Long-Term Care Planning and Wills - dummies

By Carol Levine

Copyright © 2014 AARP. All rights reserved.

In recent years, many books, software, websites, and services offer templates for writing a will without consulting an attorney. The appeal is obvious: You still have to pay for the basic materials, but the cost is much less than an attorney would charge.

However, do-it-yourself wills do not take into account the specific circumstances that need to be addressed and may not have as precise wording as a lawyer-written will. Unless someone is watching out for details, the will may not be signed and witnessed in a way that makes it valid in your state. A court may conclude that an invalid will is no will at all and take over the distribution of the estate.

If you decide to take the DIY route, make sure that you have thoroughly considered all the worst-case scenarios so that you can account for them in the will. Also have someone else check the document for proofreading errors ($100.00 when you meant $10,000) or failure to include a person’s name where you are asked to [Insert Name Here].

Taking inventory of your assets

In considering a will (and for estate planning in general), start by making a list of assets to be distributed, including

  • Liquid assets (things that can quickly be turned into cash), such as bank accounts (checking and saving), certificates of deposit, and money market funds

  • Fixed assets, including bonds

  • Certificates of deposit that are payable to a named person on death

  • Retirement accounts, such as 401(k) plans, IRAs, Keogh accounts, and pensions, if they have designated beneficiaries

  • Transfer-on-death stock accounts, payable to a named beneficiary

  • Valuable personal items such as jewelry, antiques, artwork (items with only sentimental value can be kept in a separate list)

Community property is the law in nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin). This means that property acquired during a marriage is shared equally by a married couple regardless of who earned the money.

Only the share owned by one person can be distributed in a will. This may call for some Solomonic decisions, but it can be addressed in a will by a spouse giving his or her half of the community property to the surviving spouse.

Considering types of wills

According to the American Bar Association, there are several types of wills:

  • For an uncomplicated estate, a simple will provides for the outright distribution of assets.

  • A pour over will assigns some assets to a trust that has already been established.

  • A holographic will is handwritten but not witnessed. About half the states recognize this kind of will, but it’s not a preferred option.

  • An oral will is spoken but not written down. Very few states recognize this kind of will, and then only in cases of final illness. Again, it’s not a good option.

Choosing the executor

Choosing the executor (the person responsible for making sure that the instructions in the will are followed) is an important step. Being named as an executor is not an honorary title; it involves a considerable amount of time-consuming work. The executor has to create an accurate accounting of assets to be distributed, find all debts that need to be paid, and resolve tax questions.

Consultants such as accountants and attorneys may need to be hired. Unhappy relatives may need to be placated. The ideal executor is a person adept at understanding finances who is detail-oriented and even-tempered.

If this job description fits someone in the family, then that person would be a good choice. If not, then look outside the family for a trusted friend or professional. A professional will expect to be paid, and fees may be a flat amount or a percentage of the estate.

The person named as executor should be willing to take on that job, because if the person declines, a court will name another executor and it may be someone you or your parent would not choose. You should name an alternate in the will in case your first choice to be executor cannot serve.