Wills provide peace of mind for the family
Estate planning is one of those things everybody knows they should do, but a surprising number of people put it off until it’s too late, or do it wrong in the first place.
Unfortunately, too many people of all ages hesitate to have their wills drawn up. There is no good reason to avoid that. If you die intestate — that is, without a will — you have lost the right to specify who inherits your property.
In this situation, the state decides how your property will be distributed, and it is unlikely that the allocation dictated by state law will match your preference. Moreover, in many states, state law will allocate your property in a way that may not be fair to your spouse.
Some individuals feel that because they are married and own their property jointly with their spouse, there is no need for a will. What if you and your spouse die together in an accident? Who will then receive your property? If you have young children, who will become their guardian? If your young children inherit property, who will manage it?
Who gets what?
It is important for you to know what property passes by will and what does not.
Any property owned with “rights of survivorship” goes to the other owner(s). Property with a named beneficiary goes to the party named. Any property disposed by contract goes to the named owner(s). The provisions of your will do not override the preceding specifications.
Any property that you own individually that does not have a named beneficiary passes by will. Your will can also cover property you may not be aware of. For example, if you receive an inheritance or a legal settlement, the provisions of your will can address these assets.
There are many advertisements suggesting that you can avoid legal fees by purchasing books, legal forms or computer programs to create your will. In my opinion, that is foolish. If any mistakes are made, the will can be disallowed, and state laws associated with intestacy will prevail.
A straightforward will is not expensive, and many attorneys won’t charge for an initial meeting. Reputable attorneys will provide you with an estimate of the cost of will preparation after you provide them with basic information.
A will needs to be detailed and precise in many ways. A good attorney can help you specify key provisions such as: who will receive what property; how you should hold your property; trust agreements; the best way to name beneficiaries of your retirement plans; maintaining consistency with named beneficiaries and contracts specified in other documents; minimizing any federal estate tax; and naming an executor and guardians. Make sure you select an attorney with expertise in this field.
Preparing a will is an essential starting point. However, you must make sure that you update your will when circumstances change. Some events that require updates to your will would be a move to a new state, additions to the family, deaths in the family, a divorce, or new assets as a result of retirement.
Account for retirement assets
A very important estate planning issue for many retirees is related to retirement assets. If you have significant retirement assets such as IRAs, 401(k)s, and/or other retirement plans, it is very important for you to select your beneficiaries and withdrawal options with care.
If this is a significant issue for you, make sure your attorney is knowledgeable in this area. I recommend that you review the books written by Ed Slott to help you understand these issues.
Having a will prepared and updated as necessary is one of the best gifts you can provide for your family. There is no downside, and without a will there are many potential unintended consequences, none of them good.
© 2011 Elliot Raphaelson. Distributed by Tribune Media Services, Inc.