Getting a Will: Six Common Questions

Melissa DossWills

get a will

By TARA SIEGEL BERNARD

Let’s assume that you’ll live to a ripe old age and die peacefully in your sleep.

Or not. And if not, isn’t it time to think about getting your will done? It’s one of those tasks that many people tend to put off, for obvious reasons.

But at least one responsible parent is on the case: A single mother recently wrote to me and asked how she could ensure that her teenage daughter would inherit her assets without a problem, should something happen to her. She had several questions: Is a revocable trust better than a will? Should I revise my will? What happens if I remarry?
All good questions. So I thought I would answer some of them here, along with some other common queries that tend to arise when writing a will:

1. When Do I Need a Will?

It clearly becomes more important after you have children, since a will allows you to name a guardian. But anyone who has accumulated some money or other assets should have a basic will. If you don’t, everything will be divided up according to the law of the land where you live, and in some states, that may mean your young children will end up with more assets than your spouse.

2. Can I Do It Myself?

Whether you should rely on software or use a lawyer depends on your personal circumstances and comfort level. But if you’re at all unsure, it’s probably worth paying for a professional opinion. This isn’t something you want to get wrong.

Still, there are a variety of solid will-writing software packages that will give you step-by-step instructions. Mary Randolph, author of estate-planning related books and vice president for editorial at Nolo, which publishes do-it-yourself books and software for legal matters, said she believed there were plenty of people who could benefit from a simple will using a trustworthy program. “You won’t get in trouble with a simple, straightforward will as a starting point,” she said.

Ask a lawyer, however, and you get another answer.  Alan F. Rothschild, Jr., an estate planning attorney in Columbus, Ga., admits that it may seem self-serving, but said that preparing a will on your own could be fraught with risks and unforeseeable problems.

But the biggest mistake people make, he says, is thinking that the end product is the will itself. “This would be akin to saying the prescription is what you pay for when you go to see a doctor,” said Mr. Rothschild, who is also chairman of the American Bar Association’s real property, trust and estate law section.  “Of course, it’s not the piece of paper — either the prescription or basic will — that is the product, it is the professional’s advice and experience.”

Clearly, people who are concerned about the estate tax, or those with complex financial or family lives, should see a lawyer. Currently, there is no federal estate tax. If Congress fails to act by the end of the year, estates valued at more than $1 million will be subject to the tax starting in 2011. But many experts say they believe lawmakers will ultimately settle on an exemption closer to $3.5 million. Many states also impose their own estate taxes.

Others who should seek a professional help: Small-business owners, parents of children with special needs or couples where one partner is facing an illness like Alzheimer’s or who may have early signs of dementia. In that last instance, you need to think about who will care for your partner and how and  consider when or if they might end up on Medicaid.

Or maybe you’re remarried but still want to leave most of your assets to your children. This may also call for a lawyer’s assistance, since “disinheriting” a spouse can get tricky.  (You may need a prenuptial or postnuptial agreement, Ms. Randolph says.) The same goes for people who want to make more complex plans, or who fear their wishes will be contested.

But for people who aren’t fabulously wealthy or who have straightforward plans, will-writing may be easily accomplished with a good program on the Web. Some of the more widely referenced products include Quicken WillMaker, which can be downloaded for about $42, and LegalZoom.com, where pricing starts at $69.

Whichever program you decide to use, and there are many, make sure it provides thorough step-by-step instructions and accounts for the differences in state laws, said Ms. Randolph, who helped create the Quicken and Nolo programs. And be sure to carefully follow the instructions about how exactly the official will-signing ceremony must play out.

As Mr. Rothschild noted, do-it-yourself wills can be completely invalidated because of simple mistakes. Beneficiaries, for instance, can’t also serve as witnesses. And some states have very strict rules that require the witnesses to not only be in the room but also watchthe will owner sign. Mr. Rothschild has also seen a variety of other errors and oversights, such as failure to name an “alternate” executor of the will.

3. Do I Need More Than Just a Will?

Legal experts also recommend putting other documents in place that  allow others to make decisions for you in the event you become incapacitated.

When it comes to medical matters, an advance directive or living will describes what kind of treatment you want (or do not want) at the end of your life. “Everyone of every age ought to have a medical power of attorney or advance directive,” said Ms. Randolph. “Advance directives makes your wishes known, and a medical power of attorney allows someone to carry those wishes out.”
A financial power of attorney, meanwhile, gives someone legal authorization to handle your financial affairs when you can’t do so on your own. All of these directives can be handled by an attorney or with software.

4. What About a Revocable Trust?

One of the big reasons people set up revocable trusts, also known as living trusts, is to avoid probate, the court-supervised process to settle a deceased person’s estate. Why? Depending on where you live, probate can be a costly and lengthy process. Attorney, court and other fees often cost up to 5 percent of the value of the estate, Ms. Randolph said. Many Californians choose to use revocable trusts for that reason, she said. Be sure to check the probate laws in your state.

Here’s how the revocable trust works: you put all of your assets into the trust, which remains in your control and can be changed at any time. For the trust to work, you need to retitle all of your assets to the trust  (a “pour over” will is also typically used to transfer, or “pour over,” any assets that weren’t in the trust at the time of  your death). After you die, a trustee that you name distributes the assets according to your instructions, all while avoiding probate.

Some legal experts say that revocable trusts are more difficult to contest than a will, and they also allow you to keep your affairs private (Wills become part of the public record during probate).

5. How Else Can I Avoid Probate?

You can set up a revocable trust, but it may be an unnecessary expense for many people. Many of your assets will avoid probate anyway, as long as you’ve named a beneficiary. This is easily done on retirement accounts like 401(k)s,  I.R.A.’s or insurance policies. So keep those designations up to date (and include alternate beneficiaries, where you can).

Other types of property may require some additional paperwork. If you hold any joint bank accounts, they typically have “rights of survivorship,” which means the assets in the account will automatically become the property of the account co-owner upon your death.

You can also add a “payable on death” provision to most bank accounts. (If you have a joint account, this means the beneficiary will inherit the account after the second owner dies.) Just ask your bank about how to add this provision, since it’s free and usually just requires you to fill out a form, says Ms. Randolph. The only downside, she said, is that you can’t name alternate beneficiaries.
Similar arrangements can usually be made for certificates of deposit, brokerage accounts and stocks and bonds. And 13 states now allow you to set up “transfer on death” deeds for real estate holdings, she added. Transfer-on-death designations can also be registered for cars and other vehicles.

6. Where Should I Keep My Will?

Finally, make sure the executor of your estate knows where your will  and other important documents are stored. Experts recommend keeping them in a fireproof box in your home, not a safety deposit box. That way, they’re a bit more accessible to an executor.

 

The original article can be found here