Your death is the absolute last thing you want to think about when you are bringing a new life into the world. However, creating a good estate plan is essential to ensure that your assets are distributed according to your wishes when you pass away, and your children are cared for by people you trust. Most of my clients tell me that although they dreaded the initial process, they felt an immediate peace of mind once they completed their estate planning.
One of the most important components of a good estate plan is a Last Will and Testament. As you begin the process of making a will, consider the following common questions and answers:
I don’t have a lot of money or a house. Do I still need a will?
Everyone should have a will. A will does more than dictate who receives your property when you die. It allows you to control when your beneficiaries receive assets, and who will care for your young children. Your will remains effective for your entire life unless you revoke it, so you will be protected as your family grows and you acquire more assets.
Can I draft it myself?
Your will is an extremely important document. I recommend retaining an attorney to draft your will, since he or she will know the right questions to ask to ensure that all of your wishes are reflected. Choose an attorney with experience and expertise in estate planning. Unfortunately, I have reviewed many wills that were self-prepared, and the preparer made heartbreaking mistakes. Remember—once you die, the will cannot be changed, even if it is flawed. It is worth the fee you will pay to know that your will (a) is correctly executed, and (b) distributes your assets the way you want, in all circumstances.
How should I prepare for the consultation with the attorney?
First, decide who should be in charge of your estate after you die. This person will be named as the executor of your will. Keep in mind that your executor will need to file a petition with the court to initiate probate proceedings, open an estate account, pay your debts, and distribute your assets, so you should choose someone who is organized and manages money well. You can name your spouse, other family member, or friend—anyone you trust to manage the process. You should also choose at least one alternate executor, in case your original executor cannot or does not want to act.
Next, make a list of all of your assets. This includes large items of value, like your home, retirement account, or insurance benefits, but it also includes smaller items that may only have sentimental value. Write down the name of the person you want to receive each item. Be specific! You should also include contingent beneficiaries, in case the first beneficiary predeceases you.
If you have young children, you should include a children’s trust in your will. In the trust, you name a trustee to manage the assets you leave to your children so that they are distributed according to your wishes. Many people choose to stagger the distributions according to the child’s age. For instance, you can distribute 50% of the trust balance to your child at age 25, and the remaining 50% at age 30. You can also authorize distributions for educational expenses at any age.
If you include a children’s trust, you also need to choose a trustee. This may be the same person you name as your executor, but it can also be someone else. Again, you should choose someone who manages money well. Choose at least one alternate trustee.
If any of your children, spouse, or other beneficiaries have special needs, you should include a special needs trust. Special needs trusts are managed differently than typical trusts, and are drafted to ensure that any disability benefits that your child receives are not interrupted as a result of an inheritance.
What else does a will do?
You should choose a guardian for any children you have under age 18 in your will. This person or people will be responsible for raising your children if you die before they turn 18, so this is an important decision. Choose at least one alternate guardian.
You can also state specific requests regarding burial, cremation, and a memorial service in your will. While not required, such preferences can provide guidance for your executor in the days following your death.
Once I have executed my will, what else should I do?
I recommend giving a copy of your will to your executor, and confirming that everyone you have named (executor, trustee, and guardian) agrees to serve. Tell your executor where you are storing your original will, since he or she needs to give it to the probate court when filing the initial probate petition. If they have any questions, you can discuss what their roles will be.
Certain assets, such as insurance policies and retirement accounts, have named beneficiaries. These beneficiaries will receive that particular asset regardless of what your will says. Therefore, it is important to ensure that you review and update your beneficiary designations to be sure they still reflect your wishes. If you include a children’s trust in your will, any assets left to your children should be left to the trustee of the children’s trust (rather than to your children outright) to ensure that those funds are managed according to the provisions of the trust.
If you experience any significant life changes (a birth, death, or divorce), it is a good idea to have your will reviewed. If you need to make changes, you can execute a codicil, or, for more significant changes, a new will. Otherwise, try to review your will once a year or so to see if you need to make any changes.