Wills

For the Love of Money

What is a will?

A will is a legal document that sets out how you want your possessions distributed when you die. If you have any children under the age of 18, a will also allows you to dictate who will care for them after you are gone.

Who needs a will?

While no one is required to have a will, it is generally recommended that everyone with something to leave behind, even small items, consider creating one.

Some common reasons people need wills are to:

  • Ensure care of children goes to a loving guardian
  • Ensure property or financial assets are correctly distributed
  • Give instructions for your burial or cremation and funeral ceremony, if any
  • Leave last messages for loved ones
  • Leave assets to charity

Will vs Trust

Types of wills

Not all wills are created equal, and some are more likely to stand up in court than others.

Testamentary Will—A traditional will. A formal document signed in front of witnesses, often created with the aid of an attorney. This type of will is the most likely to hold up in court and result in your wishes being followed.

Oral Will—A will told to someone else–(usually on a person’s deathbed) but not set down in writing. If there is confusion or conflict between heirs, this type of will is unlikely to hold up in court.

Holographic Will—A written document that is not signed in front of witnesses. Because of the possibility of fraud or the maker of the will being forced to complete the document under duress, these documents rarely hold up in court.

Living Will—Unlike the other three types, a living will actually has nothing to do with how your possessions are distributed. Instead, a living will is a legal document created while you are living that lays out your wishes for medical care in the event you become very ill, injured, or otherwise incapacitated. A living will would, for example, specify whether or not you wish to be put on life support.

Creating a will

Creating a will requires several steps and some careful consideration:

  • Decide if you want to do it yourself, use online software, or enlist the aid of an attorney. The more money you have, the more careful you should be. Creating a will yourself is rarely a good idea.
  • Choose your “beneficiaries” who will inherit your possessions.
  • Choose an “executor” who will make sure your wishes are followed and be in charge of organizing distribution of your assets.
  • Choose a “guardian” who will care for your children.
  • Specify who gets what, including dividing up investment accounts, furniture, real estate, and anything else you own. Be as specific as possible to avoid confusion for your heirs.
  • Attach a letter if you have final thoughts or messages you want delivered to loved ones after your death.
  • Sign your will in front of witnesses. Each state has different requirements, but witnesses should be over 18 and, generally, not stand to inherit anything from you to avoid a conflict of interest.

Executing a will

After your death, your will must go through “probate.” This court process can take a few months to a year, and the specific steps required can vary from state to state.

In general, the executor of your will is responsible for filing the proper documentation with the probate court in your county. Once the probate process is started, the executor is responsible for managing and protecting your estate.

Besides filing documentation and notifying agencies, creditors, and heirs of your passing, your executor must:

  • Create an inventory of your debts and assets.
  • Pay creditors, including selling assets to meet obligations, if necessary.
  • Sell assets to pay cash bequests outlined in the will, if necessary.
  • File a federal tax return within nine months if your estate is subject to the estate tax.
  • In 2017, the estate tax only applies if your estate value exceeds $5.49 million if you were single or $10.98 million if you were married and your spouse has already passed.
  • File a state tax return within nine months if your state of residence requires it.
  • Manage the distribution of remaining assets after all debts and taxes have been paid and court proceedings have concluded.

Fun facts

  • More than 60% of Americans don’t have a will.
  • The longest will in history was created by Frederica Evelyn Stilwell Cook and clocked in at 1,066 pages.
  • The shortest wills ever recorded were only three words long: “All to son” and “All to wife.”
  • Robert Louis Stevenson left his birthday, November 13, to his friend Annie H. Ide, who had often complained of having her actual Christmas Day birthday routinely overlooked.

References

  1. http://lawprofessors.typepad.com/trusts_estates_prof/2012/05/ten-fun-facts-about-estate-planning.html
  2. https://www.theguardian.com/money/2015/aug/25/10-strangest-wills-finances-death
  3. http://www.huffingtonpost.com/entry/7-of-the-most-unusual-wills-of-alltime_us_55fb0059e4b0fde8b0cd5bc5
  4. https://www.nolo.com/legal-encyclopedia/how-probate-process-works-information-32438.html
  5. http://www.nolo.com/legal-encyclopedia/probate-faq-29135-2.html
  6. http://money.usnews.com/money/personal-finance/articles/2014/09/19/10-steps-to-writing-a-will
  7. http://www.investopedia.com/articles/pf/08/what-is-a-will.asp
  8. http://www.investopedia.com/terms/l/livingwill.asp
  9. http://www.investopedia.com/terms/o/oral-will.asp
  10. http://www.investopedia.com/terms/h/holographic-will.asp
  11. http://www.investopedia.com/terms/t/testamentary-will.asp
  12. http://www.forbes.com/sites/ashleaebeling/2015/10/22/irs-announces-2016-estate-and-gift-tax-limits-the-10-9-million-tax-break/#7fec8b7e6a7c
  13. https://www.nolo.com/legal-encyclopedia/estate-tax-will-estate-have-29802.html
  14. https://www.rocketlawyer.com/estate-planning-guide/where-to-keep-a-will-or-trust.rl
  15. https://www.rocketlawyer.com/estate-planning-guide.rl

 

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