Estate Planning 101 – A Simple Easy Guide to Understanding Wills, Trusts, and Estate Planning

10 Most Common Questions Families Ask About Estate Planning, Wills, and Trusts

1. What is a Will?

A Will is signed writing in which a person (often referred to as the “testator”) directs what is to be done with his or her property after death. Each state has its own very specific laws as to what is necessary for a Will to be valid in that state.

2. Who Can Create a Will?

Any mentally competent person who is at least 18 years old may make a Will. However, later proof of any fraud, duress, or undue influence by another person or the testator may cause the Will to be invalid.

3. Who Should Have a Will… and Why?

Every mentally competent adult should have a Will. Here are a few of the reasons:

- You can direct how you want your property divided at your death.

- You can name the person you want to handle you estate (called the “executor” or “personal representative”).

- You can reduce the expenses of administering your estate.

- You can save taxes.

- You can nominate a guardian for your minor children.

- You may provide for a trust for the support and education of your children without the necessity of costly court proceedings.

4. Does a Will Need to Be Witnessed? Does a Will Need to Be Notarized?

Generally, most states require that the signing of a Will must be witnessed by two competent persons, who also must sign the Will in front of the testator. (An exception to the witness requirement is made if the testator writes out the entire Will in his or her own handwriting, and signs and dates it.)

Although the law does not require a Will to be notarized, it is a highly recommended practice, followed by most lawyers. If the testator’s and witnesses’ signatures have been notarized, the will is presumed to be properly executed and is accepted by the court without testimony from the witness.

5. How Long is Will Valid?

Your Will is valid until you revoke it generally either by physical destruction (tearing or burning it up, for example) or by signing a superseding Will or written revocation. However, if you get divorced after signing a Will, the law may consider the Will partially revoked. Also, if you are married, your spouse may have rights in your estate regardless of what is provided in your Will.

6. Can a Will Be Changed?

Your Will does not take effect until you die; therefore, it can be changed at any time during your life as long as you are mentally competent. Traditionally, Wills were changed by an amending instrument called a “codicil,” but with the development of modern word processing technology, it is usually better and just as easy to sign an entirely new Will when you wish to make changes.

7. What Happens If You Don’t Have a Will?

If you don’t have a Will, a state statute directs who receives you property, regardless of your wishes. For example, in my home state of Virginia, if you are married, your estate generally passes entirely to your surviving spouse; however, if you have children who are not also the children of your spouse, your children divided two-third of your estate, and your spouse takes the other one-third.

8. Is Joint Ownership a Good Substitute For a Will?

In most cases, joint ownership is not an acceptable substitute for a Will. Contrary to popular belief, joint ownership of assets between husband and wife often results in excessive estate takes. Joint ownership between parent and child may foster disputes between family members and cause unexpected and unnecessary gift taxes.

9. Is a Trust (Also referred to as a Revocable Living Trust) a Substitute for a Will?

A properly funded Revocable (“Living”) Trust can be a valuable and important part of the estate plan for many people, but it does not eliminate the need for a Will. If you have a Living Trust, you will still need a Will to dispose of those assets that have not or cannot be placed into the Trust.

As useful as they are, Living Trusts are not appropriate for everyone. Only your lawyer can tell you if you should consider one, and only you lawyer should prepare it.

10. Who Should Draft Your Will?

A person who drafts a Will must be familiar with the law in order to avoid the many pitfalls and to comply with the formalities necessary to assure the Will’s validity. Only a practicing lawyer is professionally qualified to give you advice regarding your Will, to prepare your Will, and to supervise it’s signing.

A Few More Practical Suggestions:

Planning your financial affairs, and coordinating this with your estate plan, is a very personal and individual matter. You should decide for yourself the general purpose you wish to accomplish, and then consult with a seasoned estate planning attorney, financial advisor, and CPA if you want to have a coordinated and comprehensive plan, which integrates and accomplishes all of your financial goals and objectives.

Four practical steps to save time and help assure a sound result:

1. Inventory you assets. List in reasonable detail all of your property, real and personal, life insurance policies, and retirement plans, with your best assessment of their values.

2. Inventory your liabilities. List all debts and obligations, including principal amounts, payees, and essential terms.

3. List your family members and any other persons whom you wish to participate in your estate. Decide who might be an appropriate executor, trustee, or guardian for your minor children.

4. Decide what you want to accomplish. Determine what your objectives are, and to whom you wish your assets distributed.

Getting Started is Easy:

It just takes five easy steps, where your only cost will be your time:

Step One: Spend some time with your existing financial advisor, or an experienced financial advisor in your local area, so you can review the basic details your “big picture financial plan” together

Step Two: Your financial advisor will review this information and help you assess confirm exactly what your estate planning needs and preferences are

Step Three: Once your financial advisor reviews your overall estate planning needs, they can help you understand exactly how Wills and Trusts work, as well as which one they feel fits your situation best

Step Four: After you are fully comfortable and confident with their recommendation, you can consult with a seasoned estate planning attorney who can help you properly draft these documents and details

Step Five: Arguably the most important step, and often overlooked, is making sure that your estate planning attorney, financial advisor, and CPA are all working together to ensure all of your estate plans and preferences are coordinated and working properly with your “big picture financial plan”.

How Can a Business Plan Help Your Business?

Business plans are very serious or formal statements of set business goals, including the reasons why these goals are considered attainable, and also the plans or steps for attaining them. A business plan may also include a bit of background information regarding the organization which has set and is trying to achieve these goals.

These business goals which are being attempted can be non-profit as well as for-profit. Plans of the government’s agencies and non-profit business plans focus mainly on service goals. Whereas the for-profit plans, focus mainly on financial goals. A business plan can also aim at changing the perception or branding by the user, client, customer, tax-payer, or any larger group. Such a business plan, which includes a change in the way the customers perceive or the way the customers brand, and focuses on these changes as the primary goal is called a Marketing Plan.

A business plan may be focused upon in two ways; externally or internally. If a plan is externally focused, it targets the goals which are important to the external stakeholders, most importantly the financial stakeholders. These generally have in-depth information regarding the team / organization trying to achieve the goals. In terms of for-profit goals, the external stakeholders include customers or the investors.

When it comes to external stake-holders concerning the non-profit goals include all the donors and also all the clients the non-profit’s service has. External stakeholders for the government agencies include all the high level governmental agencies, the tax-payers and also international lending bodies.

If a plan is internally focused, its targets are all the goals that lie before reaching the external goals. These can include something like the development of some new product or a service or even a new Information Technology system; these also include restructuring of finance or a restructuring of some organization. Internal business’ often develop in conjunction along with a list of critical factors of success.

This enables non-financial measurement of success (of the plan). A business plan that identifies internal goals, but at the same time provides but a general guidance regarding how the organization plans to meet is called a strategic plan.

All the goals regarding an internal organization or a group or a department are described in operational plans. The goals of a project are described in project plans or project frameworks. These can also include the project’s place among the organization’s bigger goals.

You may wish to read more at: Writing a Business Plan and Simple Business Strategies