Will Power
By Diane Harris
Only four of every 10 adults in the U.S. have
a will. It’s not surprising—most of us would rather not
think about our own mortality. But to ensure that your wishes are carried
out, and reduce the risk of family members fighting over their inheritance,
you need a will. You can’t take it with you—spend it all
or do it right! Here’s some advice:
Understand the Rules
If you’re married, own most of your property jointly, and die
without a will, joint assets will pass directly to your spouse, your
child, or whomever is named on the ownership documents. The same is
true of any assets, such as a life-insurance policy or retirement account,
for which you have named a beneficiary. But if you don’t have
a will, any other financial assets and real estate will be distributed
according to the laws in your state.
Pick the Right People
If you’re a parent with minor children, the most important reason
to write a will is to name someone you trust to raise them, if neither
mami nor papi is around. You’ll also need to
appoint an executor to carry out the terms of your will, pay off any
debts and taxes, and otherwise settle your estate.
Decide Who Gets What
Simple bequests (like who inherits your money, home, and other large
assets) need only a will. If you want to attach conditions, though,
create a trust within your will. Although trusts are more complicated
and expensive to set up than simple wills, they offer specific advantages.
Trusts allow your assets to go directly to your heirs without passing
through probate (the legal process by which a court validates a will,
supervises the transfer of assets, and makes sure all debts and taxes
are paid). And some types of trusts cut or eliminate estate taxes.
Avoid Bad Behavior
Resist the urge to use your estate plan for revenge or punishment.
Sweat the Small Stuff
Heirs are more likely to fight over abuelita’s china
than money. Attach a memorandum that spells out which items go to whom.
Remember
Update your will after any major life change, like remarriage or the
birth of a child!
Get the Help you Need
If your bequests fall under the $1 million estate-tax threshold, you
don’t need to worry about taxes and don’t need much help
from a lawyer. With legal self-help software (such as Quicken Lawyer
or Kiplinger’s WillPower) or design-your-own-will websites (such
as Wills.com or Legalzoom.com),
you can probably handle most of the preparation yourself.
However, if you want to avoid estate taxes, reduce
the likelihood of a contested will, make complicated or unusual bequests,
or just talk with an expert, hire a lawyer who specializes in estate
planning.
Make Sure it’s
Legal
Sign the final document in the presence of at least two witnesses not
named as heirs. Store the original in a secure location, such as a safe-deposit
box or your lawyer’s office. Keep a copy at home and give copies
to a couple of other people you trust, including your executor (who
also needs directions on how to find the original).
Now, take our web-exclusive quiz to test
your assumptions about estate planning.
