Q What is my "estate"?
A Your estate consists of everything you own or legally control, including your home, business, financial accounts, real estate, personal possessions and intellectual property. Estate planning is the process of deciding what happens to your estate after your death, and then enacting those decisions with the appropriate legal documents.
Q What is a will?
A A will is the primary legal document directing how and to whom a deceased person’s property is to be distributed. In your will, you name an executor or personal representative to settle your estate, name a guardian for your minor children, make special bequests and possibly set up trusts to provide for loved ones. You can change your will as often as necessary during your life. After your death, it becomes an irrevocable mandate. A properly written will, signed, witnessed and dated, is your legal assurance that your personal wishes will be honored.
Q Do I need anything besides a will to have a complete estate plan?
A Experts recommend a durable power of attorney, which allows another person to act on your behalf should you become incapacitated, and a health care directive (also called a living will), in which you specify the conditions under which you no longer want your life artificially supported.
Some people also choose to create a living trust (see below). And if you are married, there are some basic trust arrangements that can protect your spouse’s inheritance and minimize estate taxes.
Q What is the cost of writing a will?
A A simple will generally costs a few hundred dollars in attorney’s fees. Adding a living trust can bring the cost into four figures. Costs vary depending on the attorney you choose, where you live and how complicated your will is to prepare. Attorneys often charge a flat fee for the preparation of estate planning documents, and can quote you that fee after an initial consultation. If you do not have an estate planning attorney in your area, ARI can assist you in locating one.
If you do not wish to hire an attorney to prepare your will, there are books, software programs and Web sites you may use to do it yourself. However, beware of generic “boilerplate” provisions that may or may not fit your estate planning needs. And if you do write your own will, we recommend that you have it reviewed by an attorney licensed in your state of residence.
Q What happens if I die without a will?
A If you die without having legally stated your desires regarding the distribution of your property, the government takes over those decisions for you. Officials in your state of residence decide the disposition of your assets according to “one-size-fits-all” laws, which are unlikely to coincide with your personal desires. A court-appointed administrator decides what becomes of your property and who will care for any minor children. Family members whom you may or may not have intended to benefit will likely receive your estate according to a statutory formula. If you have no living relatives, your property will go to the state. The Ayn Rand Institute will receive nothing if you have not taken the steps to prepare a will and designate a bequest.
Statistics indicate that more than fifty percent of Americans die without a valid will. Making a will is a relatively simple process for most people, but it is a task many avoid because it involves “death and taxes” or because it is contingent on other decisions they may not be ready to make. If you have postponed writing your will, consider that in the event of an unexpected tragedy it is better to have a simple plan in place than to have waited too long to do the perfect estate plan.
Ultimately, there are three potential recipients of your wealth and property: your heirs; the state; and nonprofit organizations such as ARI. If you plan ahead, the disposition of your estate will properly reflect your choice of beneficiaries.
Q I am young and do not yet have many assets. Do I really need a will?
A It is a good idea to have a will, regardless of the size of your estate. Anyone who owns any property and cares about what becomes of that property should have a will.
Q What is a living trust?
A Like a will, a living trust is a revocable legal document that contains your instructions for the distribution of your assets after you die. The trust is a method of holding property that allows you to manage your assets and pay your expenses, and then to benefit others after your death.
Putting property in trust protects your privacy. After your death, your will is a matter of public record, but trust provisions are private. Also, assets in a living trust avoid probate, often saving time and money in the settlement of an estate. More . . .
Q What is probate?
A Probate is the legal process of settling a deceased person’s estate. It is a court-supervised proceeding that validates a will and ensures that its terms are properly carried out. Probate procedures and costs vary by state.
More About Estate Planning
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