In Sickness and in Health: When is the Right Time to Prepare a Will

March 27th, 2012

Despite the recent drama over Michael Jackson’s death, he did many things right when it comes to end-of-life estate planning. The most critical thing Jackson did was to name a business associate as executor to carry out his wishes and designate a guardian for his minor children. He also set up a family trust that should keep the division of his estate out of the public eye.

As opposed to Jackson, Steve McNair, former NFL quarterback, died intestate (without a will). According to reports not personally verified by the writer, McNair had a wife, two children from a former marriage, and two children from a previous relationship. Now, instead of being able to decide for himself how his property should be distributed, the distribution of his assets will be determined by a formula set forth under state law.

Too often people do not get around to making a will. The problem is there is no deadline to make sure it is done before your death, and people do not like to think about dying. It is important to remember that if you die without a will state law dictates what happens to your property and assets and a court of law may determine who has custody of your children.

While mortality is a difficult topic to discuss or think about, leaving your family with large financial decisions isn’t pleasant either. Start by assessing your overall financial picture – your net worth. You need to identify not only your financial investment assets but also the value of your real and personal property.

Craft a will. With the assistance of an attorney, you can outline how you wish your estate – your assets and liabilities – to pass through after your death. Your assets along with your debt will need to be handled by your family. Identify anything that may need to be taken care of in case you are incapacitated. Check on taxes that may need to be paid by your estate. Remember to keep your will updated if you move, remarry, divorce, or experience any significant change in your life.

In some cases you may wish to discuss your desires with trusted family members. By letting others know what your plans are, you can prevent misunderstandings after your death. In some cases complete privacy is indicated. Choose an executor. Whether it is a family member or friend, the executor needs to be someone that can be trusted to handle the decisions and paperwork surrounding your death and the probate of your estate. Choose a successor. Be careful when choosing a spouse whose health may be failing along with your own.

Protect your assets with a trust. Setting up trusts can allow you to provide for your family and beneficiaries after you are gone and in some cases bypass probate and the associated expenses altogether. Plus, in the appropriate case and jurisdiction a trust may aid in lessening the potential taxes on your estate. Talk over your planning and estate needs with a financial advisor. You can provide an income to a surviving spouse and children, safeguard your assets until your children reach a set age or establish a trust for a charitable organization. The benefits of a trust are: federal unified tax credit to leave assets tax-free; providing income to one beneficiary for his or her lifetime, and the balance to others; professional investment assistance and management; and postponing estate taxes with property transfers. The various types of trusts you may want to consider and/or discuss with your attorney are: revocable living trust; testamentary trust; living trust; and irrevocable and charitable trusts.

Keep your children in mind. Make sure that you name a guardian who will care for them into adulthood. Establish how you want your children to inherit your estate, whether it is through investments or trusts. Choosing the guardian of your children is very important. Be sure that whomever you name is aware of and willing to take on the responsibility. You may want to also take into consideration their age and health.

Periodically review your plan (especially in the case of divorce or death of a spouse or beneficiary). Your estate will change over time. Do not assume that what you set up five years ago will be what is best for your present estate. Money grows, investments change, you may downsize your housing needs – reassess your plan and make the changes in writing.

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