It's unfortunate how many people believe that estate planning is only for wealthy people. People at all economic levels benefit from an estate plan. Upon death, an estate plan legally protects and distributes property based on your wishes and the needs of your family and/or survivors with as little tax as possible.
Advance Medical Directives
Everyone faces the possibility that sometime during our lifetime, we may become incapacitated. This often happens when nearing death, but it can also be the result of a temporary condition. Many people assume their spouses or children will automatically be allowed to make financial and/or medical decisions for them, but this is not necessarily true. Advance directives are written documents that tell your doctors what kind of treatment you'll want if you become unable to make medical decisions (for example, if you're in a coma). Forms and laws vary from state to state, so it's a good idea to understand the laws of the state where you live as you write advance directives. It's also a good idea to make them before you are very ill. Federal law requires hospitals, nursing homes, and other institutions that receive Medicare or Medicaid funds to provide written information regarding advanced care directives to all patients upon admission.
A living will is one type of advance directive that comes into effect when a person is terminally ill. A living will does not give you the opportunity to select someone to make decisions for you, but allows you to specify the kind of treatment you want in specific situations. For example, you might choose to specify that you do not want to be treated with antibiotics if death is imminent. You can, if you choose, include an advance directive that you do not wish to be resuscitated if your heart stops or if you stop breathing. In this case, a Do Not Resucscitate (DNR) order would be entered on your medical chart.
A will is the most practical first step in estate planning; it makes clear how you want your property to be distributed after you die.
Writing a will can be as simple as typing out how you want your assets to be transferred to loved ones or charitable organizations after your death. If you don't have a will when you die, your estate will be handled in probate, and your property could be distributed differently than what you would like.
It may help to get legal advice when writing a will, particularly when it comes to understanding all the rules of the estate disposition process in your state. Some states, for instance, have community-property laws that entitle your surviving spouse to keep half of your wealth after you die no matter what percentage you leave him or her. Fees for the execution of a will vary according to its complexity.
Rules To Remember When Writing A Will
- In most states, you must be 18 years of age or older.
- A will must be written in sound judgment and mental capacity to be valid.
- The document must clearly state that it is your will.
- An executor of your will, who ensures your estate is distributed according to your wishes, must be named.
- It is not necessary to notarize or record your will but these can safeguard against any claims that your will is invalid. To be valid, you must sign a will in the presence of at least two witnesses.
Choose an Executor
An executor is the person who is responsible for settling the estate after death. Duties of an executor include:
- Taking inventory of property and belongings
- Appraising and distributing assets
- Paying taxes
- Settling debts owed by the deceased
Most important, the executor is legally obligated to act in the interests of the deceased, following the wishes provided by the will. Here again, it could be helpful to consult an attorney to help with the probate process or offer legal guidance. Any person over the age of 18, who hasn't been convicted of a felony, can be named executor of a will. Some people choose a lawyer, accountant or financial consultant based on their experience. Others choose a spouse, adult child, relative or friend. Since the role of executor can be demanding, it's often a good idea to ask the person being named in a will if he or she is willing to serve.
If you've been named executor in someone's will but are not able or do not want to serve, you need to file a declination, which is a legal document that declines your designation as an executor. The contingent executor named in the will then assumes responsibility. If no contingent executor is named, the court will appoint one.
Write a Social Media Will
Social media is a part of daily life, so what happens to the online content that you created once you die? If you are active online you should consider creating a statement of how you would like your online identity to be handled, like a social media will. You should appoint someone you trust as an online executor. This person will be responsible for the closure of your email addresses, social media profiles, and blogs after you are deceased. Take these steps to help you write a social media will:
- Review the privacy policies and the terms and conditions of each website where you have a presence.
- State how you would like your profiles to be handled. You may want to completely cancel your profile or keep it up for friends and family to visit. Some sites allow users to create a memorial profile where other users can still see your profile but can’t post anything new.
- Give the social media executor a document that lists all the websites where you have a profile, along with your usernames and passwords.
- Stipulate in your will that the online executor should have a copy of your death certificate. The online executor may need this as proof in order for websites to take any actions on your behalf.
Review Your Estate Plan
Once you've completed a will, it's a good idea to review it from time to time, and consider changes if:
- The value of your assets change
- You marry, divorce or remarry
- You have a child
- You move to a different state
- The executor of your will dies or becomes incapacitated or your relationship changes
- One of your heirs dies
- The laws affecting your estate change
Sourced from the USA.gov at http://www.usa.gov/topics/money/personal-finance/wills.shtml (no longer available) on March 5, 2012. Content reviewed on July 17, 2017.