In this topic, you'll learn:
Your will is the cornerstone of the legal framework of your estate plan. A will is a legal document designating the transfer of your property and assets after you die. If you die without a will, the court steps in and distributes your property according to the laws of your state, which may or may not coincide with your wishes. If you have no apparent heirs and die without a will, it's even possible the state will claim your estate.
Remember, wills are not just for the rich; your will helps to ensure that whatever your assets, they will go to family members or other beneficiaries you designate.
To be valid, a will must comply with the laws of the state in which you live. Only about half the states recognize "homemade" wills. State law may stipulate that you use specific language, sign the will in a particular way, and/or have a certain number of witnesses of a certain age present when you sign. Be sure to consult a professional in your state to make sure your will is valid.
Bear in mind that having a will is especially important if you have young children because it gives you the opportunity to designate a guardian for them in the event of your death. Without a will, the court will appoint a guardian.
In the will you also designate an executor - the person who ensures that the instructions in the will are followed. The executor also handles tasks such as collecting your assets, paying creditors and taxes, cancelling accounts, and notifying government agencies of your death. Obviously, your executor should be an individual you trust. Most people choose their spouse, an adult child, a relative, a friend, or a trust company or attorney to fulfill this duty. It's also a good idea to designate an alternate executor in case the primary executor is unable to fulfill their duties.
Creating a legally binding will is the best way to streamline the probate process - the process during which a court determines that your signed will is a genuine statement of how you want your estate to be distributed. Depending upon the state in which you reside, the probate process may take a few days or it may take many months, and depending upon the complexity of the will, it can be an expensive process. A qualified financial planner or estate attorney can help you determine what's appropriate for your specific situation.
When making a will, remember that some of your assets, such as insurance policies, normally bypass your will and flow directly to beneficiaries you have listed. Keeping this list of beneficiaries up to date is just as important as creating and maintaining your will.
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