What Happens if you Die Today? Estate Planning Basics II: Wills
Most of us don’t want to think about dying, let alone what happens to the ones we care about after we die. It isn’t a fun subject, besides, it won’t happen for a long, long time – right?
It’s not only the old that die. The news is full of stories about unexpected deaths – a pile up on the highway, climbing and skiing accidents, drownings and etc.
If you are truly interested in building your family’s legacy and wealth across generations, successful wealth transfer is obviously critical. An understanding of the basics of estate planning is a part of building a successful multi-generational wealth transfer plan.
This article is the second in a series reporting on the basics of estate planning.
Why have a will?
- Name your own person to handle your estate.
- Name your own person to care for your dependents.
- Ensure all your assets are handled at death.
What is a will?
A will is: “A legal document in which you identify what people or institutions should receive money and property from your estate after your death. It also serves to appoint guardianship of children or adults who are your legal responsibility, and designates and executor to manage your estate after you die.” (from “Your Wills, Trusts, & Estates Explained Simply” by Margo Pierce).
What is usually included in a will?
- An opening – identifies you as well as any family members talked about later and explains how taxes owed by the estate will be paid;
- a survival clause – leaves your entire estate to one person (if that is what you want);
- a guardianship clause – appoints guardians for your legal dependent;
- a giving clauses – what goes to who (your beneficiaries) under what circumstances including real and personal property as well as leftover (residuary) property;
- an appointment clause – identifies your executor (sometimes know as personal representative);
- a fiduciary powers clause – explains what your executor can do; and
- an area to hold the legalities like your signature, date, location and witness signatures.
What controls what must be in a will to make it legal?
The laws of the state which is your ‘primary domicile’ (used for determining the proper jurisdiction for matters such as taxation, voting – the place you have established things like a drivers license and a home where you spend most of your time) control what the form, structure and legal requirements are for a will.
Why have a will?
There are ways to transfer property without a will. For example, in some states you can put a beneficiary on your car when you register it. Many mutual fund’s allow designation of Transfer on Death or Pay on Death beneficiaries. If you are doing more advanced estate planning, you may have created a trust. If so, the trust can direct the property transfer. If you own property which is titled as Joint Tenancy with right of survivor-ship, the property automatically passes to the joint owner at your death. Other means also exist, such as using partnerships, corporations or other entities.
How does a will work when I die?
If you own assets at the time of your death that will pass through the will, then a court proceeding is needed (probate court). To start the court proceeding, your executor (who may be called personal representative, administrator or something else depending on your state) files a petition with your local probate court. A judge is assigned to the case. The judge will acknowledge your executor or appoint one.
The main steps after this are performed by your executor. They include publishing a notice of death in the local paper, paying bills and debts, valuing your property, distributing your property, filing reports and inventories with the court and filing papers to close the estate (so no future creditors can make claims to it).
Estate Planning Basics by attorney Denis Clifford copyright 2009 published by Nolo
The Everything Will & Estate Planning Book by Kimberly A. Colgate copyright 2003
Quicken WillMaker Plus – Estate Planning Essentials copyright 2010 published by Nolo
The Executors Guide by Mary Randolf copyright 2010 published by Nolo
Your Wills, Trusts and Estates Explained Simply by Margo Pierce copyright 2008.