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Personal Finance

How Do Online Wills Work?

A will is one part of an estate plan that clarifies your final wishes and how you'd like your assets to be distributed after your death. Traditionally, wills are written with the help of a lawyer, but online will services allow you to generate a legally binding will for a fraction of the price (and with minimal work).

Whereas an estate attorney could charge upwards of $250 per hour for their services, an online will is a do-it-yourself approach to making sure your estate is in order and your family is taken care of should you pass away.

Without a will, a court proceeding—not you or your loved ones—will ultimately determine how your estate and property will be divided.

What Is an Online Will?

An online will is a legal document that functions the same way as a will that's drafted by a lawyer. They're made without the help of a live professional, but the majority of online will services do provide some level of guidance. Most will ask you for information to help you build your will, such as a list of assets, whom you'd like to act as guardian for your minor-age children and who will be the executor (the person you appoint to manage your estate and execute your will after your death).

You'll need to consider all of your bank accounts, insurance policies, retirement accounts and any other investment accounts you may have when putting together a list of beneficiaries who will inherit your assets when the time comes.

As long as your online will is put together properly and is compliant with your state's unique estate laws, it will be considered a legal and valid document. This is why it's so important to go with a reputable company that specializes in online wills.

No matter what, a well-prepared will should clearly state that the person creating it is of sound mind and intends to bestow their assets. In addition to having the will creator's signature, wills should also be signed by witnesses who have no stake in the will's outcome.

Is an Online Will a Good Idea?

There are benefits to creating an online will. For starters, it ensures that you have a will in place should you pass. Thanks to their ease of use, online will services have helped streamline the process and dial down some of the intimidation. Moreover, some folks may prefer to do it from the comfort of home without having to make multiple visits to an attorney. Doing it online can also get the job done faster than going with a traditional lawyer, and the cost is often considerably cheaper. (More on this in a moment.)

Online wills aren't for everybody, however. While useful for those with fairly basic estate planning needs, they may prove insufficient if your situation is more complex or you have a large estate. Those who've been divorced, have stepchildren or own multiple properties may need the guidance of a skilled estate planning attorney when mapping out their will. The same goes for business owners who plan on including assets related to their company in their will.

What Costs Can You Expect With an Online Will?

The cost of creating an online will can vary greatly depending on the service you use. Sites like FreeWill and Do Your Own Will, for example, are completely free. Meanwhile, Rocket Lawyer charges a monthly rate of $39.99 that includes free will writing, among other legal services. Other sites assess a flat, one-time fee that could range anywhere from $19.95 to $89.

Just keep in mind that not all online will companies are created equal. Some may not be able to create a will that's valid in your state or have the ability to create a living trust, if that's something you need. At the same time, some platforms come with extra perks you may find handy. This includes secure online document storage or the ability to connect with a lawyer if you have questions. Your best bet is to do your research and settle on an online will provider that best meets your needs.

What to Do After You Create an Online Will

If you're wondering if your signed will needs to be notarized, the answer is not always. A properly prepared will can be legal and valid without it. However, some witnesses may choose to provide an additional document called a self-proving affidavit, which verifies that they indeed witnessed the signing of the will. This does require a notary.

Beyond that, you'll want to keep your will in a safe place. Some online will companies provide secure digital storage to do just that. If that's not an option and you decide to store your online will on a personal device, encrypting your files can provide an extra layer of security.

No matter where you store it, be sure that your loved ones and your executor know where to find it and have the means to access it.

Additional Elements of an Estate Plan

Creating a will is just one part of a comprehensive estate plan. When someone dies, a special court validates the person's will during a process called probate. The court also authorizes someone to distribute their estate to their requested beneficiaries. Having a will in place ensures your wishes will be granted, but does not help you avoid the probate process, which can be timely and expensive. Creating a living trust in addition to a will is one way to avoid probate and simplify the distribution of your estate to your heirs. Even if you don't have a lot of assets, a trust can still be helpful. And unlike a will, which is a public document, a living trust is private.

A solid estate plan considers durable powers of attorney, as well. These are trusted people you appoint to make crucial decisions for you in the event that you become incapacitated or unable to do so yourself. There are two types of powers of attorney—one to oversee your finances and another to manage responsibilities related to your medical care.

The Bottom Line

Having a valid will is a critical part of any estate plan, and online will services can help you cross this important action item off your list. It pays to do your research so you can find a reputable service that complies with your state laws. Of course, there are other steps you can take here and now to shore up your financial health. Getting in the habit of reviewing your credit report and score is a good place to start.