The first question that comes to mind when the issue of preparing a last will and testament crops up is “Do I really need a will?” There is only one answer to that question, and that is a resounding “yes!” For the fact is, all your assets (except those from your life insurance and retirement plan) will be seized by the government if no will is found after you pass away(knock on wood).
If you are single and your personal assets are not much, it isn’t absolutely necessary to prepare a will(and certainly not if you don’t wish any beneficiary to claim those assets, no matter how little). It becomes an entirely different story, though, when you happen to be on the other side of the fence, that is, with assets to boot. Yet even if not, it still makes sense to execute a will just so you can visualize what will happen to anything you own after you pass away—for example, your dog, your bike, or your 20” TV (anything to add here?).
A will basically gives you the chance to square off with the facts of your mortality. Once you pass away, your estate assets will be used to pay off your debts. A will allows you to state what happens to the rest of your assets by allowing you to name specific allocations, or how your assets are to be divided.
A will also allows you to do the following:
- Name the executor, who is the person who will carry out the terms of the will, thereby releasing your executor from the need to post a bond. Be sure to select an executor whom you think will outlive you. Hence it’s a good idea to pick someone much younger than you.
- Select the guardian who will take care of your minor child if the child’s other parent is unable to care for him or her.
On the second point, the court is the one that ultimately decides the custody issue for your child, such as whether the individual or individuals you have specified are fit to be a guardian—but the fact is, the court would of course like to know your preference before making a decision on the matter.
There are always simple, two-page or so “prefab” wills available over drugstore or supermarket counters. A
simple will, however, may not be appropriate if the total value of your estate exceeds estate tax exemption. In the United States, for example, this exemption is $675,000 in 2000, an amount which will increase to $1,000,000 by 2006.
If the total value of your estate, plus the total value of taxable gifts made during your lifetime, exceeds the amount above, this excess could be taxed at the rate of between 40 to 50%. An estate this large certainly calls for consulting with estate planning professionals.
The fact is, wills produced by on-line will mills (such as Wills.Com or PCWills.Com) are not designed to help avoid estate taxes. Generally speaking, complex situations call for consulting with an attorney. But before you do that, it is a good idea to come up with something quick and easy until you find the time to address more complex issues(let’s hope it’s not too late!). Taking this step starts you on the journey to thinking about the issues you will need to make decisions about.
Making a simple will on-line can cost you around $30 for a four-page spread or thereabouts. Sites like Wills.Com and PCWills.Com even offer useful tips before you even get around to having your will done. These sites provide you with very useful FAQs and sample wills to give you a feel of how to do yours right. While there are will-composing softwares you can buy, it does not make sense to do so if you are only going to use it once. It makes sense to take this step for doing your income tax return, but certainly not for a will, unless you have a huge family you intend to share the software with.
To get the feel of how some wills are done, you can go to Yahoo or Google and simply enter “Last Will and Testament” in the search box. There you will find wills of many famous people (Benjamin Franklin, JFK, Elvis, etc.) free for you to browse. Taking this journey puts you on the road to drawing up your own, complex will until you are ready to talk to an estate professional.
Here are some things you can’t cram into a will, for your guidance:
- Your will cannot specify the beneficiaries of life insurance policies, retirement plans, even annuities. The beneficiaries for these funds are set up by filing with the insurance companies. So it is a good idea to review the beneficiaries on file for these plans before making your will to make sure that all the bases are covered.
- Last wishes are not part of a Last Will and Testament. Last wishes allow you to enter your personal choices regarding burial or cremation and any other last requests you might have which you finalize into “Requested Final Arrangements”. For help with this, you can go to PCWills.com.
And finally, let’s address the issue of what makes a will legal:
- The person whose will is being made must be an adult
- He must be of sound mind
- The will must be typewritten or computer-generated (hand-written or holographic wills are not valid in all the states of U.S.A.)
- The will must specifically state that it is your will
- The will must be signed and dated by the owner of the will in front of the required number of witnesses
There may be other legal requirements needed depending on which country you are from, so be sure to check this out with a lawyer before you finalize everything. Of course, the bigger the assets or properties at stake, the more you should consider the legal side of things seriously. None of us can predict our death, but preparing a will certainly enables us to control what happens afterwards.