A will is a legal document that transfers what you own to your beneficiaries upon your death. It also names an executor to carry out the terms of your will and a guardian for your minor children, if you have any.

Your signature and those of two witnesses make your will authentic. Witnesses don’t have to know what the will says, but they must watch you sign it and you must watch them witness it.

Hand-written wills – called holographs – are legal in about half the states, but most wills are typed and follow a standard format.

Who Needs a Will?

The short answer is everyone! However, it’s imperative to make a will as soon as you have any real assets, or get married, and certainly by the time you have children.

What If You Don’t Have a Will?

Without a will, you die intestate. The law of your state then determines what happens to your estate and your minor children. This process, called administration, is governed by the probate court and is notoriously slow, often expensive, and subject to some surprising state laws. It’s estimated than more than two-thirds of Americans die intestate. Do you really want a court deciding vital family matters such as how to divide your estate and custody of your children?

What Should Your Will Include?

Your will should contain several key points in order to be valid. The following list is a start; check with a local estate attorney for a more comprehensive list:

• Your name and address.
• A statement that you intend the document to serve as your will.
• The names of the people and organizations – your beneficiaries – who will share in your estate.
• The amounts of your estate to go to each beneficiary (usually in percentages rather than dollar amounts.)
• An executor to oversee the disposition of your estate and trustee(s) to manage any trust(s) you establish.
• Alternates to provide both executor responsibilities and trustee(s).
• A guardian to take responsibility for your minor children and possibly a trustee to manage the children’s assets in cooperation with the guardian.
• Which assets should be used to pay estate taxes, probate fees and final expenses.

What Is A Living Will?

A living will expresses your wishes about being kept alive if you’re terminally ill or seriously injured.

Disadvantages of a Living Trust

There are disadvantages to using a revocable living trust as well. You must re-title assets into the trust name, which entails a lot of paperwork. And although creditors only have a limited time after your death to make claims against your estate while it’s being probated, there is no time limit within which creditors may go after assets in a living trust.

Conclusions

If your goal in using a revocable living trust is only to avoid probate, there are easier ways to accomplish this task. However, the revocable living trust can provide a wide variety of estate planning benefits that are difficult to achieve with any other estate-planning tool.

Trusts can be extremely complex and generally require the aid of an experienced estate-planning attorney. Please contact us for more information on charitable trusts.

The federal government imposes a substantial tax on gifts of money or property that exceed certain levels. Without such a tax, someone with a sizable estate could give away a large portion of his or her property before death and escape death taxes altogether. For this reason, the gift tax acts more or less as a backstop to the estate tax. And yet, few people actually pay a gift tax during their lifetime. A gift program can substantially reduce overall transfer taxes; however, it requires good planning and a commitment to proceed with the gifts.

Advantages of Gift Giving

You may have many reasons for making gifts — for some gift giving has personal motives, for others, tax planning is what motivated them. Most often, you will want your gift-giving program to accomplish both personal and tax motives. A few reasons for considering a gift-giving plan include:

• Assisting someone in immediate financial need
• Providing financial security for the recipient
• Giving the recipient experience in handling money
• Seeing the recipient enjoy the property
• Taking advantage of annual exclusion allowance
• Paying gift tax now to reduce overall taxes later
• Giving tax advantaged gifts to minors

In the aftermath of the tragic case involving Terri Schiavo, interest in living wills has increased markedly. A living will expresses your wishes about being kept alive if you’re terminally ill or seriously injured.

Other famous Americans have used living wills to retain control over their final medical care through use of a living will and a health care power of attorney. During the final weeks of his life, former President Richard Nixon refused “heroic measures” and received only palliative (comfort-easing) care at his home. Similarly, former First Lady Jacqueline Kennedy Onassis refused life-prolonging medical intervention before her passing.

Perhaps you’ve reflected on your own wishes if you were to face a similar situation. Although no one likes to imagine the possibility of being in such a helpless state, the statistical possibility of such an event remains significant. This is why it’s wise to ensure that your wishes will be respected if you become incapacitated.

Just as a will becomes the governing entity for your estate after you die, a living will can make your wishes clear and legally binding in the event of a devastating illness or injury. A living will is often referred to as a health care power of attorney. In it you state how you should be treated in the event of a terminal disease, severe illness, or tragic accident. By giving such directions when you are healthy, your relatives won’t have to make difficult decisions on your behalf, and you’ll receive the type of care you desire.

Issues you might want to consider addressing include:

• Organ donation
• Religious and faith issues
• Hospital, nursing home, and hospice arrangements
• Funeral arrangements

To carry out your living will, you’ll need a health care directive, a written statement that expresses how you wish to be treated in advance of any incapacity. Make sure you give precise, comprehensive directions.

You’ll also need a health care proxy, designating a representative to make your health care decisions based on the guidelines you provide in the directive if you are incapacitated or unable to communicate your desires.

Many people assume estate planning is all about reducing taxes. But it’s also about making sure your assets are distributed according to your wishes both now and after you’re gone. Here are three questions to consider before you begin your estate planning.

1. Who Should Inherit Your Assets?

If you are married, you must consider marital rights before deciding who should inherit your assets. States have different laws designed to protect surviving spouses. If you die without a will or living trust, state law dictates how much passes to your spouse. Even with a will or living trust, if you provide less for your spouse than state law deems appropriate, the law will allow the survivor to receive the greater amount.

Once you’ve considered your spouse’s rights, ask yourself these questions:

• Should your children share equally in your estate?
• Do you wish to include grandchildren or others as beneficiaries?
• Would you like to leave any assets to charity?

2. Which Assets Should Your Survivors Inherit?

You may want to consider special questions when transferring certain types of assets. For example:

• If you own a business, should the stock pass only to your children who are active in the business?
• Should you compensate the others with assets of comparable value?
• If you own rental properties, should all beneficiaries inherit them?
• Do they all have the ability to manage property?
• What are each beneficiary’s cash needs?

3. When and How Should They Inherit the Assets?

To determine when and how your beneficiaries should inherit your assets, you need to focus on three factors:

• The potential age and maturity of the beneficiaries,
• The size of your estate versus your and your spouse’s need for income during your lifetimes, and
• The tax implications of your estate plan.

Outright bequests offer simplicity, flexibility and some tax advantages, but you have no control over what the recipient does with the assets once they are transferred. Trusts can be useful when the beneficiaries are young or immature, when your estate is large, and for tax planning reasons. They also can provide the professional asset management capabilities an individual beneficiary lacks.

Whether you choose a will or a living trust, you also need to select someone to administer the disposition of your estate – an executor or personal representative and, if you have a living trust, a trustee. An individual (such as a family member, a friend or a professional advisor) or an institution (such as a bank or trust company) can serve in these capacities. Many people name an individual and an institution to leverage their collective expertise.

What does the executor or personal representative do? He or she serves after your death and has several major responsibilities, including:

• Administering your estate and distributing the assets to your beneficiaries.
• Making certain tax decisions.
• Paying any estate debts or expenses.
• Ensuring all life insurance and retirement plan benefits are received.
• Filing the necessary tax returns and paying the appropriate federal and state taxes.

Whatever your choice, make sure the executor, personal representative or trustee is willing to serve, and consider paying a reasonable fee for the services. The job isn’t easy, and not everyone will want or accept the responsibility. Designate an alternate in case your first choice is unable or unwilling to perform. Naming a spouse, child, or other relative to act as executor is common, and he or she certainly can hire any professional assistance that might be needed.

Finally, make sure the executor, personal representative, or trustee doesn’t have a conflict of interest. For example, think twice about choosing an individual who owns part of your business, a second spouse or children from a prior marriage. A co-owner’s personal goals regarding the business may differ from those of your family, and the desires of a stepparent and stepchildren may conflict.

Selecting a Guardian for Your Children

If you have minor children, perhaps the most important element of your estate plan doesn’t involve your assets. Rather, it involves your children’s guardianship. Of course, the well being of your children is your priority, but there are some financial issues to consider:

• Will the guardian be capable of managing your children’s assets?
• Will the guardian be financially strong? If not, consider compensation.
• Will the guardian’s home accommodate your children?
• How will the guardian determine your children’s living costs?

If you prefer, you can name separate guardians for your child and his or her assets. Taking the time to name a guardian or guardians now ensures your children will be cared for as you wish if you die while they are still minors.

You also should be aware of the other procedures involved in estate settlement. Here is a quick review of some of them. Your attorney, as well as the organizations mentioned, can provide more details.

Transferring Property

When thinking about transferring your property, what probably first comes to mind are large assets, such as stock, real estate and business interests. But you also need to consider more basic assets, including:

• Safe deposit box contents. In most states, the bank seals the box as soon as it learns of the death and opens it only in the presence of the estate’s personal representative.
• Savings bonds. The surviving spouse can immediately cash in jointly owned E bonds. To cash in H and E bonds registered in the deceased’s name but payable on death to the surviving spouse, they must be sent to the Federal Reserve.

Receiving Benefits

The surviving spouse or other beneficiaries may be eligible for any of the following:

• Social Security benefits. For the surviving spouse to qualify, the deceased must have been age 60 or older or their children must be under age 16. Disabled spouses can usually collect at an earlier age. Surviving children can also get benefits.
• Employee benefits. The deceased may have insurance, back pay, unused vacation pay, and pension funds to which the surviving spouse or beneficiaries are entitled. The employer will have the specifics.
• Insurance they may not know about. Many organizations provide life insurance as part of the membership fee. They should be able to provide information.