It’s something you don’t want to think about, but it’s important that you do — what will happen to your assets, and more importantly, your children, should you pass away?
Retirees and young, new parents alike should be thinking about these things and putting them down on paper. It seems like an involved process, but if you break it down into these seven steps you will have your will taken care of in no time.
1. Decide Where to Start
There are many options to get your last will and testament drafted up. You can have a lawyer do it, utilize online software or do it yourself. About $40 can get you will-writing software that guides you through a digital interview to discern your intentions regarding distribution of property, guardianship, etc.
Anywhere upward from a few hundred dollars can get you an estate-planning attorney to help draw up a will, trust and other end-of-life documents. Visit the American Academy of Estate Planning Attorneys website at http://www.aaepa.com to find one in your area.
Geoff Williams of U.S. News & World Report recommends not opting for a do-it-yourself will. As with at-home tax preparation, a lot can be overlooked. He references the late Supreme Court Justice Warren Burger, who one may think would draft a flawless will for himself, but in fact made a bevy of errors that cost his heirs more than $450,000 in taxes and even more in legal fees.
2. Select Your Beneficiaries
After considering the many options just to get your will started, it might be nice to do something simple right off the bat. Unless you have a complicated family structure, choosing your beneficiaries should be straightforward. Keep in mind that the person you name as your beneficiary on life insurance policies and investment accounts such as 401(k) plans will inherit those assets no matter what your will or living trust says, so this is solely for your money, your house and similar assets.
3. Choose your executor
An executor is the person you want in charge of making sure your wishes, as specified in your will, are carried out. If there is, or may later be, dissonance in the family, it may be a good idea to appoint a neutral party like a bank or lawyer.
“The job of executor is also difficult work, and even a trusted, smart family member could make a mistake. Your family might get more for their money if you hire an attorney or bank to execute your will,” Williams says.
You also need to decide if your executor will receive compensation. Obviously, a hired party will receive money, charging a fee of around a 2 to 4 percent of the assets according to Geoff Williams of US News. If you do opt for a friend or family member, it might be nice to appoint that person some money because of the complicated process of closing an estate; and if you do, be sure to specify a dollar amount, hourly rate or percentage of assets.
4. Designate a Guardian for Your Children
If you have children and pass away without a will that designates a guardian for them, one will be appointed by the court. The same goes if those who you appoint turn down the role. That said, it is best to discuss these things with the prospective guardian before any final plans are made, and also to add an alternate in case the first choice is not able to take on the role.
Also put some thought into giving the guardian rights to the money left to the children until they become legal adults.
Furthermore, it’s not out of the ordinary to attach letters to the will to more personally express your desires for how you’d like your children to be raised.
5. Specify Who Gets What
If there are important heirlooms or other special objects you would like to go to specific people, certainly address that in your will. On the flip side, if there is a family member you are specifically leaving out of your will, make note of that in the document so the decision can’t be challenged in court.
6. Get it Signed
Depending on the state in which you live, you will need two or three witnesses to sign the document. They need to be at least 18 years old and cannot include those who are receiving anything in the will. If your will happens to be contested in court for some reason, witnesses may be called upon to testify on your behalf.
7. Keep it Safe
Obviously, someone you trust will need to know where to find your finalized will after you die. It’s also a good idea to keep the original secure, such as in a fireproof safe.
Even when you are finished drafting your will, the considerations don’t end. Your will may need to be updated every now and then if any life circumstances change, just as with insurance and 401(k) beneficiaries. Finally, also work on crafting a power of attorney and a living will to address your desires if you should become incapacitated.
