The will to succeed is for naught without the will to prepare. Sounds like a message of exhortation on one of those "success" posters.
Speaking of the will to prepare, have you prepared your will? Take the dog for a walk with a fresh, empty Walmart bag in hand ... or prepare your will? Which would you rather do right now? Hands down (get it?), taking Fido to take care of his business! I get that. In fact, almost anything will win out (I was going to use "trump" instead of the more cumbersome "win out," but did not want to stray into politics), over taking care of your own (legal) business here. Granted, while it may be an unpleasant task to think about your own mortality, writing a will is one of the smartest financial planning activities you can do. In that spirit, Fox Business solicited some of its contributors regarding important things everyone should know before writing a will.
Here is an overview of the pooled wisdom from the resulting article titled “3 Things You Should Know Before Writing Your Will.”
1. A will doesn't actually cover all of your assets. That is correct. Did you know that any assets that have beneficiary designations (e.g., IRAs, 401k’s, and life insurance policies) pass automatically "outside" your will to the designated beneficiaries? In addition, any assets you own in joint tenancy with rights of survivorship with one or more other folks pass to the surviving joint owners at your death. Likewise, pay-on-death bank (POD) and transfer-on-death (TOD) accounts pass to the designated beneficiary when you pass away. Finally, any assets held in trust are handled outside of probate. Teaching point: Make sure your beneficiary designations are consistent with your will. Period. Consequently, if you make changes to your will, then you should review those beneficiary designations to see if similar changes are needed "outside" of it. If you fail to do this, then your well-intended efforts to update your estate planning could create major gaps nosediving your plans for the distribution of your assets after your death into the dirt.
2. Naming your will's executor takes some thought. The executor is the individual in charge of taking care of your affairs and ensuring that your will is carried out as you directed. Selecting the executor is a big deal. Who comes to mind as a potential candidate, as you review the bullet points of executor responsibilities below? Distributing assets as directed by the will. Paying bills and taxes on behalf of the estate. Appearing at legal proceedings for the estate. Maintaining property until the estate settles. Without belaboring the point, you need to choose the right person for this important assignment. Many people select their spouse, an adult child, or a trusted friend. But you can also name an attorney as executor. You also can name joint executors and alternates in case the executor you choose cannot serve or he passes away before you do. The original article suggests the following considerations when selecting an executor. First, he or she should be someone you trust to make the right decisions, and a person who is smart enough to ask for help from an experienced estate planning attorney when they need it. Second, naming several of your children as co-executors might be hazardous, as this could lead to arguments. However, I think doing so is just dandy, and practical, if the children get along swimmingly. Your executor need not be a financial guru, but should be a person you trust with good business and common sense.
3. Take extra care in writing your will if you have young children. In many instances, children cannot deal with the responsibility of inheriting property. Also, if your son or daughter inherits property outright when he or she is still a minor, then the probate court will appoint an individual to be a property guardian if you fail to do so. That on the table, it makes total sense to carefully consider whom you want managing your assets for your child after you pass. This is especially vital because a court-appointed guardian will hand over all the inherited property to your child on the day he or she turns 18. Not good. Take some time and think about how you want to address these issues. Your estate planning attorney provide help you avoid any additional hidden gotchas and even offer some creative alternatives.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.