The ways of wills, Part 2
- By Milt x_Zall
- Nov 08, 2001
Last week's column covered the basics of why it's important to have a will
and to name a guardian and an executor. This week describes how to go about
preparing a will.
Start by organizing what you need: Outline your objectives, inventory
your assets, estimate your outstanding debts, and prepare a list of family
members and other beneficiaries. Use this information to carefully consider
how you want to distribute your assets.
Ask yourself lots of questions: Is it important to pass my property
to my heirs in the most tax-efficient manner? Do I need to establish a trust
to provide for my spouse or other beneficiaries? How much money will my
grandchild need for college? Do I need to provide for a child who has a
Taking inventory of your assets may be the key to making a will. Assets
should be mentioned in your will. Any items not specifically mentioned may
be addressed in a catchall clause of your will called a residuary clause,
which generally states, "I give the remainder of my estate to . . . ." Without
this clause, items not specifically mentioned will be distributed in accordance
with state law.
Outstanding debts usually will be paid by your estate before your beneficiaries
receive their share. You may want to clear up debts that you know will be
a problem, or make specific provisions in your will for payment of those
Remember to be specific and clear when naming beneficiaries. For example,
state the person's full name as well as his or her relationship to you (child,
cousin, friend, and so on) so your executor will know exactly whom you mean.
Clarity will also help to prevent challenges to your will.
States require that you sign the will in front of witnesses the number
of witnesses varies by state. A witness should not be a beneficiary under
the will. Only one copy should be signed.
Updating a Will
You'll probably need to update your will several times during the course
of your life. For example, a change in marital status, the birth of a child
or a move to a new state should all prompt a review of your will. You can
update your will by amending with a codicil or by drawing up a new one.
Generally, people choose to issue a new will that supersedes the old document.
Be sure to sign the new will and have it witnessed, then destroy the old
The property included in your will may be subject to taxation. In planning
your will, take into account the following:
* Federal estate taxes. These will generally be due if the net taxable
estate is worth more than $650,000. This amount is scheduled to increase
gradually from 1999 through 2006 so that it will eventually shield from
tax $1 million in gifts or estate transfers per taxpayer.
* State death or inheritance taxes.
* Federal income taxes.
* State income taxes.
You may be able to minimize your estate tax by establishing a trust
or giving gifts during your lifetime. You can also cover the cost of estate
taxes by purchasing a life insurance policy intended to pay taxes. Talk
to your lawyer and life insurance agent to find out more about how this
Where to Keep Your Will
Once your will is written, store it in a safe place that is accessible
to others after your death. If you name a trust company as executor, it
will hold your will in safekeeping. You can keep it in your safe deposit
box, but be aware that some states will seal your safe deposit box upon
your death, so this may not always be the safest place to store your will.
Make sure a close friend or relative knows where to find your will.
If you had an attorney prepare your will, have him or her retain a copy
with a note stating where the original can be found.
A Living Will
A living will is not a part of your will. It is a separate document
that lets your family members know what type of care you do or do not want
to receive should you become terminally ill or permanently unconscious.
It becomes effective only when you cannot express your wishes yourself.
If your state recognizes a power of attorney for health care, have one
executed to authorize someone to act in accordance with your present intentions.
Discuss your wishes as reflected in your living will with family members,
and be sure they have a signed copy.
The end of your life is something you probably do not want to dwell
on, but it's important to think about what will happen to your loved ones
and your assets and personal possessions. Making sure you have done all
you can to make their lives easier will give you peace of mind.
And once your will is drafted, you won't have to think about it again
unless something significant in your life changes.
Milt Zall is a retired federal employee who since 1987 has written the
Bureaucratus column for Federal Computer Week. He can be reached at [email protected].