How to Create a Will: A Guide to Get Started with Making a Will
It’s Halloween — time for a scary, morbid subject.
Young adults don’t think about wills. The typical person graduates from college, gets a job, marries his sweetheart, has children, and never considers a will until he turns fifty. But not everyone lives to be fifty. You can’t always see death coming. A will is for anyone with money and possessions that need to be distributed according to some plan.
A Lifehacker reader recently asked about drafting a will:
I’m 31, single, and do not have a will. Obviously my family doesn’t know the details of my finances. Do you know an inexpensive way to create a will and do you have any tips for being prepared for such an eventuality? (i.e. record of finances, power of attorney, etc.)
Lifehacker readers provided a variety of answers. One recommended legalzoom.com, which bills itself as “the leading online legal service center. We can help you take care of common legal matters — without an attorney.” Another recommended Wills Online and Lectlaw.
But another wrote:
Forms purchased over the internet? Be aware that probate law varies a great deal from state to state and from year to year, and forms do not necessarily reflect this. Moreover, I have been astonished by the low quality of some of the forms that I have seen people find over the internet or produce via software. A simple will from a reputably attorney who wants to keep his bar license is cheaper than you might think. If you have enough stuff that you need a will, you can afford a simple will from an attorney.
(Read the complete Lifehacker discussion for more extensive discussion.)
Why worry about a will?
“The importance of an up-to-date will cannot be overstated,” writes David Chilton in The Wealthy Barber. Wills give clear, legal instructions regarding your intentions. Verbally expressing your wishes isn’t enough. A will is crucial even for those with modest assets.
For more information, I contacted David L. Carlson, an attorney from Salem, Oregon. Carlson answered the following questions.
Is drafting a will difficult?
Most wills are routine. Assuming a person has children only by their spouse and, they’re still married to that same spouse, there are usually very few problems. Couples with minor children may want to designate a specific guardian. If there are specific family heirlooms that you want to go to a particular family member, the will is the best place to do that.
For more complex family situations (multiple marriages, multiple children by multiple partners, mixed families, etc), the need for a will increases significantly. Being clear in your will about what you want to have happen to specific property, and what you want to do for specific people, can serve to significantly reduce hardships and hard feelings. It can also ensure that specific needs are covered.
Do I need a lawyer to do this?
Yes. You need a lawyer for this, if only because she is thinking of things from an outside perspective, and will ensure that things are done properly. Nothing is worse than thinking your will is valid and then having your family find out after the fact that it isn’t valid because it wasn’t properly created/drafted and witnessed.
In addition, people often make incorrect assumptions about what will happen to their property when they pass. For example, a person’s retirement account — frequently their single most valuable asset after their home — is generally not governed by a will. The distribution of those assets are covered by a completely different set of rules. However, if you make your estate plan on your own, and haven’t considered the other forms of distribution for an asset, you may be making a tremendous mistake.
Another common mistake that people make is forgetting to change their beneficiary designation on their retirement accounts after their divorce. This results in significant litigation each year, especially if the deceased remarried and the new spouse wants a part of the retirement account (which is still payable to the ex-spouse).
In addition, certain self-help probate avoidance schemes can seriously damage your family and their potential tax situation. Having a lawyer assist you should avoid those problems.
How do I approach a lawyer about creating a will?
Just ask one. Call a lawyer and say you’re interested in planning your estate — say that you need more information. The lawyer will want concrete information about who you are, your assets, and your concerns. The more organized you are, the better the process will be. If you want to know how much it costs, ask. Some lawyers are uncomfortable talking about fees because it’s the least popular topic for both lawyer and client (usually because the client thinks it’s too much). That shouldn’t stop you from asking.
For many reasons, I usually wait until near the end of the initial client interview to discuss fees. Most people are uncomfortable asking about how much things cost, and don’t want to talk about it until after they’ve explained their situation. As the person listening, I want them to be as comfortable as possible, so that they know I understand their situation. In most cases, my fees won’t change between the beginning of the meeting and the end.
What will this cost me?
Cost is usually insignificant for those who are truly interested in a will. My fee for husband-and-wife mirror wills is usually $300. If someone needs tax planning or something similar (a trust, for example), the cost can be greater. An attorney can estimate this cost after an initial interview.
Anything else I should know?
Making a will isn’t about walking away from your lawyer’s office with a document in hand. It’s a process of evaluating your estate and planning for its distribution. That process is eased when you have the guidance of someone who knows the system, and who is comfortable enough with it to advise you and to answer your questions.
(Note: Yesterday, Udandi & the Craft of Money looked at the Bogleheads chapter on estate planning.)
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There are 12 comments to "How to Create a Will: A Guide to Get Started with Making a Will".
Hey JD – great post. This subject intimidates a lot of people and it’s critical that everyone get their wills mapped out and official.
One point that I have to toss in is that I’d be sure to perform some due diligence on the attorney before you get knee deep with him/her.
I recently had a terrible experience with an unethical attorney and I am out $600 because he took the money and ran. I am now pursuing a small claims court case although I’d love to get him in some trouble.
Just do your homework, just because they went to school for more years than you doesn’t mean that all attorneys are legit.
Jay
Jay-
Check with your state bar association to see if there’s any other remedy you might have. In Oregon, for example, there’s something known as the Client Security Fund that is designed to assist people who have had their lawyer do something like what you’ve described. This is not to address situations in which someone feels that they didn’t get what they wanted to get, but rather for situations in which the lawyer has literally jumped ship and absconded with the $$.
Another issue is that you can’t just make a will and be done forever. Things change. For example, I decided I wanted everything to go to my mom because she’s responsible and fair and she would distribute things well if my dad and siblings could use them. But now that I’ve been living with someone for many years, I’d like him to at least get the house. I do expect my parents to die before me, and then I’ll have to find someone else responsible.
You can also make an extra attachment (codicil) to list specific items you own and who should get them. You know better than most people who most appreciates various items in your possession. When you die, the executor can be overwhelmed by the sheer amount of your stuff; I imagine that knowing that one person will take care of your sci fi book collection and another will get all your rock-climbing gear, etc. could be very helpful. You have to keep names and contact information up to date, but you can change this part for free as often as you want.
I really like that retirement accounts are not governed by wills–you can update them as often as you need quickly and for free.
Another thing to consider: Anna Nicole Smith. Seriously. Her husband had a will and she was not in it (ie he did not want her to have his money). She sued, got his money.
Point is, wills can be contested in court. A trust cannot. A trust is a legal, binding document. If you want the power to reach from the grave and ensure that your wishes will be carried out EXACTLY, set up a trust. Life still changing? Set up a revocable trust.
Example of the power and scope of a trust (and not whether to be mentioned “Man” is a jerk or not): Man and Woman marry at 20. Both begin with nothing. Man works, woman does not. They build a household with modest assets. Man and woman divorce at 50. Man (and his lawyer) knows that everything Man was able to accomplish and accumulate was with the help of his former bride. So, Man says “alright, I am going to give you the house and some money to live. But I don’t want the house to leave the family and am not giving you money, I am only going to allow you to take the interest and earnings of my money, never the principle.” Man dies after the ink is dry.
For the house: trust will ensure that if Woman sells house, proceeds may only be used to buy/rent another house. Also, Woman can be only person on title of house or subsequent houses. For the money: trust will not allow Woman to touch principal. After Woman dies: trust will ensure that the money and the house (or proceeds) go to whatever Man wants (children, university, etc). And none of this is optional. It must be done. It is what it is when the trust was set up.
Point two, when you begin getting yourself into complex financial situations, hire a smart accountant and lawyer. Please. Money is far from being everything, but it’s important.
For Debbie- a codicil is an amendment to a will. It *could* include a specific list of property to be distributed, but why not just put that into the will to begin with? Second, in executing a codicil the same formalities need to be observed as you would have with creating a will. The moral of the story- you can’t simply attach a list to your will and expect it to have binding effect. It should be dealt with up front.
For Blake- yes, a trust can be a powerful tool, but it is vulnerable to many of the same flaws as a will. You can contest a trust in court and it’s done all the time. The best way to ensure that no-one *successfully* contests your estate plan is to do your best to cover all the bases with appropriate legal counsel. You can’t prevent a disgruntled child, relative, etc. from contesting but you can make it really hard for them to win.
In setting up a trust that has contingencies to take place after the person dies, the grantor needs to take great care in selecting a trustee that’s going to follow the rules. In your example, if you put wife in charge of running the trust the odds are good that over time the majority of the assets would disappear from the trust’s list of assets and over time be turned into wife’s assets. This is a breeding ground for potential litigation.
Lastly, your example of the divorcing couple would work but only if the woman was dumb enough to take that kind of deal. Presumably her lawyer would be smart enough to talk her out of it. Just because she didn’t work doesn’t mean she’s not entitled to 50% of the principle. Even if the trust was set up ahead of time a divorce court will go through that thing like a hot knife through butter (in most cases). Big exception if there’s a pre-nup.
A will is another tool in our personal finance toolbelt. As you mention the complexity and cost often cause us to avoid its use.
I found a way to get a quality will drafted by a lawyer for free, check it out http://www.moneysmartlife.com/2006/11/14/who-wants-free-estate-planning
Great article, many thanks for posting. For anyone in the UK who has not written their will yet I highly recommend Sure Will, who wrote my will for me last year. It was a steal at £49 and I was actually able to talk to a human being on the phone (after a bad experience with another site – tenminutewill – who wouldn’t even answer my call :S).
H
This is a very thorough article. Most people wait too late to do a Will, and those that want to do a Will, try to do it on the cheap without thinking of the consequences.
Here are 2 more site about Wills that I came across. quite interesting & different if you are thinking of writing a Will.
http://writingawill.wordpress.com
http://how-to-write-a-will.blogspot.com
What about online wills? I came across some blogs like http://www.onlinewillsadvisor.com that says that online wills are ok.
Does anyone have any idea if they are any good?
Once you have a will, DO NOT PUT IT IN A SAFETY DEPOSIT BOX. Those you leave behind cannot access your safety deposit box until you produce a Death Certificate. This usually takes 3 to 7 days. If your codicile, which is with your Will, gives your burial desires, no one will know what YOU want (cremate me or don’t cremate me, etc.) until it’s too late. It’s best to let your family know what you want BEFORE you die.
Yes, it is true, many online document sites create poor documents. But, I have seen many Living Trusts created by attorney’s that are jokes. If you are going to use an attorney, spend the extra money on one that specializes in estate planning. I have not seen a general attorney create a quality document. And do research on if you need a trust or a will before you talk to an attorney.
I have seen estates that an attorney drafted a will for and then probated the estate for the family. The will cost a couple hundred. The probate fees were well into the tens of thousands.
Has anyone used http://www.ewills.com ? A friend of mine used them to create a will for him and his family.
He said he signed up and paid a $0.97 activation fee and than was sent a 2 page questionnaire. He filled out the questionnaire and was mailed his Last Will in less than 10 days.
Said it was very simple.. didn’t require a lawyer and he was able to complete the questionnaire on his own time.