Estate Planning Articles |
What You Need To Know About Your Will
Providing Peace Of Mind And Keeping You In Control
Everyone knows the importance of preparing and maintaining a will, yet many people have never written one. To those who haven't, take note: If you die intestate (without a will), the probate court intervenes and a judge (whom you probably have never met) decides how your assets are to be distributed. And if you're a single parent of minor children, the same judge will decide with whom they will live.
On the other hand, if you take the time to prepare a will, you can help ensure that your family members and friends will be taken care of when you're gone. A will provides peace of mind and the immense satisfaction of knowing that you have taken the necessary steps to pass on the fruits of your life's labor to your loved ones.
Wills: Making Your Wishes Clear And Legally Enforceable
A will is quite simply a written legal declaration that enables you to direct the disposition of your assets upon your death. You generally can divide your assets any way you want, as long as guidelines are presented clearly in writing. The portion of your estate covered by a will includes both tangible assets, such as your home or your car, and intangible assets, such as bank accounts and mutual fund shares that are owned in your name. Property that is owned jointly with another person with right of survivorship will pass directly to the surviving owners. Other rights and benefits, like pension rights and life insurance proceeds, are normally handled outside of your will. In most cases, those benefits are paid directly to your designated beneficiaries. While the cost of creating a will can vary depending on the complexity of your estate, most range in price from $500 to $2,000.
| Your Will Should Include The Following Items: |
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Your signature is usually required to be certified by at least two witnesses, preferably by individuals who have no connection to the will, such as employees of the law firm you're using.
Do not have someone who is a potential beneficiary of the will act as a witness, as this could raise doubts about the will's authenticity at a later date.
Drafting A Will: Rely On A Legal Professional To Make It Binding
Ideally your will should be drawn up by a lawyer. In addition, you (and your heirs, if possible) should be familiar with the will's general form and contents. Although it's your legal right to do so, it's usually not a good idea to draft your own will. You may not be aware of the statutory requirements that exist in your particular state for establishing a valid will. State requirements vary and some states may have different standards for witnessing a will, or require specific language that must be included for the will to be considered valid. Having your will at least reviewed by a lawyer can safeguard against these errors.
When you find a lawyer you feel comfortable with, be prepared before you meet to draft your will. Make sure that you bring the requisite information that you'll need. This includes:
- proof of your real property, such as your home, along with documentation that shows how much you paid for it;
- deeds, bills of sale, and any other documentation to prove your ownership;
- a list of your intangible property, such as your bank account and investments
- your latest bank statements and brokerage or mutual fund statements;
- a list of your debts to banks, insurance companies, the Internal Revenue Service, and individuals;
- a list of names, addresses, and telephone numbers of any professionals they may want to contact, such as your financial professional, banker, or lawyer;
- the names of any executor or guardian named for your children.
Creating Your Will Puts Critical Family Issues On The Table
Husbands and wives can write their wills jointly or separately, although most legal professionals recommend the latter as it is difficult to establish who owns which property in a joint will. Questions also arise as to whether one spouse can change the terms of the will without the consent of the other. Obviously, this can be a particularly thorny issue in the event of a separation or a divorce.
Also, if you have young children, an important provision is the selection of a guardian who would raise your children in the event of your death and the death of your spouse. Remember, if you die without a will and have minor children, the probate court will appoint a guardian for them. There is no guarantee that the court's appointment of a guardian will coincide with your choice. Often the courts take a "blood is thicker than water" approach to children, although your first choice may have been a friend whose style of child rearing is more in line with your own.
Once The Will Has Been Signed ...
Once your will is completed, keep an original copy on hand, although it's perfectly fine to make photocopies for family members and friends. Keep the original in a secure place, such as a home, business, or fireproof safe. If that can't be arranged, keep it in your lawyer's office or with the clerk at your local probate court, who will hold it for safekeeping in a sealed envelope. Wherever you decide to keep your will, make sure that its location is known by family members or close friends.
Periodic Review Keeps It Current
It's also a good idea to review your will every five or so years. Your family circumstances or financial fortunes may change, as may federal and state laws. When things do change, periodically review your will with your lawyer (and revise if necessary) to ensure that its contents conform to current laws and regulations and that it reflects your current status and desires.
| Choosing An Executor: Another Significant Decision |
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When you create a will, you must choose an executor of your estate. Your executor will ensure that the settlement of your estate is properly administered upon your death. This can either be a longtime, trusted friend with a good grasp of conducting financial affairs, or an institution, such as a bank or a law firm, that has the necessary financial and legal expertise. If you trust your executor completely, it may be a good idea to give that person enough authority to take action on your estate without having to buy a surety, or fidelity bond, that ensures your estate against poor management by the executor. The cost of that bond, which can be significant, is usually paid by your estate. |
A Will Helps Put Your Financial House In Order
Much is made in life of the things we can't live without. In your financial life, little is made of the things you can't die without. A will is at the top of that list. While it's unpleasant to contemplate the possibility of your own demise, it's very satisfying to know that you've put your financial house in order.
Points To Remember
- If you die without a will, the state decides how your assets are allocated and with whom your minor children will live.
- A will is a legal declaration that enables you to direct the disposition of your assets upon your death.
- Most people prefer a simple will, which provides for the distribution of your assets to your beneficiaries.
- To ensure that your will is legally sound, hire a lawyer who is familiar with the statutory requirements for wills in your state.
- Although husbands and wives can write their wills jointly, most legal experts advise against it. Questions can arise concerning who owns property included in the will and whether one spouse can change the terms of the will without the consent of the other.
- Once your will is completed and locked away in a safe place, it's a good idea to review it every five or so years, or as your personal and financial circumstances change.
© 2011 McGraw-Hill Financial Communications. All rights reserved.
