LEGALLY SPEAKING by Cassandra Savoy, Esq. OP/ED
A Will is a legal document that outlines your wishes regarding what happens to your property after your death. A Will provides for an orderly end to your life.
Do you need one? Well, do you care who gets your property if you die? Do you care who gets your money if you die? Do you care who is appointed the guardian of your minor children if you die? If your answer to any of these questions is “Yes,” then you need a Will. Planning for what will happen when you die is called estate planning, and one of the primary instruments for estate planning is a Will.
Many people think that only the rich and wealthy need a Will but regardless of how much or how little money you have, a Will ensures that your wishes are heard regarding the disposition of your money and property. Having a Will is especially important if you die while your children are under the age of eighteen. In that case, having a Will ensures that you get to choose your children’s legal guardian. Without a Will, a judge, a stranger who knowns nothing about you or your family will decide who will be your children’s legal guardian, and how your money will be spent.
With a Will, you get to give authority to carry out your wishes to a person you know and trust. The executor will pay off your debts, gather your assets and distribute them as you choose. Unfortunately, a Will is not a do-it-yourself project and you will likely need the assistance of an attorney.
Most people who come to an attorney say, “All I need is a simple Will” as if they expect the lawyer to pull a form out of a drawer and fill in the blanks. Preparation of a Will is a complex process and requires a lot of deliberate thought on your part. The abbreviated version is as follows.
First, select an executor or executrix, a man or woman whom you designate to wrap up your life. Don’t select your sister who lives on the West Coast who has two jobs and four children. Select someone who lives close by and who has the time to settle your affairs.
Second, make specific gifts, called bequests, to the beneficiaries. If you own a home, you can name who you want to have the property when you pass on. Remember; however, that you can only give away what you own. This means that if you still owe a mortgage on the property, the mortgage may need to be paid off before you can transfer title to the property. The lender trusted you to repay the mortgage; the bank doesn’t know your first cousin and has not agreed to lend money to her.
Consequently, what you may end up giving your beneficiary is the right to sell the property, pay off the bank and keep the cash as a down payment on a similar property. You can make bequests or gifts to people or institutions. For example, you can leave your property to the Red Cross, or to your alma mater, Spelman College, or to the local humane society.
Third, if your children are minors, nominate a guardian for your children. You can even nominate two guardians: one to watch the kids, and one to watch the money. For example, suppose you really trust your elderly parent with your children, but she may not have the energy to keep up with two, active six and seven year old children. Your sister can keep up with the kids, but she’s a bit of a spendthrift. You can nominate Sister to address the day-to-day activities of the children, and Grandmother to monitor expenditures. You can also nominate an alternate guardian, say for instance, Sister becomes ill, or no longer wishes to serve a guardian.
Fourth, make sure there is enough cash to cover expenses. For example, suppose you have a house without a mortgage valued at $350,000. You have a $150,000 life insurance policy naming your brother as the beneficiary, and you have a bank certificate of deposit (CD) of $200,000 made payable on death to your mother. When you die, the insurance money goes directly to your brother. The money from the CD goes directly to your mother, and the house may be worth $350,000, but the funeral director nor the credit card lenders can be paid with the equity in your home.
As a lawyer who has done her share of divorces, I have one story about Wills and insurance policies and other “end of life documents” that I tell often. Make sure you review your Will every couple of years or if there is a significant event in your life.
True story! A man has a daughter with his first wife who is six when they divorce. He remarries and with the second wife he has a child who is severely handicapped and has many special needs. He quits his job at Johnson and Johnson to start his own business. He drops dead leaving $235K in debts and unpaid bills to the 2nd Wife and the disabled child. When the Wife attempts to claim the $1,000,000 insurance policy, she learns that child #1 remains the beneficiary and all of that money will be place in trust for child #1’s exclusive benefit.
If you remarry, have another child, a beneficiary dies before you, GO BACK AND REVISE YOUR WILL!
