Too often, people delay writing a will because they believe they are too young, or they think that their estate is too small. But estate planning experts say anyone with children or anyone who owns any assets –Â whether of monetary or emotional value — should have their affairs in order in the event of their unexpected demise.
“You don’t know when you are going to die. You have to create a will if you want to legally make sure that your property passes to the loved ones you choose,†says Lori Anne Douglass, a partner at Moses & Singer L.L.P., who specializes in estate planning.
A will is a legal declaration of a person’s wishes regarding the disposal of his property or estate after death; it may also include details on the guardianship for minor children. Unfortunately, drafting a will is something that many people fail to do.
Often, it is the property with the least financial value but the most emotional value that can cause strife between heirs, says Bradley A. Thomas, a member of the Washington Bar Association, one of the nation’s first black law groups.
Without a will, when a person dies no one can access the money in the deceased person’s solely owned bank account, transfer ownership of their vehicles or houses, or collect stock or liquid assets, says Douglass, who is corporate council for Earl G. Graves Publishing Co.
When a person dies without a will they are called intestate and their property will be distributed according to law. “[When you draft a will] you are taking as much control over your affairs as you can, rather than letting the state control them,†says Thomas.
Basic wills can be created for about $70 on websites like Nolo.com and Legalzoom.com, but both Douglass and Thomas recommend hiring a lawyer who specializes in wills and estate planning. An attorney can ensure that the will is less likely to be contested and minimize the time and expense of the probate process, which involves the collection and appraisal of assets, payment of debts, and dispersal of assets, according to the deceased’s wishes.
“It would not be out of ordinary that the will for an estate like Michael Jackson’s would be more than $10,000,†says Thomas. “For the average person who does not have that kind of estate a will might cost from $600 to $2,000.â€
Here are four steps Thomas and Douglass recommend when preparing to draft a will:
Take an inventory of what you own. Determine exactly what are your assets, your debts, and providing you have more assets than debts, decide who you want to leave your assets to, what and how much of the assets each person will receive and consider your charitable intentions, says Douglass. Update your will regularly as you gain or lose assets or as your family situation changes. Every time a new will is drafted, it should specifically revoke all prior wills.
Select a person you trust to carry out your affairs. The person you choose to be in charge of your estate is called your Executor, or Personal Representative. The role of the Executor is to make sure that the original will is filed with the court and to oversee the probate process. If a person dies without a will then the court will determine who should be in charge of your estate.
“Pick someone who is honest, will follow through and will take care of all of the final matters,†says Douglass. The Executor is also responsible for filing and paying all taxes for the deceased, including but not limited to estate and income tax, explains Douglass.
Thomas also recommends that when preparing a will one designates a successor Executor in case the first choice is unable or unwilling to perform his responsibilities. The Executor is typically entitled to a fee or commission for the work of probating the will, explains Douglass.
Appoint a guardian for your minor children. If you have children under 18 you will need to name a guardian in your will. A will is the only place where you can appoint a person to be a guardian of your child’s person and a financial guardian. Those can be two separate people or one person. The guardian of
the child will be responsible for your children’s upbringing, including making decisions about your children’s health, schooling, and moral training, while the financial guardian oversees the inheritance.You should also consider if the guardian can take care of your kids financially if you can not leave enough money for them. Discuss your intentions with the chosen individual to make sure that they are willing to act as a guardian if you were to die. It is also wise to choose a successor guardian in case the first person becomes unable to serve. If you don’t name a guardian or trustee then the state will name one for you.
If you are separated, single, or divorced and are the sole physical guardian of your children, it is crucial to have a will that sets forth your desires about who you want your child to live with if you die while the child is a minor. Express your concerns in the will if you believe the surviving parent is not capable of raising the children. While not guaranteed the courts will most likely honor the custodial parent’s wishes.
Consider setting up a trust. A trust is a legal arrangement whereby a person gives property to a trustee to manage for the benefit of a third party. Trusts can stand alone or be a part of a will. “A will is just one part of estate planning,†says Thomas. “The larger an estate is the more you rely [on trusts.]â€
Take the case of Michael Jackson. The recently deceased entertainer set up a trust to contain most of his property, and he was his own trustee. His will decreed that whatever property was not in the trust at his death would be added to the trust and overseen by the trustees he chose upon his death.
The best practice is to set up a trust and/or a financial guardian for any children under the age of 18 because most states do not allow minors to inherit directly, says Thomas. In so doing you will need to appoint a trustee who is responsible for managing the money until the child reaches the age of adulthood or whatever age you determine.
Although a trust is oftentimes created for a minor, one should always consider transferring money to people of any age in trust. Just as Michael Jackson has left money, in trust, for his mother, assets can be left in trust for any adult. By leaving money in trust, the trustee can help manage the money, protect the beneficiary from creditor’s claims, prevent money from becoming available in a divorce, or allow for the beneficiary to receive government entitlements such as Medicaid. These trusts are technical and state specific. We strongly recommend meeting with an attorney for trust-based estate planning.
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