Create a will to identify which of your assets you want go to which beneficiaries. Here's what you need to know to get started.
The Steps to Preparing a Will
Distributing assets after a loved one has passed on is always a difficult. You can make things easier for your family by creating a will that clearly outlines how you would like your estate to be distributed to your beneficiaries after you're gone.
Whether you create the document yourself, with a software program, or engage an attorney, drawing up a will requires some preparations. Start by making a list of all your assets: bank accounts, investments, real estate, cars, furniture, sentimental heirlooms, and other personal property.
Then identify your bequests: who should receive what. For each beneficiary identified, write out his or her legal name, address, and contact information, since any details you can organize ahead of time will reduce the amount of time you spend later with a lawyer or any other estate of tax professional.
Next, consider whom you will want to appoint as the executor of your estate. The tasks often include, but are not limited to, paying taxes and funeral costs, settling debts, and dealing with mortgages. Due to the many responsibilities associated with the role, you will probably want to consider someone who is an adult and who is willing to take on the responsibilities. You will also want to consider naming a back-up executor in case your primary choice is unwilling or unable to manage the tasks.
Then you will need to actually prepare your will. The statutory requirements for a will vary from state to state, and you will want to make sure that the will you prepare is legally valid. Once your will is prepared, you may need to get it notarized (banks offer notary services), and then you will want to store it in a fire- and water-proof safe or in another safe place. Make sure your executor knows where the original will is stored. You may also choose to give copies to the executor or beneficiaries, although it's not necessary. If you want to make changes to your will at a later date, you may be able to make these changes with a separate document called a codicil, depending on state law. A codicil usually does not replace a will and typically only makes changes to it. In some states, a minimum of two witnesses must also sign the codicil. It is recommended that one witness be a notary.
The Cost of Preparing a Will
If your finances and bequests are straightforward, you might be able to prepare the will yourself, using software and generic templates that cost about $30 to $60. In some states, your will should be signed in front of at least two witnesses, who also should sign it. However, you may want to have an attorney review it. Be aware that certain rules differ from state to state, such as requirements for notarization or handwritten documents.
For more complex financial situations, it's worth using a lawyer. For instance, if you have substantial assets, a business of your own, or an investment portfolio, you may want to talk to an expert. An advisor can also help you manage potential tax consequences, appoint a guardian for children, or establish a trust to pay income during your spouse's lifetime.
Depending on the market, attorney fees for a basic will can range from about $500 - $1,000. Some lawyers offer reduced rate packages, which include a personal consultation plus the drafting of the will. Expect to pay extra for more complex issues, estate planning, power-of-attorney delegations, and living will documentation.
Reviewing Your Will
Review your will at least once every five years and every time there is a major family event, especially given that tax and state laws are always evolving and that your own circumstances may also change with major life milestones, such as marriage, divorce, the birth of children or grandchildren, adoption, the death of a spouse or other beneficiary, or real estate purchases. Update your will to reflect those changes as well.
Preparing a will protects your legacy by directing assets to the beneficiaries of your choice. For the beneficiaries, a will provides an outline and directive as to how you want your assets distributed, which can reduce or eliminate misunderstandings following your passing.
