Personal Finance: Put making a will on top of bucket list

photo Chris Hopkins

A surprising number of Americans make one of the most easily avoided mistakes: dying without a will. After a lifetime of working, saving and caring for family, failing to commit your final wishes to paper could result in a significantly different outcome than you intended, and is guaranteed to impose an additional burden upon surviving family members already grieving (presumably) your loss.

Despite the relative ease of drafting a simple will, too many adults leave the disposition of their assets to chance. A recent Harris Interactive survey commissioned by the online legal service Rocket Lawyer found that 64 percent of American adults do not have a will. Surprisingly, the percentage has increased since the last survey in 2011 despite the proliferation of inexpensive alternatives to the traditional process of engaging an estate attorney for simple cases.

The rationale cited for failing to plan is hardly encouraging. While few found the cost prohibitive, 57 percent said they hadn't gotten around to it, while 39 percent felt it was either not urgent or not necessary. In realty, there are few people for whom at least a rudimentary simple will is unnecessary, and the least effective time to tackle one is en route to the funeral home.

Some classes of assets transfer directly to named beneficiaries regardless of the existence of a will. IRA and 401(k) accounts, for example, along with life insurance proceeds and assets held in trust pass to named heirs outside the probate process. Assets like bank accounts and real estate titled in joint tenancy or as transfer-on-death also change hands directly. Most other possessions must navigate probate, will or no will.

Many people wrongly assume that absent a will, assets automatically pass to the spouse upon their demise. While this is true in the nine community property states, it is not so in most other jurisdictions, and each state has its quirks regarding intestate succession. Tennessee divides inherited property among the surviving spouse and living children, with a minimum of one third to the spouse. For example, if a man dies without a will and leaves a wife and two children, each of the three receives an equal share of the estate. Furthermore, half siblings count fully in the distribution and receive equal shares. This may not be exactly what the deceased had in mind.

While financial assets are easily divisible, this may not be so with certain types of tangible personal property. Dividing up Mom's good silver or Dad's bass boat evenly among several heirs presents certain challenges that a will can easily anticipate.

Technology presents fascinating new imperatives for estate planning. Much of our personal property is now maintained in digital form, like iCloud storage, Kindle books and social media content. Legal theory regarding ownership and transferability of digital assets is still developing, so as more of our content is electronic, the need to specify its disposition in a will becomes increasingly imperative.

Also bear in mind that estate planning is not just about stuff. In the event that both parents of minor children die intestate, the court will appoint a guardian who may not be the person the parents would have chosen. According to the Harris poll, 51 percent of married American adults with minor children do not have a will.

While it is essential consult an attorney in all but the simplest cases, it is not a legal requirement. The most important consideration is to get it done to ensure that your wishes are followed. A good place to start is FindLaw.com for educational materials and advice.

Christopher A. Hopkins, CFA, is a vice president and portfolio manager for Barnett & Co. in Chattanooga.

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