An important legal document, the last will and testament, is the first building block of a good estate plan. Estate planning is when an individual or family arranges the transfer of assets in anticipation of death. The estate is the assets or property. You may need to choose between either a will-based estate plan or a trust-based estate plan. Your last will and testament largely depend on your overall estate planning strategy.
Option 1: Will-based estate plan
The will-based estate plan will outline all essential details of your last will and testament. It will provide information including the person to be put in charge of settling your final affairs (the executor), the persons who will inherit your property (beneficiaries), and the provisions on how they will inherit it. Your last will and testament with a will-based estate plan will cover the following:
Who will serve as the personal representative/executor
What powers your personal representative/executor will have
Who will inherit your property
How and when your property will ultimately be transferred to your beneficiaries
Who will serve as guardian of your minor children until they become adults
Option 2: Trust-based estate plan
In the trust-based estate plan, a document called a revocable living trust will cover all the important points listed above in the will-based estate plan with one exception: the person in charge of settling your final affairs after you die is called an administrative or successor trustee instead of an executor. You will still need a last will and testament if you have a revocable living trust. Ideally, you will fund or move your assets into your trust before you die. If you fail to fund even one asset into your trust, the last will and testament will be the necessary document to "catch" the unfunded property and transfer it to your trust after you die. In this case, the last will and testament will function as a pour-over will that will cause the unfunded assets to "pour over" into your trust through a probate process.
A pour-over will need to cover:
Who will be in charge of your assets that were not funded into your trust as the personal representative/executor
What powers your personal representative/executor will have
Who will serve as guardian of your minor children until they become adults
What will happen in the absence of a last will and testament?
A last will and testament is recommended for your property to go to the beneficiary of your choice after you are gone.
The absence of a will could result in the state providing a last will and testament on your behalf under the state's intestacy law. The laws of the state that your property is located in will prevail. This can get complicated if you own property in multiple states.
Do I need a lawyer to make a will?
Newlyweds, new parents, homeowners and even people without significant assets should write a will. What you own is yours and should go to the loved ones or charities of your choice. Spelling out and recording your final wishes don't have to involve expensive visits to a lawyer. You can create a legally binding last will and testament online. The process is simple. You will be asked questions in order to inventory your assets and specify your beneficiaries.
You can choose alternate beneficiaries in case your first choice doesn't survive you. Spouses that have jointly owned assets will have these assets automatically become the property of the surviving co-owner beneficiaries and are generally not under the jurisdiction of a will. Retirement accounts and life insurance with specified beneficiaries are also outside the purview of a will. Most spouses typically must make separate wills to specify the disposition of individually owned assets.
Even workers living paycheck to paycheck should consider making a will, especially if they have young children. You can specify an adult guardian for children under age 18.
Any adult of sound mind is entitled to make a last will and testament. All it requires is that you date and sign the will and record signatures by at least two witnesses who must watch you sign the will, though they don't need to read it. In most states, the witnesses must be people who won't inherit anything under the will.
You don't need to have your will notarized. You do not have to record or file your will with any government agency, although it can be recorded or filed in a few states. Simply keep your will in a safe, accessible place and be sure that your executor (the person you choose to wind up your affairs) knows where it is.
There is no requirement for a lawyer to write your will and most people do not need a lawyer's help to make a basic will -- one that leaves a home, investments and personal items to your loved ones and names a guardian to take care of young children. If you have questions or there are complexities in your estate, you may prefer to get legal counsel by hiring a good lawyer.
Source: 1-2-Law: www.12law.com