23: Will Power
Who Needs a Will? If you are broke, young, single, and childless you don’t need a will. But if you are any of these, have ANY money (even $10,000 or old 401ks) you need a will! Even if you don’t have children, you will want to leave your money to someone or an organization. If you have a pet, you’ll need an executor to take care of it and monitor the money.
What are the key components of a will?
Last will and testament (who you actually want your money and belongings to go to)
Executor (who is in charge of making sure the beneficiaries get the assets)
Guardian (if children are involved)
Living will (also known as an advance directive) and health care proxy (your health care decisions and wishes if you are too sick or feeble)
How do I create a will? If you have very few assets, no children, and very simple finances, you can create one online. Suggestions: Nolo Will Maker ($89), LegalZoom ($89), Suze Orman Will and Trust Kit ($100). You can get a free will template online. Very basic. If your situation is more complicated, (i.e. multiple properties, children with special needs, leaving money to charities, businesses involved) then you need a lawyer- specifically an estate planning lawyer to draw up a will. This can cost anywhere from $1,500 and up. You can always get the first will made and then get a second one later on drawn by a lawyer.
How do I make a will into a legal document? To make it legal, a will document must be signed in the presence of two (2) witnesses. You should also get it signed by a notary public for an extra layer of legal protection.
Who should you give copies of your will to? Give copies of advance directives to your healthcare proxy(ies) and doctor. Give executed copies to your lawyer (if you have one). Tell close family members/friends where you keep copies of vital documents; make sure to include log-in info.
What is a trust? Trusts provide more control over your assets. They are an arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary. Trusts are established to provide legal protection for their assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes. They can avoid probate court and can protect your loved ones in worst-case scenarios. They can be essential to assist children with special needs.
Who needs one? Ideally for people with $200,000 in assets or more. Anyone concerned about facing a stroke, dementia, or Alzheimer's may want to consider a trust to ensure their resources are preserved, managed, and spent in line with their wishes while they are under the care of a loved one or health professional.
Difference between a will and a trust. The difference is when they kick into action. A will lays out your wishes for after you die. A living revocable trust becomes effective immediately. While you are alive you can be in full charge of your trust.