Sunday, March 9, 2014

Your Will: Protection for your Family

"Estate planning" is the rather delicate term that is used to describe planning for your death. Many people put off their estate planning because of the discomfort they feel in thinking about their death. But you shouldn't procrastinate. Estate planning is your primary means of protecting those people you care about who will still be alive after you are gone.
Wills have many Benefits
The basic legal document you use to protect, care for, and provide for your loved ones in the event of your death is your will. In this document you can give important instructions regarding how your property should be distributed after your death, who will care for your children and other loved ones, who will be in charge of finalizing your affairs, and much more.
Your will helps assure that your assets will be distributed to the persons you want in the right amounts and at the right times. You can use your will to reduce or eliminate the taxes that will be levied against your estate, to avoid family conflicts, and to provide for religious, educational, or other charitable causes. A will also allows you to give your executor flexibility in dealing with your estate, eliminate the need for filing costly bonds, and minimize other costs that can diminish the amount received by your heirs.
Naming a Guardian
If you have young children your will provides you with the opportunity to protect them after you are gone. Your will is the legal document you use to name a guardian to care for your children after your death. Choosing a guardian for your children may be one of the most important (and most difficult) decisions you will ever have to make. However, if both you and your spouse were to become incapacitated or die without naming someone in a will to be responsible for your children's care and finances, the courts will be forced to appoint a guardian without the benefit of your knowledge and judgment. Factors you may want to consider in choosing a guardian include the guardian's age, personal characteristics and religious and moral qualities. You can also appoint a trustee to administer a trust for the children until they reach a specified age later than age 18.
Naming your Executor
A will gives you the opportunity to select an executor. The executor is the person who will be in charge of finalizing your affairs and administering your estate. Your executor has many responsibilities such as collecting the assets you own or are owed and protecting them until they are distributed to your beneficiaries. In addition, the executor sees to it that all proper debts, expenses and taxes are paid, that legal requirements are followed, and that your estate is managed and distributed in accordance with the instructions you provided in your will.
Serving as executor can be quite complicated. Your executor may need to obtain appraisals, process claims, register stocks and bonds, pursue lawsuits, prepare information for beneficiaries, prepare tax returns, and so on. You should give careful thought to the person you choose. Ideally your executor should be knowledgeable in business and financial matters, patient, thorough, and fair minded. You may want to name a co-executor, or an alternate executor in case your original choice cannot serve. You may even want to name a bank or other professional executor. If you die without a will, a court will have to appoint someone (called an "administrator") not of your choosing to perform the executor's functions.
Probating the Will
After your death your will must be proved to be valid. To do this, your executor "probates" your will by filing it with the Register of Wills of the county in which you resided at the time of your death. In Pennsylvania, the Register of Wills then gives your Executor documents called "short certificates" which authorize the executor to perform the functions needed to administer your estate. If questions arise regarding your will or the handling of your estate, a Judge of the Orphans Court will be available to resolve them. However, since the rules regarding wills are very well established, it is rare that a Judge will ever need to get involved.
Consulting a Lawyer
It's a good idea to have a lawyer prepare your will. A competent attorney can prepare your will using precise legal terms that can avoid later problems for your heirs. Yes, you can draw up a will on your own without a lawyer, but for most people this is not advisable. Varying state laws, uncertain tax implications, obscure legal requirements, the need to avoid ambiguities, and your unique circumstances, all can trip up the non-professional. Considering what is at stake, saving legal fees can be a false economy.
Some Assets are outside of your Will
As important as your will is, the transfer of some of your property may occur without regard to the provisions of your will. Joint bank accounts, for example, usually become the property of the surviving account holder. A home that is owned jointly with a provision for "right of survivorship" automatically passes to the surviving owner. Other assets not affected by your will may include life insurance, annuities, IRAs and other retirement plans, and other assets for which beneficiaries have been named. You need to create a plan that covers all of your assets, not just those that will be distributed according to your will. Good estate planning requires a coordinated review of all of your ownership and beneficiary arrangements. Your will is a key document in your plan but it is not the only document. Professional assistance can help you make certain you do not miss any important elements in preparing your estate plan.

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