Contents
Estate Planning Basics
How Estate Taxes Work
Wills and Estate Planning
How to Write a Will
Planning Directives
Probate
Estate Planning and Trusts
Types of Trusts
Life Insurance
Charitable Giving
General Gifting
Long-Term Care Planning
Business Succession Planning
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How to Write a Will
There are two ways to write a will: by yourself or with professional help.
- “Do it yourself” wills: Writing a will by yourself is less expensive than working with a lawyer but is also riskier. Though there are forms, software, and websites for writing wills, these “do it yourself” tools can’t ensure that your will complies with the guidelines of your state and the federal government.
- Work with a lawyer: A lawyer who specializes in estate planning not only will make sure the will you produce meets all guidelines but also will be able to help you to create planning directives and, if necessary, trusts. Legal fees for producing a will are usually in the $300–$1,000 range per person.
If you choose to work with an attorney, always request and check references before beginning.
Choosing an Executor
When you write a will, you have to choose an executor of the will—the person or institution responsible for settling your estate after you die. (The executor is sometimes called a personal representative.) Make sure you choose an executor you trust to fulfill this responsibility, and get his or her consent before finalizing your decision. For advice on choosing an executor, see the following table.
If You . . . |
You Should . . . |
|
Are single |
Try to avoid choosing a parent, as he or she will likely die before you die. |
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Are a parent |
Though an eldest child is the most common selection, don’t just choose your eldest child by default. Consider whether complications, such as
sibling rivalries, might ensue. |
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Don’t have a suitable relative |
Choose a friend you trust, or name a bank or other trust department or perhaps an attorney. |
In addition, before selecting an executor, consider the following issues:
- Make sure your executor will have access to the liquid assets (cash) sufficient to cover the costs of probate, legal filings, travel, and so forth. This amount should total at least $5,000 but could be as much as $25,000 or more if you have assets in multiple states, have complicated debts, or if the executor must travel extensively to settle your affairs.
- When choosing a family member or friend, always remember that being an executor requires a significant investment of time, money, and emotion.
Executor’s Copy of the Will
Once your will is written, make sure the executor can easily obtain a signed, witnessed copy at your death. Don’t keep your only copy in a safe-deposit box—these boxes are often sealed when you die (though your executor can eventually gain access). It’s best to provide a separate signed and witnessed copy to your executor well before you die.
Spousal Rights in a Will
You can usually leave all your personal assets (and your interest in joint assets) to your spouse without estate or income tax consequences but only if you have a will that affirms your wishes. In addition, the following guidelines
apply in most states regarding your spouse’s rights to property after your death:
- You can’t “disinherit” your spouse unless you have a signed prenuptial agreement (“prenup”) authorizing you to do so.
- Property held jointly, such as a primary home, usually goes directly to the other owner(s)—most often to your spouse if he or she is a joint owner. Property held jointly may be classified as tenants in common, joint tenants with rights of survivorship (JTWROS), or tenancy by the entirety. Real estate owned as tenancy by the entirety applies solely to married couples. In this case, neither spouse may direct the property to anyone other than a spouse.
- Your share of any property held as joint tenants in common (JTIC) can usually be left to whomever you wish, including your spouse, as long as you comply with your state’s laws in preparing your will.
Choosing Guardians
If you have minor children (under 18), you can use your will to identify a guardian who will be responsible for their care should something happen to you. Get the consent of anyone you are considering as a guardian before selecting him or her. Also make sure that any guardian you select has sufficient financial resources to take care of your children.
State-Related Considerations
Each state has specific estate planning laws and requirements. These include guidelines for spousal rights for married couples and community property statutes that decide who gets what when someone dies intestate.
Community Property States
Currently, nine states—Arizona, California, Idaho, Louisiana,
Nevada, New Mexico, Texas, Washington, and Wisconsin—
have laws that consider as “community property” all property acquired during a marriage.
In these states, a husband and wife jointly own all assets purchased with money earned during the marriage. Estate planning in states with community property laws can be complex, so be sure to consult an attorney to help devise a plan to ensure that your wishes will be carried out if you die before your spouse. Spouses often wish to leave a portion of their jointly owned assets to people other than their spouses, such as children—a decision often best facilitated by a trust in addition to a will (see Estate Planning and Trusts).
Getting the Will Witnessed
In order for a will to be official, it must be signed in the presence of a notary by at least one, and usually two, witnesses. Anyone can serve as a witness to a will as long as he or she is not a spouse of the writer of the will. In most states (though not all), a witness may not be a beneficiary under the will.
If you work with a lawyer, he or she will make sure the will is witnessed correctly. After the will is witnessed, it may take several weeks for the documents to be completed.
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