Leaving your job? Making the wrong decision with your 401(k) could cost you big time.
A will describes what happens to your assets after you’re gone. Bankrate explains.
What is a will?
Also called a “last will and testament,” a will is a legal document that specifies what happens to a person’s assets after he dies. Wills make sure specific individuals or organizations receive their share of an estate. Any adult who meets the legal requirements can write a will, and, generally, there is no structure or specific language that needs to be in the document other than the signature of the deceased.
In addition to the list of beneficiaries, wills also define the executor of the estate and the guardians of any minors, and detail such instructions as paying debts and taxes and caring for pets. In some states, in-laws, biological parents who gave up children for adoption, and estranged children of a deceased person can legally receive a share of the estate if there is no will stating otherwise.
Wills do not supersede agreements for community property, life insurance proceeds, retirement assets, or transfer-on-death investment accounts. For example, the beneficiaries listed on record with a retirement account’s managing company receive the benefit, even if the will indicates that a different entity should receive it.
The person creating the will must meet the legal definition of “being of sound mind,” meaning that she knows what she owns, understands her relationships to her family members, and knows what she’s doing as she puts her instructions in the will. Generally, courts do not recognize someone who’s in a coma or a person with decreased mental capacity as the result of a brain injury or illness as having a sound mind.
When an individual dies without a valid will, the state takes over and distributes the assets, with the bulk of the estate usually going to the surviving spouse or any children. The court may order the sale of the marital home, especially if the surviving spouse’s name is not on the mortgage or deed. It also appoints a caregiver for minor children.
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Julius had his lawyer draw up a will for his considerable assets. When he dies in an unfortunate misunderstanding with his colleagues Brutus and Cassius, the lawyer reveals to Julius’s survivors that they stand to inherit his wealth and property. The terms of the will specify how exactly his assets will be distributed among his family and friends, with almost all his property going to his wife and each of his children, smaller items to close companions, and a sum of money going to his favorite temple of worship.
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