Do You Have a Will? Estate Planning 101
About two weeks ago, my friend at Being Frugal asked You Tell Me: Do You Have a Will? I do, but it’s so old, it’s probably useless…unfortunately. With the recent arrival of my son, it’s time for me to follow my own advice and create a basic will that will form the foundation for my estate planning.
What If I Don’t Have a Will?
To get started, I first wanted to answer the question what happened if I die without a will? According to the Lawyers.com New York Estate Planning web site:
“If you die without a will (known as dying “intestate“) in New York, your assets will be divided amongst your immediate family. If you have a spouse but no children, your spouse inherits everything. If you’re survived by a spouse and children, your spouse will take the first $50,000 and one-half of the balance of the property, with your children inheriting the rest.
If you have children, but no spouse, your living children each receive an equal share, with the children of any of your predeceased children dividing up their parent’s share.
If you have no spouse or children or grandchildren, your parents (or their descendants such as your siblings or nieces and nephews) will inherit everything.”
The default answer sounds okay to me, but my concerns are:
- Who would take care of my child if something happens to both my wife and I?
- Who would provide for my parents who are nearing retirement age?
- How would anyone know where all my assets are?
- What to do with my retirement funds in 401k and IRA?
- What to do with the mortgage?
Getting Started
While I was writing this post, I also found a great Estate Planning Guide from CNN Money. It explains that there are four basic elements to an estate plan:
- A Will
- Assignment of power of attorney
- A Living will or healthcare proxy (medical power of attorney)
- A Trust
In any case, it seems that the appropriate first step is to take inventory of all my assets and accounts information. At the very least, I can share this with my wife so that she has it handy if needed.
Also, I found the CD for WILLPower that came along with the tax software, TaxCut, that my friend gave to me last year. I am going to give it a try and see what kind of information it’s looking for and the output that it provides. However the reviews of WILLPower on Amazon.com are not that great, so I may end up buying a copy of Suze Orman’s Will & Trust Kit or Quicken WillMaker Plus 2008 instead.
Now, I am off to doing my assets inventory.
More about estate planning:
- Is it Time to Talk with your Parents? @ Wise Bread
- What You Need to Know About Wills @ Free Money Finance
- Disappointment @ Blunt Money
- Do-It-Yourself Wills and Trusts @ Blueprint for Financial Prosperity
- A Brief Overview of Estate Planning Software @ Get Rich Slowly
- 12 easy steps to preparing your estate plan @ MSN Money
This post was featured in the Carnival of Personal Finance #133 hosted by We’re In Debt.
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dying intestate, will, cnn money, Suze Orman, living will, power of attorney, estate planning, trust, nieces and nephews, healthcare proxyRecommended articles
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Interesting. Making a will is on my to-do list, though since my wife and I have no children and very little assets at this point (still deeply in debt) it seems that we can probably get by without a will for a while.
I have been looking at using uslegalforms.com. Have you considered that service?
Your inventory of assets should be in a safe, accessible place. A safety deposit box is often recommended, but I think access issues mitigate against it. I’d have my attorney keep it, with modifications as appropriate.
I don’t have any assets – just debts – so it’s not an issue for me, but intestacy laws vary widely from state to state so you need to do some research.
@Eden – I heard that everyone should look into estate planning, even if they don’t have assets. I think it’s because of things like living will, power of attorney, etc. I haven’t looked at uslegalforms.com yet, but I will.
@Minimum Wage – You almost got me fooled for a millionaire. That’s a great add. I am planning to keep the asset inventory list in the safe at home.
Hey, that’s a great idea. The safe at work would work. I don’t have one so it didn’t occur to me. (lol)
Your will isn’t “useless” – its terms will govern the disposition of your estate when you die. So unless you have a new will in place before you leave the house tomorrow, you should make sure your old will has been nullified. You should find out what you need to do in your state to make sure that your current out-of-date will is no longer in effect. In some states, all you have to do is tear it up.
But be careful if someone has a copy. If not, you may walk out the door, get hit by a car, and inadvertently disinherit your wife and kids (for example, if you left your estate to someone you used to be in a relationship with or to your parents). don’t think that just because your will is old, it is not going to be implemented to the letter if you die. For your family’s sake, you should make sure that it is nullified, even if you don’t get your new will in place right away.
Also, please remember that the beneficiaries you put on your accounts will inherit those accounts. It doesn’t matter if you have a provision in your will leaves those accounts to someone else. Make sure your beneficiary designations are up to date. Those designations will trump whatever you put in your will.
@Nicole – thank you for the detailed information. I will have to see if I still can locate the copy. I gave one to my friend so that she can help execute it. I believe my copy was destroyed a while ago.
As for beneficiaries, I have been keeping those up to date. Right now, I am waiting for my son’s Social Security Number to arrive so that I can update everything again.
A second important question is do you have life insurance? It hit me many years ago when my toddler daughter asked me to never die. Of course I couldn’t promise her that, but I could ensure that she, her brother and their mom were financially taken care of.
Best Wishes,
D4L
Great question! I do have life insurance because there are so many people who depends on me — i.e., parents, wife, baby, etc.
Making a will is VERY important because it just makes things so much easier for family members should something happen to you. I got my first will organised when i was 23, simply because I wanted to ensure that my wife didn’t have any problems. None of us like to think about death, but it can cause so many problems if a will isn’t in place, so it’s always a good discipline to get on and organise one.