Every other month or so, the subject of wills surfaces during my girl's night out group's conversations. We all agree we need to get our last wishes down on paper and make them official. We all have kids. In spite of this, of the five of us, only one has actually taken the steps to create a will. I have thought about it, talked to Dear Husband, talked to my parents, talked to friends, and, of course, researched it. However, I have never followed through – until now.
I finally realized what was stopping me from actually sitting down and drafting a will: the part about deciding who we want to raise our kids if (gulp) Dear Husband and I suddenly and prematurely depart from this world. I have not allowed myself to go into that dark corner of my brain. Ironically, that is also precisely the most important reason to have a will. It breaks my heart to imagine my children losing their parents, but the truth is if I love my kids (and I do, more than anything else on earth), I must force myself to think about this possibility. So, I recently called our dear friends and asked them if they would raise our boys if something should happen to us. I always thought that asking someone would feel so concrete, so final, so sad, as if I was as good as gone. It turns out, asking them was not that difficult to do. They are great friends, fabulous parents to their kids, and we trust them to raise our kids much in the way we are doing now, and I, in fact, feel a sense of peace about it.
As an attorney, I think it is important for every individual to have a last will and testament. However, for people with kids, especially minor children, it is paramount. Your will outlines how you will provide for your child(ren) when you are gone. A last will and testament is a legally-binding contract that outlines your last wishes to be carried out upon your death. A will gives you the power to make final and very important decisions regarding your estate, minor children and burial preferences.
Having a will saves money and time. If you die intestate (without a will), your property will be distributed by a judge according to the laws of the state in which you reside at the time of your death. If you have a minor child at the time of your death and the child has no living parent, the judge will also choose the guardian for your child and the trustee to manage the minor child's inheritance. To me, that is the biggest reason to have a will. A judge knows nothing about you, your kids or the best person to raise your kids. And quite honestly, the judge does not want to have to make this decision any more than you don't want him or her to have to do so.
Creating a will is actually a relatively simple process. You can certainly call an attorney or estate planner to create the documents. Of course, that will be the most expensive route, but also the most reliable, especially if you have special circumstances to consider. A friend who is a solo practitioner in Iowa, charges approximately $600 for a simple will and testamentary trust. Another option is to choose a preformatted will that can be downloaded and/or ordered from various online sources or any store that sells software. Preformatted options range in price from $20 to $150 depending on the services and the options chosen. Many banks and insurance companies offer estate planning services to their customers, as well. All options have you fill out a questionnaire to get started. The difference is that with an attorney or estate planner you get to discuss your information and wishes and ask the "what ifs".
Most of the information contained in a will is pretty straightforward. You will have to decide how you want your estate distributed, but if you have minor children you will probably want your entire estate, after debts and burial expenses are paid, to go into a trust to be distributed to your child. You have to choose an executor to administer your will. The primary job of the executor is to make sure the will is executed as the testator (that's you) intended and the items named in the will are distributed correctly.
More challenging, of course, is deciding on guardians for your minor child(ren). You may want to start the process by considering what is most important to you about who will raise your kids. Is it location? Parenting style? Religious and/or other beliefs? Discipline style, resources or educational opportunities? Many people choose a family member, but it can be a friend, and should be the person you feel would be best suited for this responsibility. It is sensible to name at least one alternate guardian in case the first choice is unable to fulfill this duty. Another good point to ponder when making this very difficult decision is that at least one of your choices should be around your age or younger so that there is a good chance that person will be able fill this role until your youngest child turns 18. While many of you may first think of your parents when choosing a guardian, it is wise to consider their health, energy, and desire to raise young kids again. Of course, you and your spouse need to discuss who each of you think is best because you may have differing opinions about this topic. Your will and your spouse's will should mirror each other. You must be in agreement regarding guardians and distribution of estates.
When you create your will, you will also need to set up a trust that will provide for your children at the time of your death. You may choose to set up a living trust or a testamentary trust. A living trust, also called a revocable trust, is established during your lifetime in which you transfer title of property into the name of the trust when the trust is created. A living trust is not part of your will. You retain control over your assets placed in the trust, but can avoid probate, a process that establishes the authenticity or validity of a will in a court of law at the death of the testator. The alternative to a living trust is a testamentary trust. A testamentary trust is not funded until after death, and does not go into effect unless both parents die before a child reaches the age designated by the parents. You should include the language setting up the testamentary trust in your will. For either trust, you may choose the age at which you would like your child(ren) to receive all or part of the principal of the trust. You will also need to choose a trustee to invest and distribute your child(ren)'s inheritance. The trustee will be able to provide money from the trust for your child(ren)'s education, support, etc. as needed. The trustee is responsible for investing the trust assets wisely and exercising good judgment in making discretionary distributions. The qualifications to look for in choosing who will be the trustee are similar to those of guardians. Most people prefer to ask a family member, but a friend or bank trust department could be chosen as well. Again, it is a good idea to choose an alternate or two and to choose at least one that is around your age or younger to ensure he or she will be able to serve in this capacity until your youngest child is old enough to receive the final distribution of trust assets. While you can choose the same person(s) to be the guardian and trustee, choosing a different person to be trustee provides a checks-and-balance system for money requests from the guardian. One note to add on the subject of testamentary trusts is that once you have your will with a testamentary trust in place, you should change your contingent beneficiary on your life insurance policy and other non-probate assets to "the trustee named in my will dated _____."
There are two more documents that are equally important to the will and trust: the general power of attorney and the living will. Basically, a general power of attorney is for checking and savings accounts, and a living will is for medical decisions. These documents take effect if you are incapacitated and cease to be in effect if/when you are no longer incapacitated. Also important to note is that these documents expire once you die. At that point, the executor of your will would begin to oversee your estate. Here is a simple explanation of how these documents work: If you get in a car accident and go into a coma, the executor of your general power of attorney can pay your bills through your checking account, and the executor for the living will can make your medical decisions. The preformatted wills-programs and Websites that I looked at all offered these two additional documents in addition to wills and trusts. If you are going to go to the trouble and expense of drafting your will and setting up a trust, it's worthwhile to also draft the general power of attorney and living will too. Doing so will save you and your family time and money if you are suddenly incapacitated and unable to manage your affairs and make your own decisions.
It is important to remember that wills are state specific. That is, each state has laws on exactly what language should be included in a will, what the will should look like and how it should be executed, or signed. For instance, some states allow handwritten wills, otherwise known as a holographic will, that are not signed by anyone but the testator. Others are very particular and require wills to be signed by the testator in the presence of two witnesses (who also sign the will). Many statutes that require a more formal will may require the witnesses to actually see the pen the testator uses to write his name on the will. It is important to note this if you choose to do-it-yourself, go through a Website or use a preformatted program. Most of the preformatted options are state specific so this should not be a problem, but it is something to check.
While most states won't accept a handwritten will or handwritten changes to a will, you can attach a handwritten statement designating the distribution of personal property. You could change that list everyday or several hundred times a day if you want to, but you cannot do that with your will. Here is an example of how you might draft your list of personal property: "All my clothing, jewelry, automobiles, household furniture and furnishings, recreational equipment, and all personal effects used by me about my person or home shall be distributed in accordance with the most recent signed and dated list or statement which I have prepared, if any, indicating my wishes regarding the disposition of such property. Otherwise the property described in this Article shall be distributed to ..... if they survive me...otherwise the rest goes to my children ..." The statement distributing personal property should be kept together with your executed will.
Now I challenge each of you who don't have a will or have not updated it since having children, making a fortune or other lifestyle changing event to draft a will and the accompanying documents discussed, or at least take a look at your existing will and other documents to check for accuracy. I would love to hear from you if this post inspires you to take action and get your very own will. On Wednesday, I will post some tips for helping you take the steps towards creating a will and a website with helpful estate planning information. Over and out.