A will is a legal document in which you specify a variety of things pertaining to the way you want your estate to be distributed after you die. Other elements you would see in a typical will include who your chosen executor is, your attorney, special clauses pertaining to relatives, and provisions related to the guardianship of your minor children. Making a great will requires preparation, an understanding of estate planning and legal savvy.
How Do I Evaluate My Estate?
Evaluating your estate means sizing up your net worth, or the sum of your personal resources minus the sum of all your debts. You don't need financial sophistication to evaluate your economic condition. You can do it "old school" by taking a piece of paper, drawing a line in the middle to create two columns, and indicating your assets on one side and your liabilities on the other. Your assets include everything you own, and the liabilities, everything you owe. Assets include cash, the face value of your life insurance policy, certificates of deposit, income tax refunds, money market account, and investments you intend to sell within 12 months.
Estate planners and accountants call all the above resources "short-term assets" because you can sell them and get the money right away. Long-term assets, those you will use for more than one year, include your mortgage-free house, lien-free automobile and equipment. Liabilities include everything from credit card balances to mortgages and personal loans. Don't disregard transactions in which you were a co-signer or have guaranteed that someone else would pay. If the primary borrower defaults – accounting shortcut for "doesn't pay" – you are liable, so you should include that debt into your total liabilities when evaluating your estate.
What Do I Do to Protect My Children?
Safeguarding the future of your kids is important, but it is even more critical to protect minor children. You should think about the concept of "guardianship," which involves everything from taking care of the underage kids and attending to their needs, to managing the money and other physical property you might leave. Talk to your lawyer and executor about guardianship laws and the guardian's responsibilities. Ask both of them if they would recommend someone to you, which is always a good thing because at least you would get a chance to review his or her professional profile and interview him or her while you are still healthy – and alive. It is not uncommon to see a guardian perform both the caregiver role and financial manager function.
What Are Effective, Fair Ways to Distribute My Property?
The best way to distribute property – and avoid family drama after you are no longer part of this world - is to specify everything in your will. Think about your relatives' financial needs, keeping an eye on things like age, education, current financial condition, future economic prospects and family dynamics – the kind of amorphous concept that would prompt you to love one relative more than another; to trust your younger sister, for example, more than your older siblings; and to bequeath less money to your eldest son because he is already making enough cash on his own and does not need much economic help.
How to Select the Right Executor?
Also known as an administrator, an executor is the person you select and trust to carry out your last desires, as expressed in the terms and conditions included in the will. An experienced executor once told me that the element of trust cannot be ignored or underestimated in making a will because a person's last wish is not only important because it is his or her last desire, it also carries some prominence in the sense that it is not a decision that the person made lightly. In other words, someone sensing his or her last days coming typically spends some time thinking about various types of situations and then makes the best decision, depending on his or her viewpoint. You can choose a friend, relative or spouse as your executor.
When Should I Hire A Lawyer?
Depending on your estate's size, you may need to consult with someone versed in the subtleties of estate planning and who has a knack for decoding esoteric tax laws into easy-to-understand concepts. Your goal here is to be on the right side of the law, using what the current legislation allows to better size up your estate, think effectively about tax implications of various decisions you make, and make a smooth distribution of assets. An experienced lawyer may charge you more to handle your estate affairs, especially if you have a sizable estate, but the high legal fee is worth it, considering that this is about implementing your last wishes.
Can I Amend My Will at Will?
If needed, amend your will at will – no pun intended. You can amend your last wishes whenever you want, depending on the whims of relatives, your changing mood, the vagaries of life, things you thought you knew but now found out you didn't know, and a mishmash of other reasons for changing your will's contents that only you know. The most important thing is to make sure that the last version of your will is as close to what you really want as possible. Don't do the changes yourself, though. You might invalidate the whole will document, especially if the courts think you did the changes under stress, pressure or duress – all of which typically annul a contract or might prompt a judge to annul it.
Preparing a will may not be the most fun-filled exercise to carry out, but you are better off leaving clear instructions about your estate than have it divvied up in courts in a way that wouldn't please you if you were alive. To make your will a success, you should do your homework, be prepared and talk to the right people. You also should figure out your estate's value, determine the best way to distribute it to your heirs, and amend your will whenever you deem it necessary.