INTRODUCTION VII STEP 1: WILLS AND ESTATE PLANNING: AN INTRODUCTION 1 1 THE IMPORTANCE OF ESTATE PLANNING 3 1. Do You Need a Will? 3 2. What Is Estate Planning? 4 2.1 Updating your will 5 2.2 Avoiding delays in settling your estate 5 2.3 Providing for loved ones 6 2.4 Providing for yourself 7 2.5 Getting advice from professionals 8 2 GETTING STARTED: THE FIRST STEPS TOWARD SUCCESSFUL ESTATE PLANNING 9 1. The Basics of Estate Planning 9 1.1 Understanding what you own and how you own it 9 1.2 Deciding who gets your property 10 1.3 Setting goals for your estate 10 1.4 Implementing your goals 11 1.5 Reviewing your plans regularly 11 2. Understanding the Language of Wills and Estate Planning 12 2.1 What is a will? 12 2.2 Who are the players? 13 2.3 Estates and their administration 13 2.4 Types of property 16 3 UNDERSTANDING ESTATE ADMINISTRATION AND PROPERTY 17 1. Probate and Nonprobate Property 17 1.1 Advantages and disadvantages of the two forms of property 18 1.2 Keeping track of probate and nonprobate property 20 2. The Special Considerations of Jointly Owned Property 21 2.1 Tenants in common 21 2.2 Joint ownership with right of survivorship 22 2.3 Tenants by the entirety 23 iii Contents 2.4 Life estate 24 2.5 Joint bank accounts 24 2.6 Community property 25 3. Jointly Owned Property and Estate Planning 25 4 TRUSTS AND GIFTS AS ESTATE-PLANNING TOOLS 27 1. Trusts 27 2. Gifts 30 5 YOUR WILL: A FAMILY AFFAIR 33 1. Providing for Your Spouse 33 1.1 Minimum inheritance 33 1.2 The consequences of divorce 34 1.3 Planning together 34 2. Providing for Your Companion or Life Partner 35 2.1 State your intentions 35 2.2 Common-law marriage 36 3. Providing for Minor Children 37 3.1 Nominating a guardian 37 3.2 Financial considerations 38 3.3 Property 38 4. Providing for Grown Children 39 5. Family Farms and Businesses 40 6. Providing for Your Family during Probate 40 6 PREPARE YOUR INVENTORY 43 STEP 2: PREPARING YOUR OWN WILL 49 7 HOW TO MAKE YOUR OWN WILL 51 1. The Requirements of a Sensible, Legal Will 51 2. Holographic Wills 52 3. Who May Make a Will? 52 4. Naming an Executor 54 4.1 Choosing an executor 54 4.2 Coexecutors 55 4.3 Naming an alternate executor 56 4.4 Defining the extent of your executor’s power 56 5. The Basic Clauses: The Importance of Exact Language 57 5.1 Naming people 57 iv Write Your Legal Will in Three Easy Steps 5.2 Specific bequests 58 5.3 Thirty-day clause 59 5.4 Residuary clause 59 5.5 Clauses related to minor children 60 6. Signing Your Will 62 7. Witnesses to Your Will 63 8. Self-Proof Affidavits 63 9. Undue Influence 64 10. Revising Your Will 65 11. Revoking Your Will 66 12. Making Copies of Your Will 67 13. A Simple Will 67 13.1 Opening clause 68 13.2 Executor clause 68 13.3 Gift clause 71 13.4 Concluding clause 73 13.5 Notarized affidavit 74 14. A More Complex Will 74 15. Summary of Steps 74 STEP 3: BEYOND THE WILL: OTHER ESTATE-PLANNING TOOLS 77 8 LIVING WILLS AND POWERS OF ATTORNEY 79 1. Living Will 80 2. Power of Attorney 80 2.1 Durable power of attorney 81 2.2 Health-care power of attorney 82 TABLES 1. Estate Tax Limits 29 SAMPLES 1. Estate Inventory 44 2. Simple Will 69 3. Will Nominating a Guardian 75 FIGURES 1. Per stirpes distribution to two children if spouse is already deceased 72 2. Per stirpes distribution with both children deceased and 72 three surviving grandchildren Contents v (20110714)
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