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The simplest way to ensure that your assets
and personal property will be distributed according to your
wishes after
your death is to prepare a will. However, simple drafting
mistakes that can occur even when you work with an attorney
can negate your intentions and cause big problems for your
heirs. Follow the tips below to help ensure your will accomplishes
what you want it to.
Avoid mentioning dollar figures.
By specifying
dollar amounts in your will, you run the risk of having your
estate distributed
in a way you never intended. For example, suppose that your
estate is valued at $500,000 when you write your will. You
decide to make a $50,000 gift to your brother and leave the
remainder of your estate to your only daughter. But what
happens if enormous medical expenses destroy your net worth
and at your death you are worth just $80,000? According to
your will, your brother still gets $50,000, more than your
daughter’s share of $30,000, clearly not the split
you intended. Using percentages rather than dollar figures
gives you a better chance of achieving the distribution you
desire.
Use caution when choosing couples as
guardians.
You love your sister and she loves your children, so you
name
her
and her husband as your children’s guardian. However,
what happens if she dies before you or if the couple gets
divorced? Are you comfortable having your brother-in-law
and whomever he may re-marry raise your children? If not,
name your sister first and choose another person as a backup.
Never use a beneficiary as a witness
to your will.
Having the same person as both a beneficiary and
a witness casts
a shadow of doubt about what influence that person may
have had on you and could open the door for your heirs to
contest
your will. If you use an attorney, have his or her office
staff members serve as witnesses. If you do not use an
attorney, you need to find witnesses who are not named as
beneficiaries
in your will.
Address the possibility of simultaneous
death.
For married couples, if a will does not address the
possibility
of simultaneous
death, each spouse is presumed to have died before the
other. And that leads right into a tax trap because it prevents
the couple from taking advantage of the marital deduction
that allows one spouse to leave an unlimited amount of
property
to the other at death without triggering the federal estate
tax. Accordingly, in situations where there is a big disparity
in the value of the estates, the will should note that
in the event of simultaneous death, the partner with the
greatest
estate would be assumed to have died first.
Include a provision
for disclaimers.
This is not simply a matter for high net-worth
individuals. Because a large,
unplanned inheritance could put a surviving spouse in the
position of not wanting to receive anything additional
into his or her estate, your will needs to be worded properly
to allow heirs to disclaim their inheritance.
Do not include
funeral and burial arrangements.
Wills should be comprehensive,
but they are no place to detail funeral
arrangements. In fact, in some cases, wills are not located
and read until after the funeral, so it’s possible
that your wishes would not be known. Draft an additional
document and discuss your wishes with the family members
or friends you ask to keep the document.
Coordinate your
will with other documents.
Some of your assets, such as
life insurance proceeds, 401(k) accounts,
and IRAs, will pass outside of the will to your named beneficiaries,
while property held in joint tenancy automatically goes
to the other person. You should coordinate bequests you make
in your will with how these assets will be distributed.
Review and update your will.
While you
immediately should revisit your will if you get married,
divorced, or have a
major change in your financial fortunes, it’s wise
to a do a quick review every year or so. If your estate is
large enough to worry about estate taxes, reviews are essential
after major estate tax legislation.
Choose your executor
carefully.
You’ll want someone
who is calm, honest, organized and, most importantly, willing
and qualified to serve. Be sure to discuss the job requirements
with your candidate and get his or her consent. It’s
also wise to list an alternate or two.
Finally, although
you may not want your family to know in advance what is
in your will, they should at least know where
to find it. Rather than leave your will in a safe deposit
box that could be sealed and inaccessible upon your death,
ask your executor to keep a copy.
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