From the Federal Citizen Information Center

This Life Advice® booklet was produced by the MetLife Consumer Education Center with assistance from the American Association of Individual Investors and reviewed by the Cooperative State Research, Education, and Extension Service, USDA.

Why You Need To Consider a Will

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 your assets 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 are domiciled, the probate process may take a few months or it may take years, and it can be an expensive process. If you own real property in more than one state, you will have probate in each of these states. In most cases, probate takes about two years and they are public proceedings to be avoided if privacy is a concern. Careful planning can reduce or avoid the probate process. For example, you may set up a living trust and/or you may ensure through appropriate beneficiary designations that neither life insurance nor retirement assets go through probate.

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 is recommended that you consult an attorney for help when creating a will.

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.

Elements of a Will

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.

Naming a Guardian

If you die while your children are still minors or you have children who cannot care for themselves in adulthood, you'll want them to have the best possible care in your absence. Making a will gives you the opportunity to select the person you believe can provide that care. The guardian you choose should be over 18. Before naming a guardian, talk to the person you'd like to name to make sure they are willing to assume the responsibility. Also, name an alternate guardian who can take over if the primary guardian is unable or unwilling to fulfill the responsibility. This is especially important if your children are young or will require lifelong care. If you do not name a guardian to care for your children, a judge will appoint one, and it may not be someone you would have chosen.

Although it is legal to name a couple as co-guardians, it may not be advisable. It's possible the couple may choose to go their separate ways at some later date, and, if so, a custody battle could ensue.

Naming an Executor

The person who carries out or executes the instructions in a will is called an executor or executrix. Obviously, your executor should be an individual you trust. Most people choose their spouse, an adult child, a relative, a friend or a trust company or attorney to fulfill this duty. Choose someone who can handle all of the financial matters involved with settling your estate, and check with that person ahead of time to make sure they are willing to assume the responsibility. Some states stipulate that the executor must be a state resident. It's a good idea to appoint an alternate executor in case the first person you name is unable or unwilling to fulfill the responsibility. The responsibilities of an executor generally include:

• Collecting your assets
• Paying creditors
• Paying taxes
• Notifying Social Security and other agencies and companies of the death
• Canceling credit cards, magazine subscriptions
• Distributing assets according to the will

While you can specify in your will that an executor waive receipt of compensation in order to be eligible to serve as executor, this is only suitable if the person named is a beneficiary of the estate or a very close personal friend, since being an executor is time consuming. You should expect your estate to pay an independent executor for this service. Banks or trust companies will not serve as executors of estates unless entitled to payment. If no executor is named in a will, a probate judge will appoint one, most often a bank or an attorney.

Revocable Living Trust

The revocable living trust is an alternative that can be used to distribute assets after one's death. Unlike a will, however, it comes into effect while you are still alive and may be funded with assets during your lifetime. You can change or cancel a trust at anytime. Assets held in a living trust will avoid the probate process as outlined above. These trusts can maintain privacy, reduce administration expenses and streamline the post-death administration of assets. A special type of will, the "pour-over" will, is usually prepared along with the trust. This would serve the limited purposes of nominating guardians and pouring assets not otherwise already owned by the trust into the trust.

Put It in Writing

An inventory of your assets is a good start, but it's not the only information your attorney will need to create a will or revocable living trust. Your attorney will also need a list of family members and other beneficiaries (e.g., charities) that you may mention in your will or living trust, an estimate of your outstanding debts and an outline of your objectives (e.g., to provide college tuition for my grandchildren). This information will be used to consider how you want to distribute your assets.

Ask yourself lots of questions: How much money will your child need for college? Do you need to provide for a child who has a disability? Are you concerned about protecting your loved ones in the events of lawsuit or divorce? Do you wish to make specific bequests (gifts) of cash or property to loved ones or charity? Is it important to pass your property to your heirs while saving taxes? An attorney familiar with estate planning will help you identify the questions and guide you in determining the answers.

Be as specific as possible when naming beneficiaries. For example, state the person’s full name as well as his or her relationship to you (child, cousin, friend) so your executor will know your intentions. Clarity will help to prevent challenges to your will or trust.

Items not specifically mentioned need to be addressed in a catchall clause of your will or trust called a residuary clause, which generally states, "I give the remainder of my property to...." Without this clause, items not specifically mentioned will likely be distributed in accordance with state law.

Note that the estate usually pays outstanding debts and taxes before beneficiaries receive their shares. You may want to clear up debts that you think may be a problem, or make specific provisions for payment of those debts in your will.

States require that you sign the will in front of witnesses; the number of witnesses varies by state. Witnesses should not be beneficiaries of the will, and only one copy should be signed.

If you need help finding a qualified estate planning attorney, the website of the American Bar Association (www.abanet.org) has information to help you find one, although they will not make specific recommendations.