ON THE MONEY
WHY YOU NEED A WILL NOW
Protecting your loved ones can’t wait. BY JENNY HOFF
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here are some things we are happy to plan for: retirement, our kid’s college education, buying a new home, taking a trip or simply paying off credit cards. Then there are things we dread planning for—namely, our death. The problem is if we don’t make those plans when we are healthy and able, then we leave our loved ones to pick up the pieces and the financial burden that a death without any directive can cause. “It’s especially important for people with [fewer] resources,” says Austin attorney Pamela Hailey-Petty. “If someone has more resources they have more resources to fight with. If you don’t have the resources, you’re left with fewer choices.” The cost of not having a will When someone passes away, generally the next step is probate, the court’s process of authenticating a last will and testament and appointing an executor (if none is named or there is no will). It also involves determining whatever assets there may be, paying off bills and taxes and distributing the remainder to the rightful heirs. It’s a long and expensive process that can be even more costly without a will. Hailey-Petty gives an example of a couple that recently came to her saying their loved one who passed had $5,000 to $6,000 in a bank account, which they needed to access in order to pay for funeral costs. That happens to be the exact cost of administering an estate without a will. With a will, legal costs are about $3,000. Had their family member drawn up a will, they would have had money left over to help with the bills. If minors are involved, the court will determine where they go even if there is a verified will. However, the will plays a very influential part in that decision and can make the process much easier for family members
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and, most importantly, the children involved. It also drastically reduces the costs, which can range between $10,000 and $15,000 without a will (as opposed to about $3,500 with one). For a family inheriting a large estate, the extra money may not be too damaging, but for many families who do not have a financial cushion, it can lead to putting the expenses on credit cards, which can quickly snowball into much larger bills if interest is added every month. A will not only helps your family in the wake of tragedy, but also helps protect you while you’re alive if it includes power of attorney—a person of your choice appointed to make decisions in your best interest if you are unable to do so. How to draw up a will The best way to draw up a will is with a reputable attorney you can meet with personally to ensure it’s done the correct way. LegalZoom and other sites may offer cheaper services, but if the will isn’t done correctly, it could be useless when needed. Typically, in Austin, the price of drawing up a will that includes powers of attorney is around $850 for one person or $1,700 for a couple. Some attorneys will offer sliding-scale options based on income to help make the process more affordable. There are also services in the Austin area where you can get a basic will drawn up for little to no cost if you qualify, such as with the Volunteer Legal Services of Central Texas. Many law schools offer reducedcost will services where a licensed attorney will monitor the whole process. The best first step is a conversation to get all your questions answered, and most attorneys either provide a free initial consultation or one that is low-cost.
The final thing family members should avoid doing in the midst of grieving is making huge financial decisions.
48 | AUSTIN WOMAN | FEBRUARY 2021
Other ways to protect your loved ones
When an estate goes into probate, it can take months before the executor can sell a home, a car or access accounts to help the heir’s financial burden. One way you can ensure your family members won’t be left in financial limbo is to take out a term life insurance plan. Term life insurance lasts for a set amount of time (perhaps until your children are through college or until a spouse hits retirement age) whereas if you were to pass during that term, your family would receive the money from the plan you chose to keep them afloat. Since term life insurance is for a certain amount of time instead of staying with you until death, it is much more affordable than comprehensive life insurance. “The nice thing about life insurance, and any financial account like a 401(k), is that it is outside of probate, so you can get paid on that immediately
