The Importance of a Will

Few people would intentionally say, “I want the state to decide who gets my property and other assets when I die and who will raise my children if I die before they are grown.” Yet that’s exactly what happens when someone dies without a will.

While virtually everyone agrees that a last will and testament is the most important financial document a person should have in place, an estimated 60 to 70 percent of American adults have not taken this step.1 Answers to the following questions provide the foundation for structuring your last will and testament:

It’s important to review your will from time to time, especially if key changes in your life trigger the need for possible changes.
  1. Who do you want to name as your beneficiaries? This can be a single individual, a number of individuals, one or more nonprofit organizations, or a combination.
  2. How do you want your assets to be distributed among these beneficiaries? You can list specific items and who will receive items—such as heirlooms, the family home or other assets. You can also bequeath specific dollar amounts to various beneficiaries. And you can designate a certain percentage of your assets to beneficiaries of your choice, once expenses and debts have been paid and other bequests made. Many people choose to incorporate a combination of these approaches. Remember, you can make changes later if needed; the key is to have a will in place.
  3. Who will you name to serve as executor of your estate? This person can be a family member or trusted friend, a legal or financial professional or an institution. Keep in mind that serving as executor of an estate can be a time-consuming process involving detailed asset valuations and reporting; the most effective executor is one who has the needed skills and can dedicate the time required to fulfill these responsibilities. You may prefer to designate co-executors, including a family member or friend along with an institution.
  4. Do you need to name a guardian for your minor children? If you have young children, this is an important step. You may also want to establish a trust and name a trustee to protect their inheritance.
  5. Do you have complex family relationships that might require additional legal documents? For example, if you are in a second marriage involving a spouse’s children from a previous marriage, you may want to talk with your attorney about ways to ensure that your assets are divided according to your wishes.
States have different requirements for structuring a last will and testament to ensure that it is honored. Typically, it must be written, signed, dated and witnessed by two people to be considered legally valid. In some states, the document must also be notarized. Beneficiaries to the will should not serve as witnesses, to avoid any implication that you have written the will under undue pressure. It is a good idea to initial and date each page of the document.

Following your death, your executor must file your will with the appropriate clerk of court, typically in the county where you were residing at the time of your death. The court determines if the will is valid and, if so, allows it to enter a process known as probate. Your executor is required to follow a number of actions—providing detailed inventories of your assets and their value, ensuring that all insurance and other proceeds are received and that all debts and taxes are paid. The court oversees each step in the probate process, which can take six months to a year or, in some cases, longer. Only then can your assets be divided among your beneficiaries.

Some wills do not have to be submitted for probate. If all property is held in joint tenancy or is owned by certain types of trusts you have created, probate may be avoided, along with the costs of probating the will.

It’s important to review your will from time to time, especially if key changes in your life trigger the need for possible changes. Examples include:
  • Marriage or divorce
  • Birth or adoption of a child or grandchild
  • Death of a named beneficiary
  • Death of an executor or guardian
  • Change of residence to a different state
  • Dramatic change in your financial circumstances
  • Regulatory change affecting estate planning

It may not be necessary to completely rewrite your will in order to update it. You may be able to attach a codicil—a written amendment used to add to, remove from or otherwise modify the terms of the original will. A codicil must be signed, witnessed and dated, and must reference the original will.

As with all important financial documents, it’s important to store your will in a safe place where it will be easily accessible. Make sure to talk through the provisions of the will with your executor(s) and provide a copy to him or her.

The most effective approach to financial planning is one that integrates all components—investments, insurance, savings for education, savings for retirement, credit needs, charitable giving, tax planning and estate planning—into a unified, coordinated strategy customized to your needs, priorities and preferences.

Your BB&T advisor can coordinate with your legal, tax and other outside advisors to ensure you have the best plan in place to fit your needs and goals.

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