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Financial Literacy - Planning for your heirs
What to know about wills
A will enables you to name a guardian who would rear your minor children if you and the other parent were to die.
Planning for your heirs

What you need to know about wills

What does a will cover?
In your will, you can only bequeath what you own, individually, that hasn't been transferred by some other means. Such assets can include your tangible personal property. "That means things like your house contents, cars, jewelry, collectibles -- things you can pick up and carry," says Spencer.

A will cannot direct assets for which you named a beneficiary by contract. These assets will pass to the designated person upon your death.

Named beneficiary accounts:
401(k) plans.
Life insurance.
Bank accounts.
Brokerage accounts.

Your will doesn't cover anything you own with someone else or that is in a trust.

"If you own a house with your spouse in joint tenancy, for example, as a lot of people do, then it won't go through the will," says Randolph. The house would simply pass to the surviving spouse upon one owner's death.

The will won't cover who inherits the house until the second owner dies. "Sometimes people do overlook that. They think, 'Well, we've got it taken care of. We don't need to worry about this because it's just going to go to my husband or my wife when I die', but then that surviving spouse needs to take care of things later," she says.

In short, many assets can pass outside a will, depending on the other transfer methods you've set up. "If you haven't selected any other method, all your property will go by your will," says Denis Clifford, author of "Nolo's Simple Will Book." "It's sort of what's left after what's specifically transferred by other methods."

When bequeathing specific personal property, Randolph advises making it clear who should inherit which asset if you don't want misunderstandings and fights to ensue. She says that people can "head off trouble by being fairly specific" in their will about important items and by talking with family members.

Also, think carefully about naming the executor who will take care of your affairs after your death. "That's the person in charge of collecting the assets, valuing them, paying debts, paying taxes and then distributing the property in accordance with the terms of the will," says Spencer. Choose someone who's responsible and capable of carrying out the tasks.

-- Posted: Nov. 19, 2007
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