- Personal Finance
How to Make a Will: Wills, Living Trusts, Powers of Attorney & Living Wills
Why Have a Will?
If you are contemplating making or updating a Will, one thing to keep in mind is that your Will is really just the centerpeice of an overall estate plan, that might include a Revocable Living Trust, an Irrevocable Trust, Powers of Attorney, a Living Will or other Advance Declaration, and possibly other planning documents as well. The Will generally sets the tone for the overall plan - and usually is used in combination with one or more of these other documents.
If you do not have a Will, and you own any property of value, real estate, investments, a business, etc., when you die the property will pass according to the default laws of your state, called intestate succession.
While this may not be the worst thing that could ever happen, it might very well be very different from what you would choose. Do you really want your spouse to take half (or only half of your estate), and your natural born children to split the remainder - as many states' laws provide? And do you really want this to be done, after your estate administrator decides how to liquidate what you have so it all can be divided?
What's in a Will?
The Will contains provisions that describe what happens with your property when you die. It describes what happens with regard to settlement of your estate, your funeral, and other provisions to take whatever you have owned, and properly transfer that ownership to whomever you would like. It may include your spouse (by law, he or she will be entitled to a portion regardless of what your Will says), children, grandchildren, friends, extended family, charitable interests, business partners, etc., and makes provision for any asset you have and know will need to be transferred through your estate.
There ARE many things that are transferred outside the estate regardless of the provisions of the Will - unless you specifically make your estate a beneficiary, which is rarely a wise thing to do. These include joint property, life insurance benefits, qualified retirement assets, annuities, etc.
You may also include a Trust within your Will. If you have children, grandchildren, even a spouse that for one reason or another, you do not want to receive everything they would be entitled to immediately upon your passing, a Testamentary Trust, within your Will, is the way to address this. This is a vital rason for creating a Will.
The Will also, always, needs to meet the state requirements for execution fo the document. This protects your desingated beneficiairies to be sure they receive what you intend to gove them - and since you won't be there to tell anyone exactly when or where you created the Will.
The two points immediately preceding are excellent reasons for using an attorney in your state to help you draft your Will.
The Other Documents
I have also mentioned Living Trusts, Powers of Attorney, Living Wills, etc. These documents are important, separate documents to have as part of an overall plan. A Living Trust is a document you may use during your lifetime, but also disposes of assets when you die, except that the assets included within the Trust, do not go through the probate process - thus keeping your heirs out of court - at least to the extent the Trust covers the assets.
A Durable Power of Attorney allows another person to act on your behalf with regard to any financial decisisons you need to have addressed, when you are not able to do yourself. This becomes very important as you grow older, but it can also be important for someone traveling abroad or with a medical incapacity of any kind.
A Health Care Power of Attorney enables your appointed representative to make healht care decisions for you when you are unable to do so for yourself.
A Living Will or Advance Declaration instructs your health care providers on what to do during an illness that is likely to be terminal.
Again, it is very wise to consult with an attorney in your own state in regard to the above legal tools. While they may not be difficult to understand in concept, particluar points of the law can be very complex.
If you would like furhter information or consultation regarding Wills, Trusts and other estate planning tools, please contact the Thompson Law Office at (877) 365-1776 or (317) 564-4976.