Financial Advice: Part 7: Wills and Trusts

part 1: creating a budget
part 2: living with a budget
part 3: fine tuning a budget
part 4: major purchases
part 5: investments and savings
part 6: retirement

Wills and Trusts
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- a will is a legal document that specifies where you want your money and possessions to go after you die.
- it can be as specific or as general as you want
- if you die w/o a will, you leave the door open for the state government to decide what happens
- estate = everything you own; house, car, furniture, electronics, antiuqes, books, retirement benefits, insurance, etc.
- the important thing about the will is what will happen to your estate
- first, there are a few requirements

- you should have your will prepared in the state in which you live
- your will should be in writing
- you must be legally competatnt to sign your will
- you must sign your will in the presence of at least two and often three witnesses

- probate = process of determining whether a will is valid or not
- important to make sure your will meets your state's legal requirements
- executor = person who oversees the process of distributing your estate
- executor is responsible for

- locating your will and studying it carefully
- meeting with the attorney who helped you establish the will
- contacting the people who witnessed your signing of the will
- notifying creidtors of your death
- locating all of your property
- inspecting your real estate contracts, leases, and mortgages
- filing your income and estate tax returns

- many choose spouses to be executors
- some choose lawyers, accountants, or other financial professionals
- it's important for the executor to know as much about you and your will as possible
- preparing a will

1. get a lawyer

- look among family and friends
- church members
- don't be afraid to ask how much you will be billed

2. talk to your loved ones

- ask family members if there are particular items that have special meaning to them
- make a note of who requests what

3. take inventory

- house, car, furniture, collections, savings account
- insurance, 401(k), IRA, stock

4. choose an executor

- if you don't appoint one, or if the person you select fails to carry out the responsibilites, the court that is overseeing your case will appoint someone to fill the position
- spouse is probably best bet
- good idea to name an alternate executor
- may even want to select a second alternate
- make sure the person you select knows exactly what is expected of them and is comfortable w/ the expectations
- keep in contact w/ the executor, make sure they are still willing and able to do the job

5. make it legal

- call your attorney
- attorney will tell you what documents you need

6. find a safe place to store your will

- before a court will probate a will, it must have the original document
- put it where it will be safe from fire, flood, theft, and disgruntled potential heirs
- keep original copy and other documents w/ lawyer
- keep important documents in a safe-deposit box
- investigate state laws about safe-deposit boxes, some allow the bank officer to open it, others require you to authorize another person
- if you don't authorize a person, the government will step in
- make sure your loved ones, executor, and lawyer know where the documents are
- keep a copy of your will for future reference

7. keep your will updated

- once a year
- ask your attorney to keep you updated on new federal and state laws that might affect your will
- if you do make changes, you don't have to rewrite the whole thing, you can make a supplement or addition. make sure you attach the original to the orignal will

- taxes

- key to avoid a lot of taxes, give it to your spouse
- if you are unmarried, or widowed, you are allowed up to pass up to $600K to your beneficiaries before taxes apply.
- give your stuph away before you die, you are aloud to give up to $10K annually

- trusts

- vehicle for owning and managing assets; will + checking account + and an allowance
- involves transferring assets to beneficiaries
- involves deposists and withdrawals
- involves distributing funds at regular intervals
- financial arrangement that allows you to provide for your beneficiaries in very specific ways but helps you to avoid major taxes
- set up a trust w/ an attorney, transfer assets into it, choose a trustee to manage the assets and distribute them to our beneficiaries
- living trust - set up and put into action while trustor is still alive
- testamentary trust - trust set up to begin after the trustor's death
- revocable trust - one that the trustor can change or cancel once established. counted towards the trustor's estate at death.
- irrevocable trust - cannot be changed after established. not counted towards the trustor's estate at death
- a trustee's responsibilities may continue indefinetly
- trustee should be equiped to handle distributing and accounting
- trustee should also have the ability to buy and sell trust assets
- duties of the trustee should be spelled out
- you want someone you can trust to be your trustee

- Don't put off your estate planning to wait for a convenient time
- If your beneficiaries are old enough to understand, include them as a small role in the will making process
- Keep your family informed
- Plan ahead
- Make a list of all your important files and documents and where they can be found
- Common responsibilites for a spouse or executor

- get certified copies of death certificate to use in filing life insurance claims, applying for social security, settling banking and legal matters, and transferring the name on property titles
- locate all life insurance policies, including health insurance policies that offer life benefits. Write each company and ask for a claims form and a summary of the information you need to have your claim processed.
- contact the social security office. Ask what ebenfits you can expect to recive and what you need to do to file a claim
- contact the Veteran's Administration and ask for information on the benefits that are due you
- convert property titles to your own name
- organize your bills according to thier due dates so that you don't fall behind on payments
- locate important documents, such as insurance policies, business contracts, bank books, loan agreements, securities, deeds, tax records, automobiles titles, and birth and marriage certificates