I'll focus on the basics in this article and the last two articles will complete the series and discuss wills and living trusts. You will also need to have a health directive and various power of attorney forms. I'm not an attorney or expert in this area and am simply relaying what I know about these complex issues and what references and software that I used to complete my documents. If you have complex issues or extenuating circumstances in your life see an attorney. They are experts in this field and can put the final touches on your overall estate plan.
Collecting all of the information I discussed in this series can be compiled in several ways. Whether or not you complete your wills and trusts using software programs such as Quicken WillMaker Plus 2016 or use an attorney you will still need all of the information in the Survivor's Guide. It is also beneficial to understand the basics of estate planning even if you hire an attorney so that you will understand the concepts he or she will discuss with you and be able to make informed decisions. It's like many things in life. We are often required to rely on professionals for many things. However, a basic understanding is essential.
If you want your assets to transfer to individuals or organizations you need to have a will that specifies your wishes. You must also have a will to assign guardianship for minor children and to select an executor who will transfer your assets and administer the will. If you die without a will the state you reside in will determine who gets what and when and your entire estate goes through what is called probate. Probate is the process used by the courts to distribute your property. Wills and trusts provide the guidance needed to insure your THINGS go to whom you desire and living trusts avoid probate so your assets can be distributed shortly after you die. Often, Probate delays distribution of your assets for up to a year or more and your estate will incur attorney fees that can be significant and are often unnecessary if you transfer property through other means.
A will is an essential backup device to transfer any assets that are not transferred by some other means such as "Pay on Death" or beneficiary designations on accounts, living trusts, and all other residual estate assets. They are also necessary to assign guardianship for minor children.
Before deciding what to put in your will you need to identify all of your major assets and determine how they will be transferred. Go to the Asset Allocation sample spreadsheet that I posted online. Read this section to understand the spreadsheet and the different asset transfer methods such as TOD - Transfer on Death, POD - Pay on Death, Beneficiary, Joint Tenancy, and Trusts. You can download a free blank spreadsheet to use for your personal assets.
Many estates simply require a will and to specify beneficiaries, POD or Joint Tenancy designations for major assets such as savings accounts, certificates of deposit, checking accounts, insurance policies, mutual funds, savings bonds, stocks, the Thrift Plan, etc. Use the spreadsheet mentioned above to identify your assets and how they will be transferred. If you assign TOD or beneficiaries your major savings and assets will transfer out of probate and often within several weeks to your heirs. All other assets will transfer through a will and revocable trust if applicable. Mid sized to large estates may also need living trusts to avoid probate and to distribute assets.
Living trusts are also referred to as revocable trusts and are initiated during your lifetime. They are not registered like a will and simply instruct your executor how to transfer specific assets per your wishes. Assets in living trusts avoid probate. They are easy to set up and do not require additional or separate tax filings. You still own all of the property of the trust as long as you live and you have the ability to amend it as necessary to suit your needs. It is important to fund the trust after it is executed and notarized. This means that you have to transfer the assets that require registration such as mutual funds and stocks and bonds into the trust's name. This is easy to do and brokerage houses and mutual fund companies will send you the proper forms to use to change registration. You, the Grantor, will name yourself the trustee and you will receive the dividend payments and can buy and sell the equity without limitations.
I used three valuable references for my estate plan and have mentioned them many times in my articles. They have answered all of my questions and I was able to do my estate plan without a visit to my attorney. However, there may be issues in your life that will require a visit to your attorney such as having a disabled dependent, certain business interests, etc. Even though I've done this on my own I do intend to eventually see an attorney concerning certain issues down the road. The three references I used are:
I keep the two books in my bookcase for reference and specify where they are located in my Survivor's binder "Letter of Instruction." You can purchase these references on my web site at discount prices. The books may also be available at your local library.