How to Plan a Will

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Ok so I shall not be left behind in becoming the FWF Star of the Week! (j/k)

This is a topic as a parent that has repeatedly come to my mind to do, but somehow it takes a backseat. 

The purpose of this thread is two-fold, to solicit information that would help me (and others) plan a Will along with the steps and things to account for in doing so. 

More importantly, I want to raise awareness to the non-financial side of things, our most precious asset, our kids, and how their future could be greatly uncertain in the absence of a will and why even if just for the kids it is important to have a will. 

So I will list out some steps and questions, and as this thread gathers steam, we will document it in this post or in the Cliff notes below so we have guidance on how to go about this. 

1) A will may or may not need a lawyer to be planned. 

2) There are specific state laws on what a valid Will is. For example most states require 2 witness signatures. Vermont requires 3. In some states handwritten wills are acceptable, in others only type-written ones are valid. 
We will explore if it is possible to plan a will with the power of FWF and Google and without having to dole out a couple of hundred bucks to a lawyer (this is FWF afterall, but for peace of mind, a few hundred bucks is nothing). A small mistake could render the Will invalid. 

3) In the absence of a will, each state has its own laws that govern how the assets will be handled and how the kids will be taken care of. This is assuming both parents are deceased. 

Even in cases where one parent is deceased things can get complicated in the absence of a will. 

4) There is a school of thought that suggests that merely a Will is not enough, but a Living Trust is also needed. The rationale being that even in case a Will exists, a Probate might take over the disposition of assets and there could be tax & administrative cost implications. 

5) You can document different people for different items in your Will. For example your brother and his family could be designated to be the guardians of your children. And your sister could be the one who is tasked with handling your assets and finances. 

It is usually recommended to have a second guardian designated in your will in case the first one will not or can not perform their responsibility!

6) Where to keep the Will. Multiple copies are good (notarized), safe deposit box should not be the only place for it (if both you and your spouse pass away), no one might be able to get to it. And yeah, do talk to the guardians you designate so no one is caught by surprise. 

7) Is a separate legal will for each parent a better idea or a joint will? If only one parent passes, does it create more issues? 

Is it better to have separate legal wills and a joint will? 

His Will: When I die, my wife will be the sole beneficiary and the guardian of my kids and all my finances.

Her Will: When I die, my husband will be sole beneficiary and the guardian of my kids and all my finances.

Joint Will: If we both are deceased, my brother DB will be the guardian of our kids and our finances as detailed below.

8)   Does a Will apply to all aspects of finances, or does one have to designate at each place say (at the Bank, 401K account, Mutual funds, Stocks) as to who the POD or beneficiary be? Or does a Will work in all circumstances without the need to designate it at every financial institution we have a relationship with? (Sorry for the dumb question

9) Inheritance Tax Implication: As of 2016 it was around $5.5 million (lifetime gift tax exemption). Husband and wife together can have up to $10.9 million. All of your assets be it checking, savings, 401K, IRA, pension, real estate, life insurance, stocks etc count towards this $10.9 million, The inheritance limits are not related to the annual $14,000 gift tax exclusion. 

Hopefully this is enough to get us started and we can all (generally) agree on a good approach to Will Planning!

Let's make Will Planning great again!  

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The problem with a will is that you never know if there is a problem with the will because you are usually dead before i... (more)

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Very well said, and I fixed the amount for you!

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The amount greatly vary depending on your actual situation, the number of heirs, your family, your asset types, etc... I... (more)

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legalshield.com

tantuti said:   legalshield.com
  
Anyone have experience with this? Says @ $19.95 a month standard will preparation is covered, so what stops people from taking a one month membership and getting the will prepared and then cancelling the membership? 

tantui - have you used their services? 

Jeeze, OP, try to put a little thought into your line breaks. It's very tough to read. But green for the thread, since it's never been done before.

For point 7: As for guardianship, if she is the natural parent, the kids would probably go to the spouse without need to specify and I am not sure you could even do anything different if it is the other natural parent.

If you wanted to make sure something stayed available to the kids, you would have to set that up in your will (maybe along with some sort of trust) to prevent everything going to your spouse which they may manage well or blow with their new BF/GF/spouse once they move on. 

For point 8: Beneficiaries trump the will so make sure if people are named on those accounts that you want the money to go to them (important in divorce usually when ex-spouses forget to change beneficiaries for items even though they change wills).  My MIL said in her will that her kids would get the 401k, brokerage accounts, and other retirement assets when she passed, but would up changing the beneficiary to her new husband a month or so before she passed away.  He got it all (which was fine, it was her money to do as she wished), but it caught the kids by surprise since she made a point of giving them copies of the will and copies of the accounts showing them listed as beneficiaries. 

hairybeast said:   For point 7: As for guardianship, if she is the natural parent, the kids would probably go to the spouse without need to specify and I am not sure you could even do anything different if it is the other natural parent.

If you wanted to make sure something stayed available to the kids, you would have to set that up in your will (maybe along with some sort of trust) to prevent everything going to your spouse which they may manage well or blow with their new BF/GF/spouse once they move on. 

  
Correct, I think that is the natural course of things, if one parent is deceased, the other automatically is the 100% guardian and caretaker of the kids. Curious to see if anything needs to be said specifically in a will or that is the natural (unsaid) course of things. 

Setting up a trust depends on how much you trust your spouse to effectively manage the finances. You are right, if they decide to move on and get a new person in their life who may not be the right influence, perhaps leaving the money in a trust (for the kids) is better. On the other hand, if the spouse is doing a good job, then the trust will be a hindrance in their access to money needed for the kids upbringing. 

Item 8), Not a dumb question but backwards to me at least. Instead of "does one have to designate at each place...?", I think one wants to designate at each place  POD/pay on death or TOD/transfer on death, or if joint accounts set up with "rights of survivorship". Let the Will cover anything left over or forgotten. Your surviving loved ones should then have seamless access to  joint accounts and easier transfer of other accounts. If you want to change who gets what you don't need to modify your will.

We worked with a lawyer last year to make our wills so I'm a bit up to speed on what's needed. Here are my thoughts:

  1. Personally, I'd use a lawyer. Even for a relatively simple situation, our wills/other documents total close to 50 pages of legal text. Most is boiler plate, but the text itself is the important part. Plus it's not just about a will. You'll also probably want power of attorneys, health directives, etc... to make sure everything is smooth. A will only activates if you die. What if both you and your spouse are in a coma for some time - who has guardianship of the kids and who can make financial decisions for you?
  2. See 1. There's a reason to use lawyers. One additional thing to consider is community property vs non-community property (depends on the state). This has a substantial impact on what assets are considered whose.
  3. See 1
  4. See 1 again. Estate planning varies from state to state. In CA, the probate process is long and expensive, so you want to avoid wills and use revocable trusts. In WA, where we are, revocable trusts are basically unheard of because the probate process is fast and cheap. Again, a lawyer is the best person to advise you.
  5. Not only did our lawyer recommend a second guardian, but basically every position has a backup (beyond the spouse) and typically a backup to a backup. It's cheap to add a few extra words, but it makes sense to do so in case someone is unable or unwilling to act in a position because it avoids dragging the court into figuring out who to appoint for a position. And for "peace" reasons, having the guardian from one side and the executor of the trust for your children be from the other can be a good way to keep everyone involved. BTW, one option for trusts is to designate a corporate trustee (e.g., an investment bank) to handle either part of the responsibility (the investment side) or full responsibility (both investment and direction).
  6. The original is the only copy that really matters according to our lawyer. Yeah, you can try to use a copy, but it may cause problems. We store ours with our lawyer and have a copy ourselves. Our rationale is that he's probably better equipped to store it long term than we are and less chance that it will get lost. That way there's a "gatekeeper" to the will who's obligated to serve our best interests and access will be much easier in case of a problem.
  7. Joint wills may be state-dependent - I don't know. We were never offered one (WA is community property, so that may be part of it). Our wills basically state "If spouse survives, then he/she gets the kids and property. If not, then these people do these things." The former part has different names on each of our wills. The latter part is the same.
  8. Wills apply to your estate. Most retirement plans and life insurance (possibly other things) have beneficiaries and so those assets skip the estate. I believe TOD also skips your estate, but it's something to integrate into an overall estate plan (and I'd do so after discussing with a lawyer).
  9. Don't forget state estate taxes - exemptions there can be lower. There are also ways to get around estate taxes (setting up various trusts) that a lawyer can help you with.


Regarding spelling everything out - our wills do exactly that. Everything is stated explicitly, including our children's names, etc... I don't know if it's required. But I'm betting that spelling everything out will just make things that much simpler to deal with and ensures that you know exactly what will happen to your kids/assets should you die.

dblevitan thank you for sharing, lots of good information.

How much did the lawyer charge you for this? Where did s/he recommend you keep the Will? Were multiple copies made and shared with the guardians as well?

fwfisawesome said:   dblevitan thank you for sharing, lots of good information.

How much did the lawyer charge you for this? Where did s/he recommend you keep the Will? Were multiple copies made and shared with the guardians as well?

  
We have legal insurance through my work which covered all this. We paid about $100 in expenses (witness fees, postage, photocopying, etc...) for the wills as well as a follow-up codicil (to officially recognize our new child). My impression is that without insurance it would have cost between $500 and $1000 but I don't know for sure. The lawyer didn't make a recommendation about where to keep the will. He basically described the pros/cons of both. If the will was with him, then there's a better chance it will be recognized as authentic, less chance of getting lost, etc... But he would keep a copy regardless. Besides the original, we have only one other copy, plus a digital one. I don't think we've shared it with anyone, but our family knows who our lawyer is. If something happens, they'd contact him and he'd handle the estate.

One thing to point out though is that is WA state, there are specific rules on lawyers handling estate proceedings. For example, they're only allowed to charge by the hour and must keep expenses reasonable. In some states, lawyers will change a flat percentage which can be very expensive. So we're comfortable with our lawyer handling things.

Hi - lawyer here. Took a very long class on wills in law school. Learned that wills are very formalistic the rules for both the format of the will and the process for signing one vary by state. If you're doing it for the first time, you run a high risk of getting it wrong. I used an estate planning attorney to do my will, through a similar plan at work as the above poster.

From price shopping, a simple will with some testamentary trusts runs ~$1000-2000, and goes up from there depending on complexity, setting up entities to bypass probate, etc.
The lawyer I used was great for process, but didn't really warn me about dangers of things like 1 spouse dies, other gets remarried without updating their will, now the kids may not get what you want them to get.  Didn't discuss issues like cotermination (one dies in a car accident, another 30 days later)  - would you really want the "suvivor's" heirs to take their share, etc.

Once you get into cancelling old wills, updating old wills, or doing anything outside of standard form language, you are on really thin ice without a lawyer. 

Find a good attorney.


Evilmagus said:   The lawyer I used was great for process, but didn't really warn me about dangers of things like 1 spouse dies, other gets remarried without updating their will, now the kids may not get what you want them to get.  Didn't discuss issues like cotermination (one dies in a car accident, another 30 days later)  - would you really want the "suvivor's" heirs to take their share, etc.
Personally, I feel that if you're that worried about your spouse re-marrying and messing things up for your kids that badly, then you have many more problems than just putting a will together. I think the general idea with most basic wills is that if you die, your spouse gets everything and you trust him/her to raise your kids and deal with the money as they see fit. If both of you die, the kids get everything in a trust.

As for co-termination, again, why are the heirs getting any share? Apart from personal items typically everything will go into a trust for the kids. The bigger issue with co-termination is just paperwork and taxes. In our will, the survivor has to survive by over 30 days. Otherwise, you get one person's estate going to the spouse, who then dies, and everything has to transfer again. It's cleaner/simpler/cheaper if both estates pass directly to the kids.

Personally, I feel that if you're that worried about your spouse re-marrying and messing things up for your kids that badly, then you have many more problems than just putting a will together. I think the general idea with most basic wills is that if you die, your spouse gets everything and you trust him/her to raise your kids and deal with the money as they see fit. If both of you die, the kids get everything in a trust.

As for co-termination, again, why are the heirs getting any share? Apart from personal items typically everything will go into a trust for the kids. The bigger issue with co-termination is just paperwork and taxes. In our will, the survivor has to survive by over 30 days. Otherwise, you get one person's estate going to the spouse, who then dies, and everything has to transfer again. It's cleaner/simpler/cheaper if both estates pass directly to the kids.

  
#1 is a lot more common that you think - you die, wife gets everything.  She cries for 5 years, then gets remarried, but doesn't update her will - it still says give all to dblevitan, if he dies, then to kids.  She uses money wisely to raise kids, but has some of "your" money still when they grow up.  She passes away, and the grieving widower finds out that his wife left her share of "their" property to your kids.  He challenges the will, and extracts his statutory "spouse's" share from "your" money.  May be a big deal if you're leaving behind a couple million or more.

#2 - I see you have the survivor clause (30 days) - that's exactly what I was referring to.  If you didn't have it:  you die, leave everything to wife.  Wife dies a week later, and her will kicks into effect.  If the two wills don't have all the same heirs, someone is going to fight over it.  Even if they do, then your wife's no-good sister now has standing to challenge your wife's will. 

fwfisawesome said:   
tantuti said:   legalshield.com
  
Anyone have experience with this? Says @ $19.95 a month standard will preparation is covered, so what stops people from taking a one month membership and getting the will prepared and then cancelling the membership? 

tantui - have you used their services? 

I have not but I know alot of people/business owners who use them and they are happy with the service. I havent signed up since I do not need anything but considering using their CHL program

    

fwfisawesome said:   9) Inheritance Tax Implication: As of 2016 it was around $5.5 million (lifetime gift tax exemption). Husband and wife together can have up to $10.9 million. All of your assets be it checking, savings, 401K, IRA, pension, real estate, life insurance, stocks etc count towards this $10.9 million, The inheritance limits are not related to the annual $14,000 gift tax exclusion.
Clarification, there is a difference between estate taxes and inheritance taxes. Estate taxes are on the assets (both probate and outside of probate) of the estate of the decedent. What you are describing is the federal estate tax. Additionally, I believe about 15 states have state estate taxes (NJ is phasing theirs out by 2018).

Only about 6 states have an inheritance tax. An inheritance tax is a tax on assets distributed to beneficiaries. Usually there are full exclusions for the spouse and either full/partial exclusions and/or reduced tax rates for other direct family members.

After 2017 only Maryland will have both an estate tax and a inheritance tax.
 

We got our first will when our youngest was still in-utero. Simple in principle -- each of us had symmetric wills. If one dies, other gets everything. Had we both died, one of each of our parents would manage the estate, until the kids could take posession of their share -- at age 25. One of our parents died a few years ago. Further, I found out that our retirement accounts will go to the kids outside the will.

So just recently we replaced the wills with new wills, and a trust. The purpose of the trust is to prevent the retirement money from going to the kids before they are 25.

We've also updated who gets the kid (the other two are grown now), and who manages the estate until the kids can take posession.


Anybody used Suze Orman's free will kit when this was posted: https://www.fatwallet.com/forums/finance/840850

examiner44 said:   Just buy this software for $25 at Costco

https://m.costco.com/Quicken-WillMaker-Premium-Home-%2526-Family-2017.product.100301657.html?catalogId=10701&langId=-1&storeId=10301&krypto=4Dmnk1ChBUyrJ%2BQrpMpIxwuc8kGrayOav4UxXaa%2F2Ek8NlK9wWv%2F0XyjRWibJEYeUDs%2B4%2FNBjBFW%0Avz7TJeMUsl2TmNcI7XFEkwNuk7Tqr3w%3D

Thanks! Seems it's worth $25 if just to get started and thinking about all the issues and possible help with lawyer fees. Offer expires tomorrow, 1/22.

The problem with a will is that you never know if there is a problem with the will because you are usually dead before it becomes an issue. So, you may save a buck today by doing it yourself, and feel great about those savings not knowing whether you wound up doing something that cost your heirs $1,000 tomorrow because something was left out or because you failed to do something that would have averted the expense for them.

This is not to say that using a lawyer eliminates the risk, just as using a dentist to extract a wisdom tooth does not mean it is going to be done properly. Still, I would rather go to a dentist than do it myself.

DavidScubadiver said:   The problem with a will is that you never know if there is a problem with the will because you are usually dead before it becomes an issue. So, you may save a buck today by doing it yourself, and feel great about those savings not knowing whether you wound up doing something that cost your heirs $100,000's tomorrow because something was left out or because you failed to do something that would have averted the expense for them.

This is not to say that using a lawyer eliminates the risk, just as using a dentist to extract a wisdom tooth does not mean it is going to be done properly. Still, I would rather go to a dentist than do it myself.

  
Very well said, and I fixed the amount for you!

Evilmagus said:   
DavidScubadiver said:   The problem with a will is that you never know if there is a problem with the will because you are usually dead before it becomes an issue. So, you may save a buck today by doing it yourself, and feel great about those savings not knowing whether you wound up doing something that cost your heirs $100,000's tomorrow because something was left out or because you failed to do something that would have averted the expense for them.

This is not to say that using a lawyer eliminates the risk, just as using a dentist to extract a wisdom tooth does not mean it is going to be done properly. Still, I would rather go to a dentist than do it myself.

  
Very well said, and I fixed the amount for you!

The amount greatly vary depending on your actual situation, the number of heirs, your family, your asset types, etc... I think of it a bit like taxes. You don't need to have a CPA file your 1040EZ if that covers all your tax needs. On the other hand, trying to file yourself taxes if you have tons of investments, several businesses and rental properties, income from multiple states, royalties, etc, then a CPA's cost will pay for itself in avoiding mistakes and audits. For wills, if you have only one financially-independent heir and simple assets setup with designated beneficiaries for bypassing probate, and no other relative to contest the will, then it may be hard to claim that a lawyer's expertise will pay for his/her cost.

Personally, using quicken willmaker was a very good starter to make us aware of all the issues. For this purpose, it doesn't even need to be the latest version. It can be a good learning tool as well as a way to evaluate whether you need professional help with your will or not, compare options between wills and trusts, etc. And when we eventually used a lawyer to finalize our estate planning, it probably saved some money since we had already decided on most issues but just needed help setting things up optimally.



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