The famous line of the late Jack Benny, “If I can’t take
it with me I’m not going,” was always good for a big laugh.
Not so funny, however, is that three out of four Americans die intestate (without a will). And if you think that your assets don’t total
enough to make a will necessary, you may be wrong. Even though your
family is in the lower-middle income bracket, when you figure the value
of your home, your life insurance, perhaps a small business or a farm
and other assets, your estate could easily amount to six figures.
What happens to this estate if you haven’t taken the time or
spent the $50 to $100 to have a simple will drawn up? Depending upon
the laws of your state, what happens may not be at all what you had in
mind. (Complicated wills, of course, will cost more and should be
handled by an attorney who specializes in estate planning.)
Some states divide an inheritance equally between the spouse and
children, for example. Other states may ignore needy relatives and turn
over your money to those already well off. Even those you might least
want to have it could come in for a substantial share.
Holding your property–house, stocks, bonds, bank account, etc.–in
joint ownership is not a substitute for a will. Joint ownership with
right of survivorship may serve to avoid probate, but there are certain
to be assets not jointly owned. What happens to them? and what happens
if both joint owners die simultaneously? The law then distributes the
property in a manner the co-owners might not have wanted. How much
property should be held in joint ownership is better left to the advice
of someone skilled in estate planning.
Before seeing a lawyer about drawing up a will, you should make a
list of your assets and liabilities. Begin with the checking and
savings accounts (although a joint bank account and, in some states,
real estate owned jointly or by tenancy by the entireties are two major
items that pass outside a will); certificates of deposit; stocks and
bonds; money market and mutual funds; the face value of group and
personal life-insurance policies; IRA and Keogh plans; interests in
thrift accounts at work.
Then list the current value of your personal belongings: jewelry,
clothing, furniture, car, etc. Now deduct your liabilities, including
mortgages and other loans, and you’ll have the net value of your
estate to take to your lawyer.
If that net value in 1984 is less than $325,000 (next
year–$400,000; in 1986–$500,000; or $600,000 in 1987 and beyond), you
can forget about paying federal estate taxes. In fact, regardless of
the amount of your estate, you can now leave an unlimited sum of money
to your spouse without the feds taking a dime of it in estate taxes.
Yes, there is a way to bypass the cost of a store-bought
will–buying a form and preparing your own. But it isn’t
recommended. Whatever you may have read about wills being legally drawn
up on an old flour sack or the blade of a scoop shovel, too many trivial
formalities are lurking in legalese that will invalidate such an
instrument, namely: typewritten, printed or stamped material appearing
on a handwritten will or a missing, replaced or out-of-place page. A
change made before or after signing the will may void the item changed
if not the entire will; for example, you cannot dispose of property
simply by adding a provision after your signature. The addition will
have no effect. And you cannot void a will by writing a sentence such as
“This will is void” and your signature at the end. A will
must be canceled with the same formality with which it was drawn up.
Although you may sneer at these seemingly unnecessary formalities, they
can be extremely important.
Now about the executor, or personal representative. If your estate
is relatively simple, you may prefer a trusted friend or a younger
member of the family who has shown good judgment and is reasonably
competent in handling ordinary business transactions. This person will
see to it that your assets are collected and inventoried, your debts
paid and your assets distributed according to your wishes. If you feel
that your estate necessitates the experience of a lawyer, or a bank or a
trust company (which often must be bonded), a substantial fee, plus the
bonding premium, will be paid with funds from the estate. Before
choosing a friend or relative, who will likely waive this fee, you first
must get his approval.
One final note. Neither your safe-deposit box nor one held jointly
is recommended for storing a will. If the box is sealed upon death,
some states require your executor to get a court order to open it and to
get the will. No such problem exists when the will lies in the safe of
your attorney or executor (provided your executor is a bank or trust
company). Keeping a copy of your will in a safe place at home, known to
your main beneficiaries, is a good idea.
(Besides a will allocating your estate, you might also consider a
“living will,” which instructs doctors and survivors about the
extent of medical treatment you wish if your become terminally ill, and
consider a letter of instruction, expressing your funeral preferences
and containing a complete list of your assets.)
Dying’s complicated business. You can make it simpler with a