Do you have a will?
If the answer is “no,” you have a lot of company.
Three out of four people in the United States die without a will. If asked why they didn’t have one, they probably would have given one or more of these reasons:
– I don’t have a big enough estate to bother with a will.
– I’m married and my spouse and I have all our possessions in joint name, so we don’t need a will.
– I can’t afford to pay a lawyer to draw up a will for me.
None of those is a valid reason for failing to have a properly prepared will, say Bethe Growe and Nancy Dilley, St. Louis lawyers who write a weekly personal advice column called “Planning Your Future.”
More Top Picks Best Graduated Compression Socks For Circulation
Women are more negligent than men when it comes to having a will, but they need one just as much as men do, the lawyers say.
“Every adult should have a will,” says Dilley. In fact, she notes, you have to be an adult to make a will-that’s age 18 in most states.
Here are some reasons you need a will:
– You may think you don’t have much in the way of an estate, but very few people have no assets. You probably have a car, some furniture, clothing and jewelry, a checking account and maybe some stocks and bonds, savings and perhaps a house or condominium. If you die without a will-the legal term is “intestate”-anything owned in your name alone will be subject to probate, and state law will determine how to dispose of your possessions.
– Even if you and your spouse have put all your assets in joint name, so that ownership belongs automatically to the survivor when one of you dies, what happens if you die simultaneously-in a car or plane crash? And you may well own some things that are not in joint name, perhaps as a result of an inheritance or gift or a promissory note for a loan. These would be considered part of an estate for probate purposes.
– It may not cost as much as you think for a lawyer to draw up a will. Shop around for legal services the way you do for other major purchases, asking how charges are made and what the estimated total cost would be for the kind of will you want. Some lawyers will offer a free consultation to discuss a will and then give you an estimate of the cost of preparing it. A very straightforward will might cost only a few hundred dollars.
Both lawyers advise against writing your own will on a do-it-yourself form. Naturally, you say, lawyers would advise that. But Growe and Dilley say a standard form is not flexible enough to adapt to many individual situations and needs.
Also, they note, an attorney experienced in estate planning is able to recognize possible problems, advise on changes in the law that might apply and draw up a will that reflects exactly what a person wants done.
States have different laws that may apply to wording of wills, they say. For example, some states use the words “personal representative” instead of “executor” in describing the administrator of an estate. Standard will forms can’t reflect such differences, and so must use more general terminology.
Why are so many people reluctant to make a will?
Growe and Dilley cited several reasons: People don’t like to think about death, especially their own; many are nervous about dealing with lawyers and legal terminology; and many think lawyers charge too much for a will because all they do is “just run off a form” to produce it.
There is a certain amount of routine legal language in a will, Growe and Dilley agree, but much of it should be specific and individual.
Clients should ask what other services a lawyer intends to provide besides drawing up the will, Dilley says. For example, they should ask whether the lawyer will help the executor administer the estate and will give advice on transfer of assets if a trust is used, and on estate taxes, law changes and other circumstances.
The one question they hear most often from readers of their column, Growe says, is how to avoid probate.
Many are confused about the role of the probate court, the two lawyers say. They explain the main reasons every state has a probate court system: to ensure that a deceased person’s debts are paid and creditors satisfied, and to be sure that the assets are distributed to the intended beneficiaries-or, if the person has died intestate, that the assets are distributed to the heirs specified in the state’s intestacy law.
Intestacy laws differ from state to state. For example, if a person dies without a will and leaves a spouse and parents but no children or descendants, Missouri law says the spouse will get $20,000 plus one-half of the balance of the estate and the parents get the rest of the balance. In Illinois, the law says the spouse gets the entire estate.
Untangling the legal web
Why do people want to avoid having their estates go through the probate court? Mainly, Growe and Dilley say, because of the time delay in settling an estate in probate, the cost of court fees and other expenses, and the publicity, since everything filed in probate court is a public record.
What is the best way to avoid probate?
Growe and Dilley stress there is “no one best answer” to that question because it depends on the individual estate, the types of assets involved and other circumstances.
Joint ownership is one way many people try to avoid probate, but it is not always a perfect solution. Another way is to give away all your assets before you die-not a desirable solution for most people.
Beneficiary designations on deeds and other assets can transfer ownership after death, removing the assets from the dead person’s estate and thus avoiding probate.
However, the two lawyers say, in many situations, the best way to avoid probate is to have a revocable trust and a will to cover any assets that you forgot to transfer into the trust before your death.
A revocable trust, also called a living trust, should be drawn up by a lawyer, preferably one with experience in estate planning. While this involves some expense, it can save your heirs money in the future, they say, because a lawyer will know about tax laws, differing state laws and other factors that can affect your estate.
A living, or revocable, trust designates a person, bank or trust company as successor trustee to manage your assets and distribute them as you want after you die, or for your benefit if you become incapacitated and unable to manage your assets before you die.
More Top Picks Best Ankle Support Shoes Under 100
One slight disadvantage of a living trust is that you must transfer all of your assets to the trust in order to assure that they won’t be subject to probate and that your estate will be a private, not a public, matter when you die. However, you retain control over the assets that are in the trust during your lifetime, and you can change the trust any time.
While a trust avoids probate, it is not exempt from taxes. The assets in a living trust are part of your estate when you die and are subject to state and federal estate taxes. However, everyone has a “unified credit” equal to $600,000 against the federal taxes. This means if your estate amounts to less than $600,000, no tax would be charged.
If your estate is worth more than that, only the amount over $600,000 would be subject to federal tax.
After your will is prepared, Growe and Dilley suggest you keep the original in a fireproof location, such as a safe deposit box. And you should designate another person besides yourself to have access to the box, so the will can be retrieved quickly after your death.
And, don’t put the will away and forget about it. You need to review it every three to five years and after any “major change of circumstances in your life,” the lawyers say.