Having a baby can be an extremely exciting and happy time. Now that you're starting a family, you probably have a lot to do and you're probably making lots of plans. What color should we paint the baby's bedroom? How will we ever decide on a name? Where should we register for gifts? The one thing that you might not have considered is making a will.
This joyful time in your life might not seem like the right time to look into estate planning but it's something you should definitely consider, for many reasons. By taking care of your wishes now, you'll make sure things happen the way you want them to, even after you're gone. Here is some information to get you started.
15 Why You Should Write a Will
A will makes it easy for your family to figure out what to do with your possessions when you die. Writing a will is also important if you have children and need someone to care for them or if you plan to leave money, possessions, or property to your family--or to people who aren't immediate family. Your will can also explain your wishes for burial or cremation.
Having these plans organized ahead of time will help simplify things for the family you are leaving behind. They won't have to question how you would have wanted things to be handled because if your will is explicit enough, they will know exactly what you wanted.
14 The Will
The will is your plan for what will happen after your passing. You will name an executor (or executors), the person (or people) who will carry out the plans described in your will. The beneficiaries that you name are the people who will inherit your belongings. If you establish a trust or trusts in your will, you would also have to name a trustee or trustees. Setting up a trust can be done in different ways. A trust specifies who gets what and when. Trusts avoid probate which may save time, court fees, and taxes, allowing your beneficiaries access to your assets much more quickly. In your will, you will also name a guardian for your child or children if you and your spouse were to die.
13 Living Wills and Healthcare Proxy
A healthcare proxy or living will gives someone the power to carry out your medical wishes in the event you become incapacitated. It's a scary thing to think about, but, for example, if you were to have an accident or complications from surgery and became unable to dictate your wishes, the health care agent that you choose would be responsible for making medical decisions for you. This way, if you have certain wishes, they are made known in advance. For example, if you do not want to be placed on life support, your representative will be able to speak for you. You can name a backup, or secondary representative, as well.
In most states, if you do not name a health care proxy and are unable to make decisions about your health, state law will decide who can make decisions for you. Most states allow close family members to make these medical decisions for you but in some states, your medical decisions may be left up to your doctor or medical staff. In the states where this is the case, your family may have to go through a long legal battle to fight for guardianship or conservatorship to be able to take control of your medical and healthcare related decisions.
12 Power of Attorney
The power of attorney gives someone the ability to handle your financial and legal affairs while you're alive. Unlike a health care proxy, it does not allow anyone to make medical decisions for you.
There are different types of power of attorney forms. Some of them work only until you are incapacitated and unable to make business decisions. Others are still valid even if you become incapacitated. Some power of attorney forms can be very specific, and allow your representative to handle certain aspects of your finances, for example, if you own a business.
You should consider giving someone the power of attorney if you have children that would need to be cared for if something were to happen to you, rendering you unable to make decisions. You should also consider having a power of attorney if you are diagnosed with a serious illness, are approaching old age, or if you have rules about how you want your property or business maintained.
11 Naming Executors and Trustees
It is quite common to name someone as both the executor and trustee in your will but these are two separate roles. You can name different people for each position. You can also name backup executors and trustees, in the event the person you name passes away before you do.
The executor is the person (or people) responsible for carrying out your will and handling probate. Probate involves the routine matter of supplying the will and proving that it is valid and legal. Probate continues as the deceased's property is appraised, debts and taxes are paid, and property and assets are distributed according to the will.
Once probate is concluded, the executor's job is usually done. However, a trustee may have ongoing responsibilities for a period of time if the will specifies that assets are to be distributed, controlled, or withheld over a certain period of time.
Setting up a trust has many benefits and allows you to maintain some control over your assets even after you're gone. You can have funds distributed to your beneficiaries a little at a time, as you think they will need it. You can provide your beneficiaries with a lump sum when they've reached an age when you think they are mature enough to handle it. You can even include rules in the trust that state your beneficiaries are only allowed to receive funds when certain conditions are met: when they reach a certain age or graduate from college, for example.
10 Naming Beneficiaries
The beneficiary is the person or group that inherits your assets upon your passing. You can name a single person as your beneficiary, more than one person, or even a group of people, such as "all of my surviving grandchildren." This legally includes all of your grandchildren without requiring you to constantly update your will every time someone is born.
In the case of children, you can also name a trust as a beneficiary. As previously mentioned, the trust will ensure that your assets are taken care of responsibly until certain conditions or met or until your children are old enough to take control of the finances.
If you have certain items that you would like to be left to certain people, make sure these are noted in your will. (You want your daughter to have your wedding ring? State it in your will. You want your son to have your car? State it in your will.) On the other hand, if there's someone in your family that you don't want to receive anything, include that, too. If you don't specifically indicate they are not supposed to receive anything, they could challenge your will in court, implying that you must have forgotten them, and possibly making what can already be a long and painful process even worse.
9 Naming Guardians
You might think that you don't need a will because you don't have a lot of money or property. But if you are a new or expecting parent, you need to consider who will take care of your child if something happens to you and your spouse.
You and your partner should be in agreement on who you choose as your child's guardian. Most of the time, people choose a relative or close friend--someone that the child knows, loves, and is comfortable being around. You can also name an alternate guardian, in case the first person you choose is unable to care for your child.
In addition to being your child's guardian, they can also be the trustee if you feel they are financially responsible and can handle your assets appropriately until your child becomes an adult.
Whoever you choose, you need to make sure they are willing and able to accept the role of guardian; while they won't ever be able to take your place, they will still be taking over a large role in your child's life.
8 Separate Wills for Each Parent
Estate planners often encourage each spouse to make their own will. Sometimes, there is property that is not jointly held. Most states use the “common law” of property ownership. This basically means that if it's your name on the deed or title, it’s yours. In that case, you are free to leave your property to whomever you choose. If you want everything to go to your spouse, you need to name them as your beneficiary. Otherwise, your assets could be divided and distributed according to state laws.
7 Can I Write My Own Will?
If you don't have a lot of property to leave behind and your family life is simple and uncomplicated, it's possible to draw up your own will without seeking legal advice. It's also less expensive.
Like tax software that you can buy or download, there are programs out there that will help you design your own will. Some of these programs will contain options to create a power of attorney and healthcare directives. These are a great option because you can print and distribute copies as needed, but you will also have a backup on your computer. That makes your will easy to alter or update if you need to.
However, you do need to be careful when creating your own will. Make sure you know the difference between the power of attorney, health care directives, and the will itself. Be sure to designate an executor of the will and a guardian for your children and backups, just in case someone is unable to carry out their role. You also need to make sure who you name as the beneficiaries to accounts in your will are the beneficiaries named on the accounts (life insurance, retirement plans) themselves. If the names don't match up, there will be complications and it's likely that who was named as beneficiary on the account will receive the funds.
6 Do I Need a Lawyer?
Complicated situations such as having lots of assets, multiple life insurance policies and retirement accounts, a family business, and blended families are reasons why it's smart to invest in a lawyer when you plan to write your will.
Getting the help of a lawyer to set up your will could save your loved ones from having to deal with arguments and legal battles down the road. You can find a lawyer in your area who specializes in estate planning at www.actec.org or www.naepc.org. If you're concerned about the cost, check with your state’s bar association to find low-cost legal help.
If your situation is pretty simple, you can also contact paralegals in your area to see if one can draft a will for you. Paralegals often draft basic legal documents (many start out as forms or templates, anyway) but there may still be a fee. However, you may feel at ease knowing that an expert helped you out.
5 What Makes it Legal?
Most states will only consider a will to be valid if it is written. (Very few states recognized other forms of a will, such as a videotaped reading of a will.) A will must also be signed by the testator, or the person writing the will. Without a signature, the will is incomplete; a signature shows that the person writing it agrees to all of the terms included in the will. The signing of the will must also be witnessed by at least two people, who can attest that the will's creator was "of sound mind" at the time the will was made.
What does "of sound mind" mean? Basically, it means that the will's creator must be free from mental disability, not under the influence of mind-altering medication, and must have created and signed the will at his or her own discretion.
4 Keep it Updated
Don't just think that once it's done, you won't need to come back to your will (or your other legal documents.) There are many reasons why your will may need to be updated over the years. You may divorce or become widowed. Some time after that, you may remarry. You may have more than one child or grandchildren. You may change your mind about the people you once selected as beneficiaries or you may outlive them.
Your life can change, and so can the law. It is a good idea to periodically check to see whether your state has put new laws into effect that could impact your estate planning documents. Also, if you move to a different state, don't assume that your will made in your previous state automatically meets the legal requirements of your new state. Each state has its own requirements for making a will valid.
3 Keep it Safe
Hopefully, you won't need to be concerned with your will for a long time. However, once it is completed, keep an original copy on hand. Keep the original in a secure place, such as a filing cabinet or fireproof safe in your home or office. You can make photocopies for family members and close friends but it is especially important to make sure the executor of your will has a copy or has access to it. If for some reason, that can't be arranged, ask your lawyer to keep it on file in their office. You can also see if your local probate court and hold it for safekeeping.
Don't put the will in a safety deposit box at the bank if you are the only person renting the box; it may seem like a safe place to keep such an important document but your executor and heirs may not have access to it. Wherever you decide to keep your will, make sure that its location is known by family members or close friends.
2 What if We're Not Married?
The surviving parent always retains custody of the child. If the parents are divorced, the surviving parent gains full custody. If the parents were never married, the child’s surviving biological parent can petition the court to gain custody. Unless the court finds the parent to be unfit, custody is usually awarded to the biological parent.
If the second parent leaves a will naming a guardian of the child, that person would be appointed as guardian only if the second parent dies. However, the court might look to the guardian named in the first parent’s will, in the event that the second parent doesn't have a will. Sound confusing? That's why it's important to make sure both partners should have separate wills when there are children involved.
1 What Could Happen if I Don't Have a Will?
If you don't complete a will, you and your family will have no say over who inherits your assets. The laws about this vary from state to state, but most often, your debts will be settled first before anyone gets anything. If you leave behind a spouse and children, your assets will be split between them. If you're single and have no children, the state is likely to decide who among your relatives will inherit your assets.
Anyone over the age of 18 who feels they are entitled to a share of your estate can apply to the Probate Office of the Supreme Court to become executor of the estate and determine how to handle the distribution of your assets. If a person has no living relatives, their assets are handed over to the state.
Again, these are probably not the plans you want to be thinking about right now but hopefully, this information will help you plan for the future.