TIPS: MAKING A WILL
The Simplest Way
The simplest way to ensure that your funds, property and personal effects will be distributed after your death according to your wishes is to prepare a will. A will is a legal document designating the transfer of your property and assets after you die. Usually, wills can be written by any person over the age of 18 who is mentally capable, commonly stated as "being of sound mind and memory."
Everyone Needs One
Although wills are not difficult to create, especially with the assistance of an attorney, approximately half of all Americans die without one (or “intestate”). Without a will to indicate your wishes, the court steps in and distributes your property according to the laws of your state. Wills are not just for the rich; the amount of property you have is irrelevant. A will ensures that what assets you do have will be given to family members or other beneficiaries you designate. If you have no apparent heirs and die without a will, it's even possible the state may claim your estate.
Additionally, the families of those dying without a will are required to obtain a bond prior to moving the deceased’s assets into their names. These bonds often run from hundreds to thousands of dollars. This can be avoided by producing a will.
Having a will is especially important if you have young children because it gives you the opportunity to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian for your children.
Elements of a Will
Here are the basic elements often included in a will:
Your name and place of residence
A brief description of your assets
Names of spouse, children and other beneficiaries, such as charities or friends.
Alternate beneficiaries, in the event a beneficiary dies before you
Specific gifts, such as an auto or residence
Name of an executor to manage the estate
Name of a guardian/alternate guardian for minor children
Witnesses' signatures - three (3) witnesses who will not take under the will.
Naming an Executor
An executor is the person who oversees the distribution of your assets in accordance with your will. Most people choose their spouse, an adult child, a relative, a friend, a trust company or an attorney to fulfill this duty. You should expect your estate to pay an independent executor for this service.
If no executor is named in a will, a probate judge will appoint one. Probate refers to the legal procedure for the orderly distribution of property in a person's estate. The executor files the will in probate court, where a judge decides if the will is valid. If it is found to be valid, assets are distributed according to the will. If the will is found to be invalid, assets are distributed in accordance with state laws.
Responsibilities usually undertaken by an executor include:
Paying valid creditors
Paying taxes Notifying Social Security and other agencies and companies of
Canceling credit cards, magazine subscriptions, etc. Distributing assets according to the will
Naming a Guardian
In most cases, a surviving parent assumes the role of sole guardian. However, it's important to name a guardian for minor children in your will in case neither you nor your spouse is able and willing to act. The guardian you choose should be over 18 and willing to assume the responsibility. Talk to the person ahead of time about what you are asking. You can name a couple as co-guardians, but that may not be advisable. It's always possible the guardians may choose to go their separate ways at some later date, and, if so, a custody battle could ensue. If you do not name a guardian to care for your children, a judge will appoint one, and it may not be someone you would have chosen.
Preparing a Will
Start by organizing what you need: outline your objectives, inventory your assets, estimate your outstanding debts and prepare a list of family members and other beneficiaries. Use this information to carefully consider how you want to distribute your assets. Ask yourself lots of questions: Is it important to pass my property to my heirs in the most tax-efficient manner? Do I need to establish a trust to provide for my spouse or other beneficiaries? How much money will my grandchild need for college? Do I need to provide for a child who has a disability?
Taking inventory of the assets may be the key to making a will. Assets should be mentioned in your will. Any items not specifically mentioned may be addressed in a catchall clause of your will called a residuary clause, which generally states, "I give the remainder of my estate to ...” Without this clause, items not specifically mentioned will be distributed in accordance with state law.
Outstanding debts usually will be paid by your estate before your beneficiaries receive their shares. You may want to clear up debts that you know will be a problem, or make specific provisions for payment of those debts in your will.
Remember to be specific and clear when naming beneficiaries. For example, state the person's full name as well as his or her relationship to you (child, cousin, friend, etc.) so your executor will know exactly who you mean. Clarity will also help to prevent challenges to your will.
States require that you sign the will in front of witnesses-the number of witnesses varies by state. A witness should not be a beneficiary under the will. Only one copy should be signed.
Updating a Will
You'll probably need to update your will several times during the course of your life. For example, a change in marital status, the birth of a child or a move to a new state should all prompt a review of your will. You can update your will by amending it by way of a codicil or by drawing up a new one. Generally, people choose to issue a new will that supersedes the old document. Be sure to sign the new will and have it witnessed, then destroy the old one.
Where to Keep Your Will
Once your will is written, store it in a safe place that is accessible to others after your death. If you name a trust company as executor, it will hold your will in safekeeping. You can keep it in your safe deposit box, but be aware that some states will seal your safe deposit bax upon your death, so this may not always be the safest place to store your will. Make sure a close friend or relative knows where to find your will. If you had an attorney prepare your will, have him or her retain a copy with a note stating where the original can be found.
Advanced directives are not a part of your will. (Please see our article on this topic) They are separate documents that let your family members know what type of care you do or don't want to receive and/or who should make health care decisions for you should you become terminally ill or permanently unconscious. They become effective only when you cannot express your wishes yourself. present intentions. You can also execute a general power of attorney to allow someone to handle your financial matters for you if you become incapacitated.
Discuss your wishes as reflected in your living will with family members, and be sure they have a signed copy.
The end of your life is something you probably don't want to dwell on, but thinking about what will happen to your loved ones and your assets and personal possessions is important. Making sure you've done all you can to make their lives easier will give you peace of mind. And once your will is drafted, you won't have to think about it again unless something significant in your life changes.
Contact us to discuss the best course of action for you and your family.