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A Complete Guide to Wills – Important Concepts and Detailed Instructions

What is a Will?

A Will is a document in which you (the «Will writer») state who will receive your property (the «Beneficiaries») and who will carry out your wishes (the «Executor»). After your death, your estate assets will be used to pay any debts or expenses you have. The remaining assets will then be distributed according to the Will. The Will distributes assets in two ways: specific bequests and the residuary estate.

What role does the Executor play?

An «Executor» or «Personal Representative» is the person or organization named in a Will who has the responsibility of carrying out the terms of the Will. Those responsibilities are to collect your assets, pay the debts and expenses of the estate, and distribute the remaining assets to the beneficiaries. Some states use the term «Personal Representative,» rather than «Executor,» but generally, either term is acceptable. If you have no preference, use the term «Executor.»

What does disinheriting mean?

Disinheriting means to deprive another person (an heir or spouse) of property that would have been distributed to that person under the laws of intestacy (dying without a valid Will).

It is the general practice for a Will writer to provide for distributions to the Will writer’s family, particularly the Will writer’s spouse (if married) and children (if any), or in the case of a deceased child, such child’s children (if any). Such persons are said to be «the natural objects of the Will writer’s bounty.»

If such persons exist but are not included in the Will, a question may arise as to whether you as the Will writer simply made a mistake. Further, such excluded persons may attempt to challenge the Will on this very basis, that is, that you simply made an error in excluding them from the Will.

If you intend to exclude someone that might expect to be included in the Will, it is advisable to include a statement in the Will that makes it clear that the omission was intentional. Although this type of exclusion generally applies only to individuals, this provision can also be used to list organizations that will be excluded.

How do estate taxes work?

Federal Estate Tax is a tax imposed at the federal level (in addition to possible estate and/or inheritance taxes imposed at the state level) for the privilege of transferring property at death.

This tax is imposed whether the assets pass under the Decedent’s Will or Trust, or by the state laws of intestacy (without a Will). The tax is based on the total value of ALL assets owned by the Decedent at death, plus taxable gifts made during the Decedent’s lifetime (the Decedent’s «Gross Estate»).

The 2001 Tax Act significantly increased the applicable exclusion amount (the amount each person can transfer in total during life and at death without paying transfer tax) and decreased the top marginal tax rate, as follows:

For decedents dying in year Estate Tax Highest Estate and Gift

Exclusion Amount Tax Rates

2007 $ 2 million 45%

2008 $ 2 million 45%

2009 $ 3.5 million 45%

2010 N/A (taxes repealed) top income tax rate

(for gift tax only)

2011 $ 1 million 55% (+5%, if applicable)

It is important to remember that under the 2001 Tax Act, the law in effect before the 2001 Tax Act is reinstated as of 2011 unless there is further legislation. Further legislation permanently adopting or modifying the 2001 Tax Act is expected; further legislation may warrant a reevaluation of your estate planning.

What are the basic components of your estate?

Your estate is composed of your assets at the time of your death. Your assets may include the following:

* Joint Property

* Personal Property

* Life Insurance, Retirement and Annuities

How to choose a guardian.

A guardian is the person nominated in a Will to have custody of the minor children, if a parent is not available. The guardian has control over the «person» (verses «property») of the minor children, providing for their PHYSICAL care, health, education, and welfare.

In contrast, if a trustee is appointed to carry out the terms of a trust established for the children, that person or organization provides for the children’s FINANCIAL needs, managing the assets held in the trust and making payments to the guardian to be used for the children’s care and/or making payments directly to the children. The same person(s) can serve as both guardian and trustee.

What are specific bequests?

The Will distributes assets in two ways: specific bequests and the residuary estate. Specific bequests, which are optional, may include cash (or other intangible personal property), tangible personal property, or real property.

If specific bequests are made in the Will, they will be paid before the residuary estate is distributed. If no specific bequests are made, the beneficiaries of the residuary estate will receive the entire estate.

A specific bequest is a gift (bequest) of cash, a specific item, or a category of items to a named person or organization. For example, a wedding ring, $1,000, an antique, a car, or all of your remaining tangible personal property.

Some persons have specific items that they want to give to a specific person (or organization). For example, a mother may want to make sure that her jewelry goes to her daughter, or grandparents may decide that they would like to give $1,000 to each of their five grandchildren.

Specific bequests are usually made at the beginning of the Will, followed by other provisions that provide for the distribution of the other assets of the estate.

Why include a «not married statement»?

Including a sentence in your Will that you are not married makes it clear that you do not have a spouse. You may think that it will be obvious to your survivors that you did not have a spouse. However, if you do not have close relatives, and/or if you were married at one time (perhaps a long time ago), your survivors may not be sure whether or not you have a spouse.

If you don’t include the sentence, your survivors may not know whether the failure to mention your marital status means you had no spouse or that you had a spouse but just didn’t mention it. In most states, a surviving spouse has rights and must be notified about your Will even though the spouse may not be entitled to receive any inheritance.

How to provide a trust for children.

The Will offers a unique planning opportunity for parents with minor children. For example, assume you leave your remaining residuary estate to your spouse, if your spouse survives you. If your spouse does not survive you this program allows you to provide for a trust for your minor children.

You can provide that all of the remaining assets of the Trust will be retained by the Trustee for the benefit of your children, or you can provide that a percentage of the remaining assets of the Trust will go to a named beneficiary, with the remainder for the Children’s Trust.

Providing a trust for children can be appropriate if you:

1. have no children but intend to have children in the future,

2. have minor children, or

3. have children who are no longer minors, but who have not yet reached an age at which it is appropriate for them to receive a large distribution of your assets.

How is residuary estate defined?

The Will distributes assets in two ways: specific bequests and the residuary estate. If specific bequests are made in the Will, they will be paid before the residuary estate is distributed. If no specific bequests are made, the beneficiaries of the residuary estate will receive the entire estate.

The residuary estate includes your assets that remain after paying debts and expenses and making distributions of specific bequests. In most estates the residuary estate includes most of the assets. If the optional specific bequests provision is not included, the residuary estate includes all of your remaining assets.

Will signing instructions and important details.

1. This Will does not dispose of property which passes on the death of the Will writer to a person by operation of law or by any contract. For example, the Will does not dispose of joint tenancy assets or the Will writer’s spouse’s share of community property, and it does not normally apply to proceeds of life insurance on the Will writer’s life or to his or her retirement plan benefits.

2. This Will is not designed to reduce taxes. The tax results of the choices made in this Will should be discussed with a competent tax advisor.

3. This Will is not valid unless it is signed by a Will writer who is of «sound mind» and of the minimum age for this state. In most states, the minimum age is eighteen. Some states permit an individual below the minimum age to sign a will if the person is married or in the military. Being of «sound mind» requires that the Will writer: (a) know that he or she is signing a will, (b) know the general nature and extent of his or her property, and (c) know the descendants or other relatives that would ordinarily be expected to share in the estate.

4. If the Will writer is unable to sign due to physical disability, another person may be able to sign on behalf of the Will writer, in the Will writer’s presence, and at the express direction of the Will writer. However, this document does not provide the necessary language for another person to sign for the Will writer. For assistance with this procedure, a lawyer should be contacted.

5. The Will should be signed by the Will writer in the presence of three DISINTERESTED adult witnesses and a notary public. Many states require only two witnesses, but the signature of a third witness provides some protection against the possibility that one of the witness’ signature will be invalid for some reason. For example, a person should not be a witness if that person is a beneficiary under the Will. In most states, if a beneficiary’s signature is counted in order to satisfy the minimum number of witnesses, then the Will is not necessarily invalidated, but that «interested witness» may not receive a share of the estate any larger than if the Will writer had died without a will.

6. All of the witnesses must watch the Will writer sign this Will. The Will writer should verbally declare that the document is intended to be his or her Last Will and Testament, but the witnesses need not read the Will or know of its contents.

7. Each witness must sign his or her name with the Will writer and the other witnesses present. The witnesses should be satisfied that the Will writer willingly signed the document as his or her free and voluntary act, and that the Will writer was of full age and sound mind.

8. The Will writer should initial on the bottom margin of each page of the Will. This is done to prevent the later substitution of pages. To print out a line for initials at the bottom of each page of your document, choose Preferences from the view menu, Select the «Print» tab, and mark the appropriate checkbox.

9. The self-proving affidavit («Proof of Will» in some states) is a document which should be attached to the end of the Will, and which contains the Will writer’s acknowledgment and the affidavit of the witnesses, made before a person authorized to take acknowledgments and administer oaths. The affidavit recites that the requisite formalities were observed in signing the Will. Although attaching the affidavit has nothing to do with the legality of the Will itself, it can speed the admission of the Will to probate after the death of the Will writer because it eliminates the need to have a witness appear at the probate proceeding to testify that the formalities in signing the Will were followed. The witnesses may not be available later when they are needed. A self-proved Will may be admitted to probate without additional witnesses or affidavits, but it is still subject to contest on such grounds as undue influence, lack of testamentary capacity, or prior revocation. In most cases, this affidavit should be signed and attached to the end of the Will. Some states do not recognize the self-proving option. Therefore, the affidavit will be of no use in those states. However, including the affidavit in those states will not invalidate the Will.

10. The date should be filled in wherever requested, using the date on which the actual signing takes place. This step could become essential to the validity of the Will (for example, if this Will revokes an earlier Will).

11. The number of total pages in the Will should be indicated, including the page(s) on which the witness signature lines appear. The page with the affidavit, if included, should not be counted because the affidavit is not a part of the Will itself.

12. The original of the Will should be kept in a secure location such as a safe deposit box at a bank, because only the signed original can be probated. A copy could be kept in the Will writer’s home files. The Will writer may wish to provide a copy to his or her lawyer, or possibly to the person named as Executor or Trustee. However, before distributing such copies, the Will writer should consider that it may become awkward to retrieve them later, should the Will writer decide to modify the Will and/or change the designation of Executor or Trustee.

13. In most states, the Will cannot be changed by adding, deleting, or modifying words on the face of the Will. Such changes are usually disregarded. When changes are desired, it is recommended that the Will be revoked by signing a new will which expressly revokes the former Will. For example, if the Will writer marries or divorces after the Will is signed, he or she should make and sign a new will.

14. If you indicated that your personal property or residuary estate assets should be distributed in percentages, it is very important that each percentage total equals 100%. Check the printed totals before signing the Will.

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