The famous line of the late Jack Benny, “If I can’t takeit 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 totalenough to make a will necessary, you may be wrong.
Even though yourfamily is in the lower-middle income bracket, when you figure the valueof your home, your life insurance, perhaps a small business or a farmand other assets, your estate could easily amount to six figures. What happens to this estate if you haven’t taken the time orspent the $50 to $100 to have a simple will drawn up? Depending uponthe laws of your state, what happens may not be at all what you had inmind. (Complicated wills, of course, will cost more and should behandled by an attorney who specializes in estate planning.) Some states divide an inheritance equally between the spouse andchildren, for example. Other states may ignore needy relatives and turnover your money to those already well off. Even those you might leastwant to have it could come in for a substantial share.
Holding your property–house, stocks, bonds, bank account, etc.–injoint ownership is not a substitute for a will. Joint ownership withright of survivorship may serve to avoid probate, but there are certainto be assets not jointly owned. What happens to them? and what happensif both joint owners die simultaneously? The law then distributes theproperty in a manner the co-owners might not have wanted. How muchproperty should be held in joint ownership is better left to the adviceof someone skilled in estate planning. Before seeing a lawyer about drawing up a will, you should make alist of your assets and liabilities. Begin with the checking andsavings accounts (although a joint bank account and, in some states,real estate owned jointly or by tenancy by the entireties are two majoritems that pass outside a will); certificates of deposit; stocks andbonds; money market and mutual funds; the face value of group andpersonal life-insurance policies; IRA and Keogh plans; interests inthrift accounts at work. Then list the current value of your personal belongings: jewelry,clothing, furniture, car, etc.
Now deduct your liabilities, includingmortgages and other loans, and you’ll have the net value of yourestate to take to your lawyer. If that net value in 1984 is less than $325,000 (nextyear–$400,000; in 1986–$500,000; or $600,000 in 1987 and beyond), youcan forget about paying federal estate taxes. In fact, regardless ofthe amount of your estate, you can now leave an unlimited sum of moneyto 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-boughtwill–buying a form and preparing your own. But it isn’trecommended. Whatever you may have read about wills being legally drawnup on an old flour sack or the blade of a scoop shovel, too many trivialformalities are lurking in legalese that will invalidate such aninstrument, namely: typewritten, printed or stamped material appearingon a handwritten will or a missing, replaced or out-of-place page.
Achange made before or after signing the will may void the item changedif not the entire will; for example, you cannot dispose of propertysimply by adding a provision after your signature. The addition willhave 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 willmust be canceled with the same formality with which it was drawn up.Although you may sneer at these seemingly unnecessary formalities, theycan be extremely important.
Now about the executor, or personal representative. If your estateis relatively simple, you may prefer a trusted friend or a youngermember of the family who has shown good judgment and is reasonablycompetent in handling ordinary business transactions. This person willsee to it that your assets are collected and inventoried, your debtspaid and your assets distributed according to your wishes. If you feelthat your estate necessitates the experience of a lawyer, or a bank or atrust company (which often must be bonded), a substantial fee, plus thebonding premium, will be paid with funds from the estate. Beforechoosing a friend or relative, who will likely waive this fee, you firstmust get his approval. One final note. Neither your safe-deposit box nor one held jointlyis 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 toget the will. No such problem exists when the will lies in the safe ofyour attorney or executor (provided your executor is a bank or trustcompany). Keeping a copy of your will in a safe place at home, known toyour 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 theextent of medical treatment you wish if your become terminally ill, andconsider a letter of instruction, expressing your funeral preferencesand containing a complete list of your assets.
) Dying’s complicated business. You can make it simpler with awill.