Your Last Will & Testament: Why You Need One, What You Need In It, and the Smart Steps to Preparing
by www.SixWise.com
Preparing a "Last Will and Testament" - commonly
known simply as a will -- is not something that anyone enjoys
thinking about or doing. But it is something that almost every
adult -- especially those with children -- should think
about and do.
The majority of Americans (57 percent) do not have a will,
according to a survey by the legal Web site FindLaw.com. This
leaves them with no say over how their children are raised
(should their children still be under 18) or how their assets
are used after they die.
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Over half of Americans don't have a will. This means
they have no control over how their children under 18
are raised, nor how their assets are controlled, when
they die. Instead the state has the control.
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Who Needs a Will?
"If you don't want the state to write your will, then
you need to create a will," says Connecticut attorney
James Kosakow, who specializes in estate planning. He continues:
"If you die without a will, the state will say who
gets what from your estate, who your executors -- those
responsible for administering your estate -- will be, and
who will take care of your minor children. You won't have
the opportunity to reduce or avoid estate taxes, which could
potentially be significant; establish trusts for your children
or other beneficiaries; donate to charity or bequeath gifts
to specific people. The only way you can have any say in
these matters is through an estate plan, which generally
includes a will."
What Should be in Your Will?
A will is a legal document that allows you to specify who
will get your assets when you die. You should name:
Beneficiaries:
These could be family members, friends or charities. Your
will should state which of your beneficiaries receive which
of your assets. You can break down your property individually
(such as a certain piece of jewelry to your child) or leave
a sum of money. You should also designate someone to receive
the "residue" of your estate, which encompasses
any remaining assets.
A guardian for your children:
If your children are under 18 years of age, you should name
who you wish to be responsible for their care if both you
and your spouse die. You can also designate someone to be
responsible for your children's financial assets. The two
do not have to be the same person.
"Many people with new babies name their own parents
as a legal guardian in their wills," said Mike Palermo,
an attorney and certified financial planner.
However, you should keep in mind that children typically
outlive their grandparents. Some things to consider when choosing
a guardian for your children include:
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Is the person physically able to care for your kids?
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Does the person have the time necessary?
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If you cannot provide enough assets for the children,
will the potential guardian be able to?
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Does the person live in an environment that will be supportive
of your children?
An executor:
This is the person (or institution) who will oversee the distribution
of your assets according to your will. Most people choose
their spouse, an adult child, friend, relative or attorney.
If no executor is named, one will be appointed by a probate
judge. The executor's responsibilities include:
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Collecting and managing your assets
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Paying your debts and taxes
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Distributing your assets in accordance with your will
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Notifying Social Security and other organizations of
the death
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Canceling credit cards, magazine subscriptions, etc.
Other items you may want to include in your will include:
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A description of your assets
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Alternate beneficiaries and/or guardians, in case of
the death of a beneficiary or guardian
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Specific gifts, such as a house
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Debts owed to you that you'd like cancelled
How is a "Living Will" Different than the Will
Discussed Here?
A living will - also known as an Advance Directive -- is
a different (and very necessary) legal document written to
ensure that your personal wishes about medical care, resuscitation,
life support, and medication are carried out if you are unable
to communicate those wishes. It is also created in advance
and important for everyone to have in place, especially those
with terminal illness.
Search the Web by combining the term "Living Will"
with the name of your state (or country if outside U.S.) for
guides to preparing your living will.
How to Have Your "Last Will & Testament"
Prepared
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Though drafting a will is not a pleasant thought, doing
so is one of the best ways to protect the well-being
of your loved ones.
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"Drafting a will can be fairly simple, depending on
the amount of assets you have and how you plan to divide your
belongings among your heirs," said Mike Janko, executive
director of the National Association of Financial and Estate
Planning (NAFEP).
Often, for example, each spouse will write a separate will
and leave all of his or her assets to the other. Wills can
either be handwritten (depending on the state) or drafted
by a lawyer.
If you decide to write your own will
(you should check with your individual state for regulations),
it must be:
You may also want to have a lawyer check it over to be sure
that it conforms to your state's laws. Alternatively, some
states offer statutory wills, which are essentially "fill-in-the-blank"
forms. These work best for people with relatively small estates.
If you'd rather not write your own, you can opt to have a
lawyer draft your will for you. Depending on how large your
estate is, and how complex your wishes are, this will cost
around $200 to $1,000.
A lawyer can be helpful in developing
an estate plan that can reduce your taxes and be more economical
for your beneficiaries in the long run. The
American Bar Association can help you find an attorney
who specializes in probate and estate planning.
The beginning of the year is the perfect time to commit to
creating your will, or updating your will if you haven't done
so in many years.
"You should revisit your will anytime there are major
life changes or every five years -- whichever comes first,"
says Janko.
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Sources
American
Bar Association: Wills & Estates
Fewer
Americans Have Wills
First-Time
Parents, Write a Will
The
State Bar of California