A will is a legal document designating the transfer of your property and assets after you die. Although creating a will is not a difficult process, about half of all Americans die without one. If you die without a will, or intestate, the court steps in and distributes your property according to the laws of your state, which may or may not coincide with your wishes. If you have no apparent heirs and die without a will, it's even possible the state will claim your estate. Remember, wills are not just for the rich; your will ensures that whatever your assets, they will go to family members or other beneficiaries you designate.
Probate is a legal term, which means to "prove" a will. During probate, the court determines that your signed will is a genuine statement of how you want your estate to be distributed. Depending upon the state in which you reside, the probate process may take a few days or it may take many months, and depending upon the complexity of the will, it can be an expensive process. Careful planning can help stream line or avoid the probate process. For example, life insurance does not have to go through probate and can be disbursed directly to your beneficiaries. A qualified financial planner or estate attorney can help you determine what's appropriate for your specific situation.
Each state has specific requirements, but in general, a will can be written by any person over the age of 18 who is mentally capable - commonly stated as "being of sound mind and memory." Although it may seem like something you can do yourself, it may be best to consult an attorney for help when creating a will, especially if:
* You expect to owe estate tax at your death
* You foresee any disagreement among your heirs or beneficiaries.
* You have children from more than one marriage, or a blended family.
* You own property in another state.
* You want to establish a trust (see "Minimizing Estate Taxes").
To be valid, a will must comply with the laws of the state in which you live. Only about half the states recognize "homemade" wills. State law may stipulate that you use specific language, sign the will in a particular way, and/or have a certain number of witnesses of a certain age present when you sign.
Bear in mind that having a will is especially important if you have young children because it gives you the opportunity to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian.
Basic elements of a will include:
* Your name and place of residence.
* A brief description of your assets.
* Names of spouse, children, and other beneficiaries, such as charities or friends.
* Alternate beneficiaries, in the event a beneficiary dies before you do.
* Specific gifts, such as an auto, residence, or family heirlooms.
* Establishment of trusts, if desired.
* Cancellation of debts owed to you, if desired.
* Name of an executor to manage the estate.
* Name of a guardian for any minor children.
* Name of an alternative guardian, in the event your first choice is unable or unwilling to act.
* Your signature.
* Witnesses' signatures.
Probably the most important considerations when making your will are naming a guardian for your minor children and naming an executor.
(SOURCE: Federal Citizens Information Center)