What You Need to Know About Wills

Here's a great, general piece listing what you need to know about wills. It details the following:

• Who needs to have a will?
• Which assets does a will direct?
• Do you need an attorney?
• Make sure your will is valid
• How often should I update a will?

In particular, the third question is one I'd like to address in this post. Do you or don't you need an attorney?

Generally, my take is that if you're single, don't have many assets, and someone isn't depending on you for an income (like a parent), then go ahead and do your own will using a software program or some sort of kit. All others I would suggest consult an attorney.

Why? Because you want to make sure it's right, legal, and will do what you want it to do. Is it really worth saving a couple hundred bucks if your estate doesn't ultimately go where you want it to go? Worse yet, what if your kids end up with someone you don't want them to end up with? Besides, a lawyer will think of issues you haven't even dreamed of -- and some kits won't address either. Go ahead, get a lawyer and make sure it's done right. If nothing else, the peace of mind will help you sleep better at night.

Now if you finances are complicated in the least bit, you really have to use a lawyer. What's complicated? Let's say your estate is over $2 million and you want to limit taxes when you die. Then you need the help of a seasoned attorney. Otherwise, your heirs could get a not-so-welcome estate tax bill upon your death. And I know what some of you are thinking -- that not many people have $2 million estates. Well, it's becoming more and more common to be a millionaire and I'd venture a guess that many of these people have more than $1 million in life insurance, hence a good number of them are over the $2 million limit.

As you know, I'm generally a do-it-yourselfer when it comes to personal finances, but not on this one. Just like I use a CPA to do my taxes, I hire a lawyer to do my will. In fact, I'm in the process of a will update right now. I'll keep you posted on my thoughts as the process progresses.

Comments

[Hal]

Hmm. Don't forget about the expanded estate tax limit for 2009 and 2010, if Congress doesn't extend the break... Or indefinitely if it does.

When I was in school when this passed, my prof said that people with large estates were jokingly advised to hold on until 2010, when they could pass their estate tax-free. I wonder if we'll see an uptick in wealthy person deaths, though, as a result of this law (particularly if Congress doesn't extend).

[Michael B. Rubin]

There's also an decent chance Congress rolls back the estate tax exemption amount. If so, $1 million estates (and possibly lower) could once again become subject to estate tax. A competent attorney can draft your estate planning documents (wills, trusts) to address these multiple possibilities due to the uncertainty of future tax laws.

And no, I wouldn't want to be very rich, very old and a little bit sick in December 2010.

[Zook]

Fact is, allowing the estate tax to revert back to $1 million is a tax on the middle class. I don't know how all of these wealthy blabber mouths can say an estate tax is "good". It's not 1965 anymore, $1 million and even $2 million isn't uber money. For example, Person A with two kids and a stay at home wife, might own a three bed, two bath house in San Fransisco worth $800,000, say he was smart and maxed out his retirement accounts with $500,000 and then there is a insurance policy worth $1,000,000. Warren Buffet is going to sit back and say this person can handle it?

Dying should not be a taxable event for a normal family like I mentioned above. Person A is getting screwed IMHO.

what is imho?

[FMF]

IMHO = in my humble opinion