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Future planning: Making a Will

  • Mary Hunt <i>The Cheapskate Monthly</i>
  • 2004 4 Apr
  • COMMENTS
Future planning: Making a Will

So how's that estate planning coming along? If it's true that misery loves company, you might be interested to know that most Americans do not have even a simple will, to say nothing of a more comprehensive plan to provide for the care of their minor children and make life a bit easier for their survivors. Of course that's not to say that it's okay for you to not have a will, only that if you do not have one you're not alone.

So why do we avoid this important aspect of personal responsibility and financial planning? Ignorance, fear and probably a lot of procrastination.

It's surprisingly inexpensive to get started with an estate plan. In fact, depending on your state, you may be able to do much of it yourself with only a few simple forms and a good self-help book.

Who needs a will?

Everyone needs a will, whether or not they make a more extensive estate plan to go with it. A will is the most basic estate planning device and should be the centerpiece of your estate plan.

What if I die without a will?

If you do not make a will before your death, state law will determine who gets your property-and it could be someone you would not have chosen. A judge will decide who will raise your kids. And if you don't have immediate family, without a will naming another person or charity your property will go into the state's coffers.

Is a basic will enough for now?

For many a will is enough, at least for the time being. For sure it's better than nothing. Generally speaking, if you are under age 50 and don't expect to leave assets valuable enough to be subject to estate taxes (see sidebar), you can probably get by with a basic will. But as you get older and acquire more property you may want to engage a more sophisticated estate plan.

Do I need a lawyer to make my will?

Probably not unless you live in Louisiana (see disclaimer below). Making a will rarely involves complicated legal issues. Most people can draft their own using a good self-help book or software program. You have to know what you own, who you care about. You need to check the laws of your state, but that is not difficult. The Internet has many helpful sites. All state governments have websites now.

Can I name someone to care for my minor children in my will?

Yes, provided both parents name the same guardian. And both parents married or not need separate wills.

Can I just handwrite my will?

Possibly. Handwritten (holographic) wills are legal in 25 states. To be valid it must be written, dated and signed in the handwriting of the person making the will. Some states allow you to use a standard form and fill in the blanks.

What makes it legal?

Well, and I'm not kidding about this, you have to convince the courts that you were in your right mind when you wrote it. Beyond that you need to state that it is your will, finish by dating and signing it. It must be signed by at least two (in some states three) witnesses. They have to watch you sign the will, sign it as witnesses but they do not have to read it. In most states, these witnesses must be people who do not stand to inherit anything from you.

You may not need to have your will notarized, although if you and your witnesses take the time to do that, it will save a lot of hassle in the future.

Okay, that's it-all you need to know to get your assets in gear and your wishes in writing. It's time to get a will.

Resources:

When it comes to legal issues and doing things myself I trust Nolo Press, www.nolo.com, where you can find products like these:

Software: Quicken(r) WillMaker Plus 2004, includes forms; $49.95.

Book: Nolo's Simple Will Book, with CD Rom, by Attorney Denis Clifford, $31.99.

This article is for information only. It is not meant to be a substitute for legal advice, only to stimulate your thinking. Before relying on any information to be true and correct for your situation, make sure you get appropriate legal advice.

This information is designed for residents of all states except Louisiana, which has a legal system based on Napoleonic Code, different from the other states. If you live in Louisiana check your specific laws regarding wills and estate planning.

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estate taxes: Taxes imposed by the state or federal government on property as it passes from the dead to the living. All property you own, whether or not it goes through probate after your death, is subject to federal estate tax. Currently federal estate tax is due only if your property is worth at least $1 million when you die. Any property left to a surviving spouse (if he or she is a U.S. citizen) or a tax-exempt charity is exempt from federal estate taxes. A handful of states also impose estate taxes; these are usually called inheritance taxes.

executor: The person you name in your will to handle your property when you die. Executors are also called "personal representatives."

guardian: An adult you name who will be given the legal right by a court to control and care for your minor children.

probate: The process following a person's death when the court appoints someone to handle your affairs, identify your property, paying your debts and taxes, identifying your heirs and distributing your assets according to your will or if not according to your states' laws. Formal court-supervised probate is a costly, time-consuming process -- a windfall for lawyers -- which is best avoided if possible.

will: Document in which you specify what is to be done with your property when you die and name your executor. You can also use your will to name a guardian for your young children.


© 2003 The Cheapskate Monthly. All rights reserved. Used with permission.

 "The Cheapskate Monthly" was founded in 1992 by Mary Hunt.  What began as a newsletter to encourage and empower people to break free from the bondage of consumer debt has grown into a huge community of ordinary people who have achieved remarkable success in their quest to effectively manage their money and stay out of debt.  Today, "The Cheapskate Monthly" is read by close to 100,000 Cheapskates.      Click here to subscribe.


Seeking financial harmony in your marriage? Read Mary Hunt's book Debt-Proof Your Marriage published by  Revell.