This article is an excerpt from the Shortform book guide to "The Wealthy Barber" by David Chilton. Shortform has the world's best summaries and analyses of books you should be reading.
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Why do you need a will? What would happen to your assets if you don’t have one?
An important part of sound personal finances is protecting yourself and your family. If you don’t have a will, all of your financial planning and success could be lost after you’re gone. David Chilton, in his book The Wealthy Barber, strongly advises that you have a will in order to leave a strong financial legacy and protect your family.
Read more to learn why it’s important to have a will.
Why You Need a Will
Chilton stresses that you should make a will and that you should do so as early as possible. Why do you need a will? In the absence of a will or revocable living trust, the court will pay off the deceased’s debts, then divide what’s left according to strict state laws. The laws do not take into consideration the wishes of the deceased or the needs of their survivors. Nor do the laws take into account anyone who does not have the requisite legal relationship to the deceased, such as common-law spouses, business partners, or charitable organizations.
A good lawyer can help you develop an estate plan. Before seeing the lawyer, decide how you want your estate to be divided, and choose an executor (the person or institution that will carry out your will’s instructions). The executor should be someone who’s the same age or younger than you, who lives nearby (so they don’t have to travel far to wind up your affairs), and who’s honest and reliable.
Finally, Chilton says, keep a net worth statement of everything you own and everything you owe, along with a copy of your will, at home and in a safe deposit box so that it’s easily accessible to executors.
(Shortform note: A will is the most basic part of an estate plan, which can also include a financial power of attorney, a health care directive, and a trust.)After each financial lesson in The Wealthy Barber, Roy the barber asks Dave, Tom, and Cathy to bring him proof that they are taking his advice (for example, a copy of their lawyer’s bill to draft a will or revocable living trust). By the end of the book, all three have made big strides toward eventual financial success and are able to “graduate” from Roy’s financial school with flying colors.
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Here's what you'll find in our full The Wealthy Barber summary :
- A guide to becoming financially successful by following simple principles
- Why you might not need to buy life insurance
- Why you should only buy a house if it’s right for you