The Easy Will and Living Will Kit provides all the documents you need in one place. In just minutes, you can follow the simple steps it takes to prepare your will, living will and powers of attorney.
- Sourcebooks, Incorporated
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What You Need to Know about Wills
The first thing you should know about Wills is that every adult should have one. A carefully considered, up-to-date, legally valid Will that accurately reflects your wishes gives you a greater sense of control over your life.
What is a Will?
Basically, a Will is a legal document that provides for the disposition of your property after your death. In it, you name an executor to see that your wishes are carried out, under the guidance of the court. You also designate beneficiaries, the people to whom you wish to leave your property. While you may think of property as real estate, the term encompasses all your possessions-bank accounts, investments, home, car, recreational equipment and vehicles, books, jewelry, and more. The sum of your property and your money is considered your estate.
If you die intestate (without a Will), your wishes may not be honored. In fact, they may not be known or understood. Nearly everyone has heard of at least one instance in which the absence of a Will caused great distress among family members. This may not be due to greed, but to varying interpretations of what you would want, sincerely put forth by your loved ones. Among people in the throes of grief, small differences can rapidly escalate into major rifts.
If you die without a Will, a judge will appoint an administrator (rather than an executor you would choose) and your property will be distributed according to your state's laws of intestate succession. The process may cost considerable money and time, not to mention the emotional havoc wreaked on your survivors. You may have shared your intentions with your loved ones, but only a valid Will can assure that those intentions become reality in probate court. Finally, if you die without any relatives that can be located, your estate will go to the state.
Your Will and Probate
On the other hand, if you have a valid Will (testate), the person you have named as executor will be responsible for settling your affairs and distributing your property to the beneficiaries you have named. You can be assured that your wishes are honored without more stress and strain on your loved ones.
Your property, however, will not automatically pass to your beneficiaries at your death. First, your Will must be probated, a legal procedure that takes time. Upon your death, the person you have named your executor is responsible for going to court to begin the probate process. The court verifies that your Will is valid, including verification of witnesses to the signing of your Will. Once your Will is proven to be valid, the court-supervised process of transferring your property to your beneficiaries begins.
Your choice of an executor is critical. This should be someone you trust implicitly to carry out the provisions of your Will in a professional manner. Many people name a spouse or adult child. It is perfectly legal for someone who will benefit from your Will to serve as executor. In fact, someone with a financial interest may be especially conscientious. In any case, an executor performs his or her duties under the supervision of the court.
Before naming an executor, be sure to discuss it with the person you are considering, as it is a serious commitment. If no one comes immediately to mind, think carefully about any relatives or close friends that you consider reliable. A bank or trust company is a possibility, but modest estates may not be a priority for them and the fees may be considerable.
Some states restrict the right of a nonresident to serve as an executor. It may be permissible by preparing additional paperwork or posting bond, but nevertheless, it should be a consideration.
Probate can be a lengthy, complex process, but you can expedite it by completing a simple document-a Self-Proving Affidavit-and attaching it to your Will. In this form, a notary attests to your witnesses' signatures. As this is an important step in validating your Will, much time can be saved by not having to locate witnesses to testify in court, perhaps years after witnessing your Will.
Limitations of a Will
Some assets-such as retirement plans, life insurance, and other property with named beneficiaries-are not controlled by your Will. They have beneficiary designation clauses, in which the beneficiary named in the account or policy receives the asset rather than the beneficiary named in your Will.
Other assets not controlled by your Will are a pay-on-death bank or stock brokerage accounts. With these types of accounts, you name a person to receive any remaining funds in your checking, savings, or similar accounts at your death. The beneficiary has no right to funds while you are alive, and you can change the beneficiary at any time. The beneficiary named in the account receives the assets, not the beneficiary named in your Will.
In the case of co-owned property, such as real estate and cars, what happens to your share depends on the type of co-ownership.
? If you co-own the property as tenants by the entirety with your spouse,
your share automatically goes to your spouse at your death. Your Will cannot supersede this law. This is how most married couples jointly own their homes.
? If you co-own property as joint tenants, the laws of most states provide that your share will be given to the surviving joint tenant at your death, not the beneficiary named in your Will.
? If you co-own the property as tenants in common, your share can be controlled by your Will and inherited by people other than the surviving tenants in common.
There is no need to probate assets that are not controlled by your Will. (Remember, probate is the court-supervised transfer of assets controlled by your Will.) The main way you can avoid probate is to own your assets during your lifetime in a way that allows your assets to pass at your death without being controlled by your Will.
Death and Taxes
Death and taxes are inexorably linked in many minds, but when it comes to your estate, there is good news. In 2005, the federal government only taxes estates of $1.5 million or more, with increased exemptions for the next several years. Thus, if your estate (including real estate equity and life insurance) totals less than $1.5 million, your beneficiaries can receive it free of federal estate taxes. States vary widely regarding estate taxes, but the state estate tax is far less than the federal estate tax levied on estates in excess of $1.5 million.
Addressing the Needs of Children
Yet another reason for having a Will is to provide for the care of any minor children you have. If you have minor children, part of your Will-making process will be to appoint a guardian in the event of the death of both parents. Should both parents die without a Will, the court will appoint a guardian for them until they reach legal majority (18 years of age in most states). The court considers what is in the best interests of the child, with great weight put on the parents' view of the person best suited to be guardian. The appropriate place for parents to express this view is in their Wills.
Should your spouse not be living, you will want to establish a trust to provide for your children financially until they become mature enough to responsibly manage their inheritance. In addition, you will want to select a trustee to manage your property for your children until they reach maturity. With regards to anyone you name in your Will to serve a specific role-executor, guardian, or trustee-you should always name an additional person to serve as an alternate, should the first person you name be unable or unwilling to fulfill his or her role.
A Continuing Process
Perhaps you have already realized that you need to change your Will as your situation in life changes. You get married; you get divorced. Your children are minors; your children grow up. Even if you have a Will and your life situation does not change, over the years the people you have entrusted to carry out your wishes do change. They move away. They get sick. They also get older and may no longer feel capable of taking on new responsibilities.
Your Will should reflect your present needs. It is wise to review your Will, Power of Attorney for Finances, and Health Care Advance Directive every five years, or sooner, if major changes occur in your life.
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