How to Prepare Your Will
Answer is acknowledged, by preparing a legal document referred to as a Will, which outlines the exact distribution to any heirs, and reduces estate taxes. Validity of the will has to be proven during probate, in a court of law. When a will is not drafted, a court would authorize a spouse or relative the authority, to make decisions, regarding the distribution of any assets and access funds, from the estate to pay any liabilities. If there is not spouse or relative to appoint, then a Public Trustee would be appointed by the court to manage the estate. This process is very time consuming and expensive (legal fees, court fees, administrative fees, and other costs), if a will was not prepared by the deceased. A Tax identification Number or deceased person’s Social Security Number would be used, when preparing and paying any estate taxes. In 2005, the applicable exclusion limit is $1.5 million and maximum estate tax rate is 47 percent.
At the legal age (Parent or guardian sign documents and make decisions until the child reaching legal age), a Will can be prepared. Also, being healthy and have full mental capacity, is the perfect time to prepare a Will and start estate planning. Preparation of the Will, should be preferably prepared by an attorney, typed, notarized legally, signed by the preparer (lawyer), and at least two witnesses. Copies of the Will should be printed, and kept in a safe place. At least one copy should be filed at the lawyer’s office. A Will takes effect upon the individual passing, and provides the following instructions: Should specifically outline burial instructions (Attorney that has a copy of the Will, should provide that information to the family and relatives), select any executor(s) that will administer the estate (Executor has the responsibility to distribute to the beneficiaries any assets and pay any liabilities or expense from an escrow account of the estate. Escrow account can be set up by an attorney), and chose a guardian for any children and or pets. Also, the executor has the authority to manage or invest any portion of the estate that will be distributed to an heir that is unborn and to a beneficiary upon reaching the “Age of Receipt” (Most jurisdictions the age is 18 years old or unless an age was specified by the deceased). The Will can specify that only the beneficiary is entitled to any assets, and excluding any one of their spouses (This can will prevent any spouse from claiming any proceeds from the estate, during a divorce). A will saves money (taxes and probate), and will avoid any disputes when distributing assets, assuming the individual of the Will was not mentally incapacitated, at the time, when the Will was prepared. If the validity, mental capacity can be proven unacceptable, then there would be legal grounds for anyone to contest the Will in a court of law. A Will should be reviewed every five to ten years or if the status of marriage, children or financial asset improves substantially to update an existing Will or prepare a a living trust, and based upon the total value of the estate. Changes that can be made within an existing Will, is referred to as codicil to a Will. A codicil attaches further instructions to an existing will, notarized, and signed by witnesses. Preferable a codicil is prepared by an attorney. Example for adding a codicil to will: If an executor or beneficiary mentioned in a Will becomes deceased, an alternative person would be named. The cost for preparing a simple will can start under $100 and go up, depending on the complexity of the will, the number of assets, total estimate value of the estate, any business contacts, and many other considerations including any family members.
Aspect of a Will and other considerations
A previous Will or codicil can be revoked, when a new Will or codicil is prepared. The last dated will is recognized only. The preparation of a Will can designate one or more executors. If the first executor is unwilling, unable or becomes deceased, then any remaining executor would perform any duties. All properties within estate are transferred to the executor(s), which will manage and distribute any assets to any heir(s) mentioned in the will. A memorandum maybe part of Will, which names the beneficiaries that are to receive a specific asset from the estate. The conversion of assets in a will, allows the executor to sell any part of the estate for cash, and proceeds will be distributed to pay any beneficiary or pay any debts. An executor can be held liable to pay any debts, if there are insufficient funds, in the estate to make payment. An executor may employee any assistance necessary to carry out the will, by using funds available from the estate. An executor manages any property that is in an estate. An executor is authorized to make any loans to beneficiaries, prior to their receipt of any amount, of distribution from the estate, and ability to borrow on the behalf of the estate, prior to completion of the estate administration. Regarding the preparation of the will, an alternative beneficiary can be mentioned, if the primary beneficiary predeceases. However, If no alternative beneficiary exist, than any asset would remain in the estate. If the estate has any securities, then the executor has the authority to make any investment decisions. Referencing to a will or codicil, inheritance is provided to any children that are either blood related, but not born outside of any marriage, except any child that is legally adopted. A surviving parent automatically becomes guardianship of any children. If there is no other parent, a will can specify one or more guardians that will have the responsibility, taking care of the child or children. Good idea to have alternative guardian, in case the first guardian, predeceases or unable to take on the responsibility. A Will can specify any amount that will be donated to a charitable organization. Frequently when there are no children or spouses, a charitable organization is often is mentioned, that will receive a sizable portion of the estate. A Will is governed and construed in accordance with the laws of the individual State, where it is signed. Additional provisions of will a lawyer can outline.
If the deceased has a joint bank account or joint investment account, then the other person named in the account would receive the balance. The heirs of an estate may not receive any distribution, if all cash in the estate was in a joint account, and no hard assets available to liquidate or sell. The existing will would then become invalid. Anyone can set up a “Totten Trust” or “payable-on-death” bank or securities account. The individual can deposit and withdraw funds any time, but upon death, the balance of the account would be received to the trustee named. Only at that time, would the trustee have access to the account.
A living trust should be considered instead of a Will, when an estate is valued over $250,000.
A living trust would be executed upon the death, would provide more detail of any distribution of assets, and save money on taxes. Further details of a living trust a lawyer would provide. A living trust is more expensive to set up and there are different types of living trust, which an attorney would be able to advise which one is more favorable.
