The Case for Completing Your Will This Year
It is often assumed that with age comes wisdom. And with wisdom comes preparedness – or at least it should! Why, then, would anybody who should know better not be prepared for the inevitable – their mortality?
Yet court records show that 50-70% of Americans are not prepared. They die without a valid will. Why, we ask, would a rational and knowledgeable person not take the necessary steps to ensure that his or her beneficiaries do not have to deal with the extra burden, the hassle and the expense that comes when someone dies without a Will?
Steps to Take
To be prepared means having a plan. Having a plan means knowing what steps to take. The first step is acquiring knowledge of what you need to do.
Step 1: Buy a book about Wills and estate planning. (Going to your local library can also be an affordable option.) Become knowledgeable about what you need to do to accomplish your goals. Some books even have CDs to help you print out a prototype Will or Trust. This way when you go to an attorney to draw up your Will, you will not be asking him to act also as your teacher. Remember, attorneys usually charge by the hour.
Step 2: Find an attorney who will help you finalize the language of the document – a Will or Revocable Living Trust – which will pass on to your heirs your assets in the most affordable and efficient manner. You can be assured that the dollars you spend now will be one of the wisest investments you will ever make!
Step 3: Make a list of those professionals and businesses who you, your executor and heirs will need to enlist to carry out your plan. Business and email addresses plus phone numbers after each name will be helpful. These professionals may include an attorney, life insurance agent, bank, brokerage firm, real estate agent or broker.
Step 4: Decide on how to best pass on to your heirs your treasures and other valuables. The basic tool to use, of course, is a Will. You also owe it to yourself and to your heirs to consider using a Revocable Living Trust.
Step 5: Create a List of Personal Transferable Items that you want the people who are nearest and dearest to you to have after you can no longer use or appreciate them. Be sure that you mention “The List” specifically in your Will, and where this list can be found.
Because it is most likely a family member or close friend who would be the recipient of this gift of personal property, very often there are deep sentiments attached to the item. When you do identify the gift and the recipient, it’s a nice idea to state why you chose that particular recipient for that particular item. This is especially important when more than one person may have had their eye on an item. Doing this just might avoid family conflict.
Step 6: Complete and properly execute those other documents we all need in this day and age:
A Living Will so that your real wishes are carried out
Healthcare Power of Attorney that gives the recipient the right to decide medical issues not covered in the Living Will
Durable Power of Attorney that will make other non-medical decisions when you no longer can.
Step 7: Last but not least, list those charitable entities, which represent your lifetime values. (We hope that Ananda and the Janaka Foundation will be one of them.) While the most common way of doing this is by including us in your Will, you owe it to yourself to explore the feasibility of other gifting arrangements such as the Charitable Remainder Trusts and Gift Annuities. These instruments can help you now with affordably taxed income, your family members, now or later, and then one or more of your favorite charities. The tax avoidance and immediate tax savings are simply the frosting on your cake of generosity.
Will, Trust, or Both?
The Will should be the centerpiece of your estate plan. Every book you read and legal expert you hear will tell you the same thing. Depending on the size of your estate, i.e. how much you manage to acquire during your lifetime, a simple Will that meets the requirements of the state which you claim as your residence will do.
The only problem is that having only a Will guarantees going through probate. Probate is the process our legal system uses to determine the validity of the Will. This process ensures that all the decedent’s debts are paid and then transfers all the decedent’s property to the named and rightful beneficiaries. (In the state of California, an estate of $150,000 and over is required to go through Probate if there is only a Will.)
The only time probate is not needed is if the decedent used a Living Trust or some other probate-avoiding and estate planning method such as a pay-on-death account (POD), or IRA or life insurance beneficiaries.
Probate is a very lengthy, complicated and expensive process. It can be a difficult process for the bereaved family members and so ought to be avoided if at all possible.
Fortunately, probate can be avoided – or at least the negative aspects of it – by choosing the Revocable Living Trust as your estate planning tool. While it is more expensive to set up and takes up time as well, it will be time and effort well spent. And your heirs and executor/trustee will thank you for your thoughtfulness.
Using a Will in combination with a Living Trust means that the “small stuff” is taken care of by the Will, such as paying the end-of-life expenses, creditors and any unanticipated additions such as inheritances.
After these expenses are taken care of and the probate judge is satisfied that there will be no further charges against the estate, the remaining funds are released and “poured over” by a provision in the Will which names the Living Trust as the residual beneficiary of the Will.
Meanwhile, the major value of the estate, which has been placed in the trust, continues to benefit the named heirs without interruption. The successor trustee (the first trustee was the person who died) is probably also the executor named in the Will. He/she might also be a beneficiary of the Living Trust.
Unlike the Will, which is a public document which anyone can get a copy of with payment of a small fee, the Living Trust is a private document. Using a Trust, family matters are kept within the family.
For more information, please contact:
Parvati Hansen at the Janaka Foundation office at 530-478-7695.
We always enjoy hearing from you.