amount, it can really add up if you don’t plan ahead.
To avoid taxes from inheritance, consider utilizing a deferred annuity or a life insurance policy. Life insurance policies provide tax-free payouts to your beneficiaries. You can also transfer the money to an inherited IRA to spread out the tax bill. Another option is to set up a family limited partnership to reduce the size of your estate. Lastly, you can fund a qualified personal residence trust (QPRT) to transfer the ownership of your home into a trust.
3. Making a Will That Is Not Properly Witnessed or Notarized
Another mistake people often make is not having the will properly witnessed or notarized. When you have your will written, you have to have it signed in front of two witnesses. The witnesses have to see you sign the will, then sign the will themselves to testify that you are the person who signed it. Having your will properly witnessed is incredibly important because it’s the only way to prove that you wrote the will when you claim you did. If there’s ever a dispute about who wrote the will, having it witnessed will be evidence that you did. It’s also important to have your will notarized. A notary public is a licensed public official whose job it is to verify your identity.
4. Not Updating the Will When Necessary
People often make the mistake of not updating their will when necessary. Wills are living documents, which means they change as your life changes. If you have children when you make your will, but then have more children later on. You may have a spouse when you make your will, but then get divorced. Should you own a house when you make your will, but then sell it later on. All of these factors change your will, but some people forget to update their wills when necessary. That can lead to problems down the road when you do pass away. Your loved ones will have to deal with those problems because there’s no will to help resolve the issues. You should review and update your will every few years to make sure it’s still accurate. This can be as simple as crossing out a name and writing in a new name. You may also want to make changes depending on your life situation. If you have a child that passes away, for example, you’ll probably want to modify your will.
5. Not Naming an Executor When Making a Will
Another mistake people make is not naming an executor in their will. An executor is the person who is in charge of your estate when you pass away. When you die, there will be probate on your will. Probate is the process in which your will is “proved” to be your will. Once it’s proven, the executor will be in charge of distributing your assets the way you specified in the will. Now, probate can take a while to complete, so having someone named who can jump in and start taking care of things right away can be really helpful.
The problem is that most people don’t name a specific person as their executor. They’ll just leave it to their spouse to handle it, which means their spouse has to go to court and prove that the will is theirs. It can take a long time for that process to happen. Therefore, you should name an executor in your will to make sure they follow your wishes as quickly as possible.
6. Not Registering Your Will
If your will is not registered with The U.S. Will Registry, it is much more difficult to locate. Your family and friends may not be aware of its existence, or they may not know where to look. There is a heightened risk of destruction or disappearance of your will by accidental or malicious means. This can lead to a dispute over your estate that can be costly and time-consuming to resolve. Most importantly, your legacy and last wishes may not be fulfilled.
