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Preparing a will
By Ken
Kurson • Bankrate.com
 Despite
advances in medical technology, the mortality rate for humans remains stubbornly
fixed at 100 percent. So why is it that about millions of Americans still die
without a valid will?
Everyone needs a will. The primary purpose of a will is to ensure
that your assets are distributed to whomever you choose in the amount and manner
that you choose. Other functions include assigning guardianship to minors and
appointing an executor to dole out your stuff.
Suppose you die in a car wreck caused by a drunk driver. Even
if you have no assets, your estate might have a wrongful death suit that produces
millions, all of which will be divvied up by the state if there's no will.
Dying intestate also triggers a little-known hassle in the form
of an administrative bond. When someone dies without appointing an executor,
the court appoints an administrator to disburse all property that wasn't jointly
owned with a survivor. The administrator must post a bond to ensure that he
doesn't loot the estate and vanish. The cost of that bond, usually about $100
a year for every $100,000 in the estate, is paid by the estate's assets.
In general, a will must be signed in the presence of two witnesses
to be legal (as do "codicils," or subsequent changes). Handwritten wills, known
as "holographs," are legal in about half the states.
But a higher quality will isn't that pricey. An attorney will
usually do a bare-bones "simple will" for less than $100. A simple
will means no trusts and an estate value under $1 million, which is a magic
number because it's now where federal estate taxes, at a rate of 50 percent,
kick in.
Tax law changes in 2001 mean the amount of an estate that's exempt
from taxes will gradually increase and the tax rate applied to the remaining
amount will drop until the estate tax is eliminated in 2010. In 2011, the estate
tax exemption will go back to $1 million and the tax rate on the remainder will
go to 55 percent unless Congress takes further action. That's why estate planning
remains critical. And while your talking with your attorney, it's a smart idea
to discuss related issues -- power of attorney in the event you are disabled
but not dead, a living will to deal with heroic medical efforts. All this can
be incorporated for about $200 to $300 total, assuming again that your estate
is relatively modest and depending on where you live.
Living trusts
Those with substantial estates (at least $250,000 or so) might consider establishing
a living trust.
A trust is simply an agreement between the grantor (the person
who establishes and funds it) and the trustee, who administers it. When someone
with a living trust dies, he can leave all his assets to the trust, which can
then be doled out by the trustee. This escapes the attorney's fees for handling
the probate process (probate simply means "presenting the will" to the court,
and the fee is usually about 2 percent to 3 percent of the estate). Living trusts
also get the assets into the heirs' hands quicker (60 to 90 days vs. nine months
or so for probate). Caution: A living trust is never a substitute for a will.
An attorney will set up a living trust for $500 to $1,000, and there's a yearly
maintenance fee charged by the institution that houses it.
Living wills and power of attorney
Mark C. White, an attorney in Cleveland who specializes in estate law, emphasizes
the importance of a living will in today's medical climate. "In the past, people
tended to just die. Now, people live for years, but are unable to make competent
decisions. Lawyers make money off these people. I've had guardianships where
I've made money for years that the relatives wouldn't have to pay had they established
each other as nominated power of attorney. Because the judge has to approve
every little thing -- a stock sale or if the house needs to be sold."
White says that anyone who may end up in charge of their parents'
assets should they become disabled should seek a power of attorney provision.
"Power of attorney isn't foolproof, but it can save a pile and is almost as
important as a will.
Do-it-yourself wills
If you choose to prepare your own, make use of several good do-it-yourself will-maker
kits, both in print and electronic versions, the best of which are sold by legal
publisher NOLO. Not surprisingly, estate lawyers tend to recommend professional
legal help, and their case isn't without merit. White points out that the kits
only help with those questions the filer knows to ask. Stuff like durable power-of-attorney
is critical in today's era of people living for decades without the faculties
to make financial decisions for themselves. And every estate lawyer in the land
has horror stories of survivors who suddenly found themselves in estate-bleeding
battles with long-lost relatives. So use the kits if you like, but don't automatically
think that certain facets don't apply to you.
One last common error: Use a separate document for special burial
instructions. Estate attorneys all have clients who buried their parents only
to open the will a few days later and discover a mad desire to be cremated.
Ken Kurson has written for Forbes, Worth, Esquire,
The New York Times and elsewhere.
Kay Bell contributed to this story.
-- Posted: March 16, 2003
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