The ways of wills, Part 2

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 disability?

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 debts.

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 one.

Estate Taxes

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 works.

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.

Plan Ahead

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].


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