Making a Will

You can't take it with you. We've all heard the expression, we all know it, but few of us want to think about it. But consider what can happen if you die without leaving a will.

Without a legal will in place, there's no guarantee that what you own will go to the people you want, or that your children will be cared for by someone you know and trust. If you and your spouse have children under 18 and die without making a will, the state will decide who raises them.

Although drawing up a will is one of those tasks that's easy to put off, it will bring you considerable peace of mind once it's done.

What is a will?

A will is a legally binding document specifying what will happen to your property and who will take care of your minor children when you die.

Your property includes your home and any other real estate, along with your car, bank accounts, stocks, certain investments, and smaller items such as furnishings, jewelry, pets, and anything else of monetary or emotional value. A will can be simple or complex. Among other things, you can leave everything to your children or divide your property up between different family members or friends. You can list property items individually and specify who gets them, or simply transfer your estate as a whole.

If you have a will, the person who oversees the distribution of your property and other assets is called an executor.

How does a will protect my children?

Having a will ensures that your family -- especially small children -- will be taken care of if you die unexpectedly. If you have children under 18, a will is the place to designate a guardian to care for them before they become adults. You can also name a trustee to manage your estate for your children until they reach adulthood. The guardian and trustee can be the same person or two different people. If you choose, your will can also direct the trustee to manage your estate even after a child turns 18 -- say, to continue to manage the property and pay college expenses until the child is 25 years of age.

Your will can also designate that some of your assets be distributed only after your child reaches a certain age. For example, you could specify that he or she can receive half of your assets at age 25 and the other half at age 30.

What will happen to my children and estate if I don't have a will?

If you and your partner have children under 18, and both of you die without a will, the court will decide who raises your children. The state courts and social services department usually choose the closest living relative, who may not be the person you would have chosen. They may not even choose a relative as the guardian, meaning that your children could be raised by a stranger. Even if you think you have little or no property to leave your children, it's worth making a will to make sure you are the one who chooses their guardian.

A will is especially important if you are living with someone in a domestic partnership relationship. The courts may not recognize your partner as the guardian unless you name him or her the guardian in your will.

If you die without a will, the law also sets out specifically how your estate will be distributed, according to a fairly rigid legal formula governed by your state. (Laws differ state by state.) These laws determine how much of your estate goes to your spouse and how much to your children. In some states, the money that goes to your children is controlled by a court-appointed guardian (who may charge a fee for the service) until the children turn 18.

Even if you do have a will, a surviving spouse will not be able to tap money or assets you leave to your children to pay bills or daily expenses. The assets will be held for children until they turn 18 or some later date specified in the will. However, courts frequently allow surviving spouses to use funds in order to pay unusual expenses, such as private school tuition and medical bills.

If you are single and don't have children, your estate will usually pass to your closest relatives. If no relatives can be found to inherit your property, it will go to the state. That would be highly unusual, however, because companies known as "heir hunters" generally manage to find a distant relative somewhere.

What should I put in a will?

Your will should cover at least three important things: identifying the executor of your estate, naming a guardian for your children, and determining who will receive your assets.

Your executor is responsible for administering the will. This may involve paying your debts and taxes, then distributing the rest of your estate according to your wishes. An executor is often a trusted member of the family, but can be anyone you choose.

Besides deciding how to divide your assets and whom to name as guardian of your children, you may also want to leave specific instructions regarding charitable contributions, organ donation, and funeral arrangements.

Two other documents are usually included with a will: a power of attorney and an advance health care directive. The power of attorney can be for health care or for financial matters, and it allows you to name someone to make decisions for you if you are unable to make them on your own. A power of attorney can be temporary, with an expiration date that requires renewal, or "durable," which means it continues until you die. It may also be what's called a "springing" durable power of attorney, meaning it springs into existence only when a person is incompetent to make decisions.

An advance health care directive, also called a living will or health care proxy, is a document that gives you the opportunity to indicate your treatment preferences if you are disabled by injury or illness. The specifics of these documents differ from state to state, but in general, a health care directive allows you to indicate whether you wish to accept or decline being kept alive by "extreme measures," such as intravenous feeding and ventilators, for example.

What cannot be included in a will?

Life insurance policies and certain types of accounts, such as 401(k)s, and IRAs, have beneficiary clauses that override wills. That means the funds in these accounts will be distributed to whomever you named as beneficiaries, no matter what you specify in your will. Make sure you're up to date on who you've already named as beneficiaries for these accounts. Many people often forget to designate a beneficiary. Make sure the beneficiaries you listed on these accounts are correct and that they align with your will.

You can also use a trust to distribute funds from these accounts. A trust is a legal entity that allows your estate to be distributed without having to go through the courts. With a trust, you can list the trustee as your beneficiary and then these accounts won't go through legal proceedings.

If you, your spouse, or someone else own real estate, a bank account, or other real property together, you can draft an agreement which will name you as "joint tenants," which means that both of you are named as equal owners of the property. When you die, the surviving joint tenant has a right to 100 percent of those assets, even if this is contrary to what your will says.

Another way to hold assets with another person is what's called tenancy in common, which often includes property that spouses own together in common law states. Under this system, you can write in your will that your share of the assets will be distributed to a person of your choice.

Do I need a lawyer to make a will?

Legal experts believe it's a wise investment to have your will drafted and reviewed by an attorney. Drafting a will yourself may leave you vulnerable to making mistakes -- and a mistake can be quite costly to your heirs or may even invalidate portions of your will. Many attorneys will charge only a nominal fee to draft a will. If you are short on funds, most local bar associations can provide volunteers for people who cannot afford an attorney to draft their will for free. But even if you do have your will drafted by an attorney, it's a good idea to review books, software, or legal forms, just to familiarize yourself with the terms used in wills.

Here's one way to look at it: If you can't afford an attorney or find free or low-cost legal help, or if you have only a few assets and no children to leave behind, using a self-help book or an online software program to draft one yourself is better than ignoring the issue completely. Nolo, a press which publishes legal self-help books, has manuals and software to assist you in drafting a will. You can also get suggestions for books on the subject from the research librarian at your local library.

However, getting sound legal advice makes it more likely that your wishes will hold up to legal challenges. One estate attorney says many lawyers make a good living from the problems that result from people drafting their own wills. "A very substantial portion of my law practice is litigating contested estates," he says. For the best advice, call a lawyer who specializes in estate planning. Ask for recommendations from family or friends, or if you work for a big company, talk to your human resources department or benefits provider. Some may provide legal counsel services for employees or be able to refer you to a lawyer.

Discuss fees up front. Find out if the lawyer you've chosen charges by the hour or a flat fee. If your lawyer isn't able to tell you what your total cost will be up front, you should at least be able to get a reasonable estimate.

How do I get started?

Whether you plan to hire a lawyer to write the will or write it yourself, you'll save time and money if you think through some basic issues first. Here are some initial steps to take:

1. Make a list of all your assets, including bank accounts, investments, real estate, life insurance, and personal property.

2. Make a list of specific bequests if you have any and indicate whether there is a specific time frame. For example, if you want your son or daughter to inherit your engagement and wedding rings, you may put an age limit on it, such as when he or she turns 21.

3. Consider who you would like to be the executor of your will, and ask that person whether he or she would be willing to carry out your wishes and handle the necessary paperwork after you die. The executor receives a small fee for handling your will, but a complicated one can involve considerable time and effort, so choose carefully.

4. Consider who you would choose to be your children's guardian, and ask that person whether he or she is willing to accept that responsibility. Most people also choose an alternate guardian, in case their first choice is unwilling or unable to do the job.

5. Choose someone to serve as trustee and handle the assets you leave your children (if you want it to be someone else besides the executor or guardian.)

6. Decide if you want to include any specific instructions, such as how you'd like your funeral to be handled, or how you'd like your children to be raised or educated. If you live alone, you may also want to designate who will take care of your pets.

When do I need to change my will?

Chances are, any major life change will require a change in your will. It's important to keep up with them so there are no unpleasant surprises for your survivors. The good news is that it's a relatively simple matter to change a will. You can either add what's called a "codicil," which is sort of like a postscript, or you can simply use the same will but have the relevant sections rewritten. In this case, though, you will need to do the will again in front of witnesses. It's usually easier for an attorney just to draft a new will for you to sign.

Here's a quick list of circumstances that usually suggest a change in your will:

Marriage. In most states, your spouse is legally entitled to claim a percentage of your property after you die, unless you have a written agreement to the contrary. If you don't want to leave at least half of your property to your spouse, see a lawyer.

Divorce. In most states, divorce or annulment revokes any bequest to your former spouse. But in some states, it doesn't. So no matter where you live, you should make a new will after a divorce. If you are not married, but in a relationship with a new partner, in most states your partner will not inherit anything unless you leave a will.

Birth of a child. You'll want to make a new will every time you have a child, not just the first child. If you die after a child is born but before a new will is signed, the child may be treated like an "omitted" child. In this case, the laws that apply when there is no will means that the child may receive more than you intended to give him. For example, you may want to leave everything to your surviving spouse, and this may not happen if there is an omitted child.

Remarriage with stepchildren. Unless you legally adopt stepchildren, they have no legal right of inheritance. If you want to leave them a share of your property, you'll need to specify that in your will.

Sale or purchase of real estate. If you leave all of your property to one or more people or organizations, there is no need to change your will as what you own changes. But if you've made specific gifts of property, then you'll need to update your will if you sell them. And if you buy new property, it should be added it to the list.

You're married and move from a community property state to a common law property state, or vice versa. Because states view the ownership of property by married couples differently, you may want to change the wording of your will if you move from one type of state to the other.

You change your mind about a bequest. This is the situation you read about in mystery novels. If you want to disinherit someone or change who gets what, you have to change your will.

How do I store my will?

After your will has been signed, put it in a safe place where those who survive you can find it easily. A file cabinet, safe, or locked drawer would be a good place. It's crucial to tell your spouse, partner, and/or executor where you put it, and give them copies of their own to store where they know they can find it.

Although many people think of safe deposit boxes as a good place to store a will, this is not necessarily a good idea. Many banks have restrictions on who can open safe deposit boxes, and may even freeze the accounts upon death. If a family member or executor can't open your safe deposit box, it could tie up your estate. Make sure you understand your bank's rules about withdrawals from safe deposit boxes before you decide to keep your will in one.

Remember, too, that courts only want to deal with the original will, not a copy of it -- so make sure it doesn't get lost. If you do leave your original will with a lawyer, you should still keep a copy of it in a safe place with the name, address, and telephone number of your attorney. It's also a good idea to execute and sign only one original will at a time. If you decide to revoke your will and you destroy one original copy, someone may later find a duplicate original that was not destroyed -- meaning that your estate may not be distributed the way you wanted it to be. Making sure your heirs can find the right version can save them a lot of headaches in the future.

References

American College of Trust and Estate Counsel, Wills: Why You Should Have One and the Lawyer's Role in its Preparation www.actec.org/public/wills.asp

American Bar Association, Estate Planning FAQs; Introduction to Wills http://www.abanet.org/rppt/public/intro-to-wills.html#jointproperty

American Bar Association, Estate Planning FAQs: The Probate Process: http://www.abanet.org/rppt/public/probate-process.html#probate

American Bar Association, Estate Planning FAQs: Living Wills, Health Care Proxies, and Advance Health Care Directives http://www.abanet.org/rppt/public/living-wills.html#livingwillsetc

Nolo Press. Making a No-Frills Will. http://www.nolo.com/article.cfm/ObjectID/87AFFE97-9722-4132-BA9691246B607A8D/catID/F251EA55-13A9-4EE0-85D21CEB27636030/309/298/ART/

Nolo Press. Do I Need a Lawyer to Make My Will? http://www.nolo.com/article.cfm/ObjectID/6A41260B-53F5-4F8E-A3564C01F682C048/catID/F251EA55-13A9-4EE0-85D21CEB27636030/309/298/ART/

Nolo, When Do I Need to Change My Will? http://www.nolo.com/article.cfm/ObjectID/9E9CF9FB-A899-46A0-8737CE94789F3E81/catID/F251EA55-13A9-4EE0-85D21CEB27636030/309/298/ART/

AARP Self-Help Guide, What is a Will? http://www.aarp.org/families/legal_issues/legal_guides/a2004-03-25-will.html

American Bar Association Guide to Wills and Estates. http://www.abanet.org/publiced/practical/books/wills/front.pdf

Legal Fees. Washington State Bar Association. http://www.wsba.org/media/publications/pamphlets/legalfees.htm

Choosing a Guardian for Your Children. Nolo Press. http://www.nolo.com/article.cfm/ObjectID/EA2707C0-AFE9-4D7E-88E71D0951B8FFF3/catID/FD1795A9-8049-422C-9087838F86A2BC2B/309/ART/

Life Advice About Making a Will. Federal Citizen Information Center. Choosing an Executor FAQ. Nolo Press.

Clifford, Denis and Jordan, Cora. Plan Your Estate. Nolo Press.

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