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Frequently asked questions about wills

Do I need a will, even though I’m single?
Everyone-single or married-needs a will that explains how they want their assets distributed when they die. A will clarifies what you want done with your investments, personal possessions, even your pets. Even if you don’t want to write a will for your own peace of mind, do it for your heirs. The document will save them lots of time, legal and court expenses.

Should I have a will if I don’t have children?
Everyone should have a will, including you and your spouse. Believing that everything the two of you own will pass automatically to the surviving spouse when one of you dies is a risky proposition. Suppose that you and your spouse bought a house or opened a brokerage account as joint tenants several years ago, but the lender or brokerage firm fouled up and mistakenly listed you as tenants-in-common. If you died before the mistake was discovered, your interest in the property would not automatically pass to your spouse. Instead, it would likely become the subject of lengthy probate proceedings and your creditors could ask that the property be liquidated to pay any debts that you left behind. Or, suppose you were killed in an auto accident and the other driver’s insurance company issued a big check to your estate. If you died without a will, the cash would be distributed according to the state’s inheritance laws instead of going directly to your widow. Those same inheritance laws would kick in if you and your spouse died at the same time in a car crash or other accident, which means your combined assets might pass to relatives you don’t even like.

What happens if you don’t have a will?
Everyone has a will. If you don’t write your own, you get the universal will that your state has written for you. All your nearest relatives get a piece of your property, but no one else does-and no one gets more than the state-allotted share, even if it’s unfair. Spouses usually suffer the most. Depending on state law, not all of the property may go to your spouse. Your grown children may get some of the money you meant for your spouse, leaving your spouse with too little to live on. A court will choose your children’s guardian. Stepchildren usually get nothing. Your family might battle with the courts. A fight might break out among your relatives over who gets the children and who runs the inheritance. Whether you do it yourself or with the help of financial advisers, writing a will is key to ensuring that the people you want to leave your property to, get it.

What must be in a will?
Certain elements usually must be present for a will to be valid. You must be of legal age to make a will (this is 18 in most states). You must be of sound mind and memory, which means that you should know you’re executing a will, know the general nature and extent of your property and what the will accomplishes. The will must have a provision that disposes of your property and it must indicate you really intend it to be a will. The will must be voluntarily signed by you (or someone you direct in case of incapacity or illiteracy). Although oral wills are permitted in limited circumstances in some states, wills must usually be written and witnessed. To be safe, don’t hand write a will if you can avoid it. A will must be properly executed, which means that it contains a statement at the end attesting that it is your will, the date and place of signing, and the fact that you signed it in the presence of the witnesses who then also signed it in your presence and watched each other sign.

Where should I keep my will?
Probably the best place to keep the original of your will is with your lawyer. Keep a copy for yourself, and put your lawyer’s name, address and phone number on it so your survivors will know how to contact the attorney when you die. If you don’t want your attorney to have the original of your will, you can keep it at home. Only do so if you have a safe that can’t be broken into, or destroyed by fire. Keeping the original of the will in a bank safe deposit box is OK, but only if your survivors could get to it quickly when you die. Access policies differ from one bank to the next. A survivor can get immediate access if his or her name is on the box rental agreement. If it’s not, the bank may not open it until a tax agent shows up or a court order is presented, either of which could take weeks or even months. An alternative would be to store the original in a safe deposit box held by your executor. The catch: If the executor dies before you do, you’ll have to start looking for a place to store it all over again.

What is probate?
Any property that is transferred by will is subject to probate, which is the legal process of verifying your will through the courts. Probate can be slow and costly. That’s why many people choose to create a living trust to convey most of their property to their loved ones. Forming a living trust makes sense for just about everyone, but it’s important to realize that it does not prevent probate-it only speeds up the probate process. You still need a will that names an executor for your estate and a guardian for any minor children. All wills must go through probate. Period.

What can be done to cut costs in processing a will?
The processing or "probating" of your will can be expensive. An executor or administrator generally receives a fee for his or her work, which consists of identifying the assets; paying off debts, taxes and administrative costs; and finally, disposing of the remaining assets to the beneficiaries. Usually, an independent executor, such as a lawyer or bank, collects between 2 percent and 5 percent of the estate’s value. If you name a family member to be executor, he or she will usually charge far less than an independent one or may refuse to accept a fee out of love for the family. All fees, which can amount to thousands of dollars, are paid by the estate. You can reduce substantially the cost of probating your will by removing assets from your estate before your death. This can be accomplished by giving away your assets as gifts, holding assets in joint tenancy, entering into certain contractual arrangements, such as life insurance or pensions, and setting up trusts. See your lawyer about these and other estate planning tactics.

What is a holographic will?
A holographic will is a will that is written out in your own handwriting. In many states, holographic wills are automatically invalidated. Even in states where holographic wills are considered valid, they are often contested because either the handwriting or the maker’s wishes are not clear.

What kind of limitations can be put on gifts made in a will?
In general, you can pick who you want your property to go to and leave it in whatever proportions you want. Some people try to make their influence felt beyond the grave by attaching conditions to a gift made in the will (as opposed to the purely advisory language in a letter of intent). According to the American Bar Association, most lawyers advise against this; courts don’t like such conditions, and you’re inviting a will contest if you try to tie them to a gift. For instance, you can’t require your daughter to divorce her no-account husband to claim her inheritance from you; nor can your husband make your inheritance contingent on a promise you’ll never remarry; nor can you force that secular humanist son-in-law go to church every Sunday. For the most part, though, it’s your call.

Most married people plan to leave everything to their spouse, and if the spouse dies first, then it all goes to the children. Why is that a big mistake?
Many married people write a "simple will" that leaves everything to their spouse or, if the spouse dies first, leaves everything to their children. Unfortunately, such a will can cause huge problems later. For example, say John and Mary have two children. John dies, leaving everything to Mary. Mary later marries Bob, a widower with three children of his own. Then Mary dies, leaving everything to Bob. All of John’s assets now belong to Bob, a guy he never met, and John’s children get nothing. And when Bob dies, Bob’s own children will inherit his assets -- which would now include everything that John and Mary had spent their whole lives working for. Check with a good estate planning attorney to answer your estate planning questions in detail. The first half hour is often free and if you take action on the ideas presented, it will be time well spent.

Should two people be appointed as joint guardians of my child?
It’s perfectly legal to name a couple as guardians of your child, but some lawyers and financial experts suggest you name one particular individual instead. Why? Because couples get divorced, or they can’t agree on how to raise the kids. Name the person you want, the one you most trust to make the right decisions, and then the couple can work out their respective roles between them.

How can I make sure that the people I want to inherit my property actually do so?
Whether you do it yourself or with the help of financial advisers, writing a will is key to insuring that the people you want to leave your property to actually get it. A will is, quite simply, a legal declaration that gives instructions on how to dispose of your assets when you die. You can divide your assets any way you want, as long as guidelines are presented clearly in writing. The portion of your estate covered by the will includes both tangible assets, like homes, cars, boats, artwork, collectibles and furniture, as well as intangible assets, like bank accounts, stocks, bonds and mutual funds. To specify that certain people should inherit particular tangible assets, insert in your will a provision known as a tangible personal property memorandum. Other rights and benefits, like pension rights and life insurance proceeds, are normally handled outside of your will. In any case, having a knowlegeable attorney prepare the appropriate documents is the best way to assure yourself that what you want done with your property after your death actually will be done.

How can you disinherit someone?
Say you get married and regret it. Your will leaves nothing to your spouse. Tough luck-your spouse will probably collect something (unless you are legally separated). A surviving husband or wife may be entitled to a statutory share of the estate regardless of the will. This is a percentage set by state law. If a husband or wife dies and his or her will makes no provision for the surviving spouse, or conveys to that person less than a certain percentage of the deceased spouse’s assets, a surviving spouse can "take against the will." This means he or she can choose to accept the amount allowed by law (usually a third or half of the estate) instead of the amount bequeathed in the will. You or your spouse can voluntarily give up this legal protection in a pre- or post-nuptial agreement. You can disinherit a child in every state except Louisiana. Your will should state specifically that you are leaving that child no money or leaving a nominal sum like one dollar.

What are the duties of a beneficiary of a will?
Every will has at least one beneficiary, who will get some or all of the assets that the person who wrote the will leaves behind. A beneficiary can be anyone-your spouse or children, other relatives, friends or even total strangers. You can name a university, hospital or other institution as your beneficiary. For that matter, you can leave it all to your favorite pet. Unlike the executor of a will, beneficiaries usually don’t have any duties other than to accept the property that you leave them. But even then, they have a choice. They can refuse to take possession of an asset by "disclaiming" it.

What’s the best way to avoid conflict between estate beneficiaries?
Let’s say your two daughters love your antique grandfather’s clock, so you leave it to both of them in your will. Will they share it in a loving way? Not likely! Few people can reach perfect accord over what to do with mutually owned property. Their personal and financial situations are different. So are their attitudes. What if one daughter moves to another state and takes the clock with her? To avoid conflict between estate beneficiaries, anything that can’t be divided should either be left to one person or sold and the proceeds split. To specify that certain people should inherit particular tangible assets, insert in your will a provision known as a tangible personal property memorandum.

How can I write a will to minimize taxes for my beneficiaries?
Sometimes you can structure your will to minimize the taxes your beneficiaries will pay. If you have a complex will which has trusts written into it, federal estate taxes can be minimized or avoided. However, even complex wills must go through probate, and they provide no protection from disability. Unfortunately, most wills are "simple wills" that pass the entire estate from one spouse to the other and then onto the children. Under such an arrangement, there is no protection from federal estate taxes.

Is it possible for me to make a gift to charity through a charitable remainder trust and still benefit my heirs?
You can set up a charitable remainder trust to pass on assets to your favorite charity. This can be arranged with your alma mater, a hospital that once cared for you, or your church or synagogue. If you deposit appreciated assets such as stocks or bonds in the trust, you receive an immediate income tax deduction for your contribution and pay no taxes on the gain in value of those assets. During your lifetime, or for a specified period, you or other individuals (such as your heirs) also receive an annuity generated by the trust assets. At your death, the assets are retained by the charity. Consult your tax adviser, your favorite charity and your estate lawyer for help with these complex trusts.

I am planning to leave my entire estate to my spouse, but what would happen if we both died at the same time?
Many married people leave their entire estate to their spouse, or to their children if the spouse dies first. But that can create problems if the couple dies at the same time-for example, in an automobile crash-or if the two die within a very short time of each other.To cover that possibility, you can include a simultaneous death clause in your will to pass your property directly to your surviving heirs. You can also require that any beneficiary survive you by a certain length of time-often 45 days-in order to inherit. This provision saves double taxes and court costs, and lets you decide who is next in line for your property. More importantly, you should meet with an attorney to help you and your spouse address all of the vital issues involved in estate planning.

Who should I name executor of my will?
Every will must name an executor, sometimes called a personal representative, who will oversee settlement of the will-maker’s estate and carry out the dead person’s wishes. When you’re making your will, it’s important to choose your executor carefully. Your spouse or a close friend might make a good executor, as long as they’re comfortable handling financial and legal matters. Or, you could choose one of your children, but make sure they’re of legal age. If your estate will be relatively complicated, you should probably pick a lawyer or similar professional to act as your executor instead. In addition to lending professional expertise, a lawyer will usually approach the job with little emotion, which can be a big plus. Another option is to name joint executors, such as a lawyer and your spouse.

What are inheritance taxes?
Inheritance taxes are state taxes that heirs must pay on the value of their inheritance. Estate taxes, by contrast, are levied by the state or federal government on the estate itself and require that the estate pay. You can specify in your will that you want your estate to pay any inheritance taxes that the government may slap on your heirs. It’s a nice gesture, and may even keep your heirs from being forced to sell property you leave them in order to pay taxes.

What are the tax consequences of inheriting a house?
When children inherit a home, the Internal Revenue Service determines their basis in the property on the date of the benefactor’s death. The cost basis is not the amount the owner originally paid for the house. It is the property’s fair market value on the date of the benefactor’s death, says Pamela MacLean, assistant public affairs officer with the IRS. "Cost basis" is a tax term for the dollar amount assigned to a property at the time it is acquired, for the purpose of determining gain or loss when it is sold. Assume the property was divided up equally. If one of three siblings deemed to inherit the home sold her share, she must pay capital gains tax for whatever profit she made over one-third of the new basis, MacLean said. Other tax consequences include estate taxes. However, the estate must total $1,000,000 (in 2002) or more before tax issues become a concern. The IRS allow residents to pass on property, cash and other assets worth up to those totals before charging the heirs any taxes, according to MacLean. Regarding the transfer of ownership, quit claim deeds often are used between family members in situations such as this when an heir is buying out the other. All parties must be agreeable to dropping a name from the title. Other resources: IRS Publication 950, Introduction to Estate and Gift Taxes. You can download it from the IRS Web site or order by calling 1-800-TAX-FORM (829-3676).

What is a living will?
By writing a living will, you’re basically exercising your right to refuse treatment that would artificially prolong your life in the event you become incapacitated. Fifty states and the District of Columbia have laws authorizing the use of some type of advance directive (i.e., living wills, medical powers of attorney). Laws that govern living wills and medical powers of attorney for health care vary from state to state. To ensure the greatest protection, an advance directive should reflect the most recent changes in state law. Everyone should have a living will; without one, your loved ones could be faced with agonizing decisions about what you might have wanted, and you will have failed to express your wishes in this crucial arena. An attorney can help you write a living will or you can obtain the documents needed to create one for free from the Compassion & Choices Web site. Choose the form appropriate to your state and download it. (You may first need to download the Adobe Acrobat Reader.) You can also download another important "advance directive," the health care power of attorney, which enables you to appoint someone you trust to make decisions about your medical care if you cannot make those decisions yourself.

Do I need a lawyer to draft my will?
The law doesn’t require your will to be drafted by an attorney. But it doesn’t hurt to use an attorney, and you should certainly consult one if you have any questions. As an alternative, the simplest and least costly way to prepare a will, a living will, and a medical power of attorney, is to use one of the high-quality, user-friendly software packages developed by attorneys. Or you can hire a paralegal typing service to help you prepare the documents. They typically charge half or less of what an attorney would charge. You can find paralegal services in the Yellow Pages of your local telephone book. If you think that the total value of your estate might come anywhere close to the amount exempted from federal estate taxes, you will definitely need to talk to an attorney.

What are the pitfalls of drafting my own will?
The chief pitfall is your lack of competence. There are many issues that may arise at death. Only a competent attorney who knows the law and is experienced probate and estate planning should draft a will. Your mistakes may be final and irreversible, and you won’t be around to fix them. Someone else will live with your mistakes, and your heirs can’t sue you if you screw the whole thing up. A competent attorney probably won’t make gross mistakes, and if mistakes occur, the attorney will have malpractice insurance that will indemnify your heirs. A simple will costs around $500. A small mistake can cost thousands.

What resources are available to help me prepare my own will if I don’t want to use an attorney?
There are several do-it-yourself books are on the market that can help you draw up a simple will. If you own a computer, there are also several easy-to-use computer programs. These include Home Lawyer, Living Trust Builder, and Nolo’s Living Trust and Willmaker. They ask you a series of questions, then format your answers into legal documents that protect you and your estate against almost any eventuality. There are also standard wills available from legal clinics or local law firms that you can customize to meet your circumstances. Computer software and legal books will take care of most common situations and are adequate if you have few assets and a limited number of people to whom you want those assets distributed. But if you hold substantial assets, or your wishes for distribution are complicated, you should consider obtaining the services of professional experts to make sure that your will covers every contingency. Also, because estate and probate laws vary considerably from state to state, it is important to be sure your will is drawn in accordance with local laws by an attorney familiar with them.

Do I need to notarize a will?
Your will does not need to be notarized. However, a formal will must be properly executed, which means that it contains a statement at the end attesting that it is your will, the date and place of signing, and the fact that you signed it in the presence of the witnesses who then also signed it in your presence and watched each other sign. Most states allow so-called self-proving affidavits, which eliminate the necessity of having the witnesses testify in court that they witnessed the signing; the affidavit is proof enough (it should be notarized). In other states, if the witnesses have since died or are unavailable, the court may have to get someone else to verify the legitimacy of their signatures.

How is it decided if I am competent when I write my will?
Any will can be challenged if someone believes that the will-maker was incompetent at the time the will was written. Your competency to make decisions can even be challenged while you are still alive. Establishing competency almost always involves going to court. A standard test used by judges to determine if a living person is competent involves the person’s ability to show they have a general knowledge of their affairs. One key question the judge may ask is, "Do you know the natural objects of your bounty?" Those "objects" are usually considered your relatives, especially your kids (if you have any). There’s also a chance your competency will be questioned after you’re dead-especially if you totally omit the name of a child or other close relative from your will. The child can argue that the very fact that you didn’t mention them in your will is proof that you had already "lost it" when the will was drawn up. To defend against such a claim, some lawyers suggest that you mention each child by name when your will is created. If you don’t want one of those children to get part of the estate, include language like, "And to my eldest son, David, I bequeath the sum of one dollar." Such specificity can clearly indicate your intent and serves as evidence that your wits were still intact when the will was drawn up.