Investment Glossary – Last Will and Testament
Talking about wills is usually done in hushed tones and with extreme levels of trepidation and awkwardness, largely because talking about death is not something that we do particularly well. In fact, we’re actually terrible at it, for the most part. So we’re going to dispense with all of the pleasantries and careful language, because there are a few things that you need to understand about drawing up a proper last will and testament, or just a “will” if you want to keep things short.
This doesn’t make you unique. In fact, it makes you normal. Last time I checked, no one, not a single person walking the face of this round rocky ball with a whole lot of water we call Earth, has ever escaped death. So it’s safe to say that you’re going to die. And it’s also safe to say that if you don’t provide a basic level of direction as far as what happens to all of your stuff when you die, the people you leave behind, whether family, friends, hangers-on, or complete strangers, are going to want a piece of what you left. Your last will and testament is a guide to showing those people how to distribute your assets once you die, so that they can spend less time fighting over who gets your teacup collection, and more time doing things unrelated to fighting about your teacup collection. To be honest, none of them really want it anyways, they just want to say they got it.
In most states, a will typically requires the signatures of one or more witnesses in order to hold up in court. The presence of witness signatures helps to prevent situations where someone forges your signature, or gets you to sign something when you are in a state where you shouldn’t be signing anything, be it a night with too many drinks or an illness that prevents you from understanding what you are signing. Attorneys in your specific state are likely going to be able to guide you as to the specific statutes for your state, but make sure you follow them to the letter of the law, as otherwise your wishes, though written down, might not have much weight in probate court.
So what is probate court?
Probate court is the system that is set up to distribute your assets, either in accordance with your will, or in accordance with state rules if you don’t have a will. That means that if you don’t have a will, the state doesn’t keep all of your assets, but they may go to people in your family that you either don’t want receiving them, or that you simply don’t want receiving that much. So drawing up a valid will is a way to direct the probate process so that things end up where they’re supposed to end up.
The great thing about a will is that you can choose to direct assets in any which way you like. You can give them to your spouse, your kids, your grandkids, brother, sisters, friends, charities, or anyone or anything else you can name. You have a ton of choices, but it’s generally best to keep things relatively simple in a will, as this will make the process as easy as possible and involve fewer people, meaning less potential for conflicts, which may happen, even if you have a will drawn up.
Certain assets you own may bypass the will, as they may have specific beneficiaries designated that supersede any instructions in your will. Examples of these accounts include retirement accounts, such as a 401(k) or Traditional IRA, also bank accounts with a “Payable on Death” designation, and life insurance policies with specific beneficiaries. But for assets without specifically-directed beneficiaries, a basic will provides guidance as far as how your assets should be distributed when you are gone, helping to ensure your wishes for your estate are fulfilled once you’re gone.