Do you have a plan for your estate when you die? If not, you're not alone. Only about 32 percent of Americans have a will or some sort of an estate-planning document.¹

But without a will, you have no say in how your assets will be distributed to your loved ones or the causes you care about. You also risk creating unnecessary stress and conflict for your family during a difficult time.

That's why you need a last will and testament — a legal document that lets you express your wishes for your property and affairs after your death.

In this article, we'll explain the basics of wills, what they can and can't do, and how to create one that reflects your goals and needs.

What is a last will and testament?

A last will and testament is a legal document that specifies how you want your assets to be distributed after your death. It also allows you to name an executor, who is the person responsible for carrying out your wishes and settling your estate.

Additionally, a will lets you appoint guardians for your minor children or dependents, and provide financial support for them or any other family members who may need it.

What assets are governed by a will?

A will governs assets that are in your name alone, such as a car, a house, a bank account, or personal belongings. These are called probate assets, because they have to go through a legal process called probate before they can be transferred to your beneficiaries.

What assets are not governed by a will?

A will does not govern assets that are jointly owned with someone else, such as a spouse or partner, or that are held in a trust. These are called non-probate assets, because they can pass directly to the co-owner or the trust beneficiary without going through probate.

Similarly, a will does not govern assets that have a designated beneficiary, such as a retirement account or a life insurance policy. These assets will go to the person or entity you named as the beneficiary, regardless of what your will says.

Finally, a will does not take effect until you die, and does not cover your medical or end-of-life decisions. For that, you need a separate document called a health care directive or a living will, which outlines your preferences for your health care treatment while you're still alive.

How to name guardians and provide financial support for your children

If you have minor children or dependents, you can use your will to plan for their future.

First, you can name legal guardians for them in your will, who will take care of them if you and the other parent die before they turn 18. This is an important decision that can affect your children's well-being and happiness, so you should choose someone you trust and who shares your values.

Second, you can set up financial support for your children or other family members who may need it. For example, you can create a trust within your will, which can hold and manage the assets you leave for your beneficiaries. You can also name a trustee, who will oversee the trust and distribute the funds according to your instructions.

This can be useful if you want to control how and when your beneficiaries receive their inheritance, or if you have a child with special needs who may require ongoing care and assistance.

Why do you need a will?

A will is an essential estate planning tool that can help you achieve several goals:

• You can ensure that your assets go to the people or organizations you choose, rather than being decided by the state law.
• You can minimize the costs and delays of probate, which can otherwise consume a significant portion of your estate and take months or even years to complete.²
• You can avoid family disputes and conflicts, which can arise when your wishes are unclear or when your heirs have different expectations or interests.
• You can leave a legacy that reflects your values and passions, whether it's supporting a cause, creating a scholarship, or passing on a family heirloom.

What is probate and how does a will affect it?

Probate is the legal process of settling your estate and transferring your property to your beneficiaries after your death. It involves validating your will, paying your debts and taxes, and distributing your assets according to your will or the state law.²

Probate can be expensive, time-consuming, and public, depending on the size and complexity of your estate and the laws of your state. However, having a valid and clear will can make the process easier and faster, by reducing the potential for disputes and complications.

What happens if you die without a will?

If you die without a will, you are said to die intestate², which means that the state law will determine how your assets will be distributed. This may not match your wishes or your family's needs.

For example, if you are married and have children, your spouse and children will typically share your assets, but the exact proportions may vary depending on the state. If you are not married and have no children, your assets will usually go to your parents, siblings, or other relatives, depending on who is alive.

However, if you have no living relatives, your assets may go to the state. This means that you will have no say in who benefits from your estate, and you may miss the opportunity to support a charity or a friend that you care about.

Creating a will

Creating a will does not have to be complicated, expensive, or time-consuming. Here are the basic steps you need to follow:

1. Assess your assets

Start by making a list of everything you own that has value, such as real estate, cash, vehicles, jewelry, and other valuables. These are your probate assets, which will be governed by your will.

Then, make a list of everything you own that has a co-owner, a beneficiary, or a trust, such as a joint bank account, a retirement plan, or a life insurance policy. These are your non-probate assets, which will not be governed by your will.

Finally, make a list of your debts and liabilities, such as a mortgage, a car loan, or a credit card balance. These will have to be paid off from your estate before your beneficiaries can receive their inheritance.

2. Determine your goals and needs

Next, think about what you want to achieve with your estate plan, and what your personal and family circumstances are.

Some questions to consider are:

• Who do you want to inherit your assets? This can include your spouse, children, relatives, friends, or charities.
• How do you want to distribute your assets? This can be in equal or unequal shares, in lump sums or in installments, or with specific conditions or restrictions.
• Who do you want to name as your executor? This is the person who will be in charge of carrying out your will and settling your estate.
• Who do you want to name as guardians for your minor children or dependents? This is the person who will take care of them if you and the other parent die before they turn 18.
• Do you need to create a trust for any of your beneficiaries? This can be useful if you want to protect your assets from creditors, taxes, or misuse, or if you have a beneficiary with special needs.
• Do you have any specific wishes or instructions for your funeral, burial, or memorial service? You can include these in your will or in a separate document.

It's a good idea to discuss your goals and needs with your spouse and family members, so that they understand your intentions and expectations.

3. Meet with your financial team

Once you have a clear idea of your estate plan, you should consult with your financial professional and other advisors, such as your accountant, your lawyer, or your tax preparer.

They can help you review your assets, liabilities, and beneficiaries, and advise you on the best strategies to achieve your goals and minimize your taxes and expenses.

They can also help you coordinate your estate plan with your other financial plans, such as your retirement plan, your insurance plan, or your business plan.

4. Create the documents

The final step is to create your will and any other estate planning documents you may need, such as a trust, a health care directive, or a power of attorney.

The best way to ensure that your will is valid and enforceable is to hire an attorney who specializes in estate planning. They can draft your will according to your wishes and the laws of your state, and help you avoid any errors or omissions that could cause problems later.

If you have a simple estate plan, you may be able to use a DIY option, such as an online service or a software program. However, you should still have your will reviewed by an attorney in your state, to make sure that it meets the legal requirements and reflects your intentions.

Once your will is ready, you need to sign it in front of two witnesses, who are not beneficiaries or related to you, and have them sign it as well. Depending on your state, you may also need to have your will notarized, which means that a public official will verify your identity and signature.³

After you sign your will, you should store it in a safe and accessible place, such as a fireproof safe, a bank deposit box, or your attorney's office. You should also let your executor and your family members know where your will is and how to access it.

Congratulations, you have just created your will! You can now rest assured that your estate will be handled according to your wishes, and that your loved ones will be taken care of after you're gone.