Monday, July 20, 2009

Why You Must Have a Will For the Sake of Your Children

I have a confession to make. Until a few weeks ago, when I decided to write this article, I had not updated my will in almost ten years. I had a hundred reasons why, but none of the reasons were worth enough to pay the toll on the Garden State Parkway. They were all just poor excuses. Many people never get around to preparing their will or updating it as circumstances change. Oftentimes, the excuse we hear from our clients for not having a current will is the perceived cost in time and money to have an attorney draft one. I also believe there is a fear of confronting our individual mortality that causes many of us to put off this necessary task. Not writing your will and failing to do even the most basic estate planning can have a disastrous effect on your loved ones and their survivors.

A will is a legal declaration giving instructions as to what person(s) or organizations(s) are to receive your property after your death. This declaration names the executor or personal representative who will be responsible for settling your estate. If you die without a will you are said to die intestate and this means the state is forced to determine the rightful heirs of your estate and distribute your assets to those heirs through the state's probate process. Your will is the only way you can nominate who will be responsible for the care of your minor children. There can be no more important a decision than determining who will care for your children in the event that you and your spouse die prematurely. In the worst possible scenario, in which both you and your spouse die in a common accident, the probate court will appoint a guardian for your children, in the absence of any written will designating a guardian. This guardian may be someone you might never have permitted even as a babysitter for your children, let alone someone who now holds the future of your children in their hands. Not only will your children be recoiling from the shock of the loss of their beloved parents, but also their situation will be made even worse by having to be raised by an individual that may not share your common values and beliefs. This guardian could also be designated as the custodian, by the state, of your assets that are passed down to your children in the event of your untimely demise, further compounding the matter.

The solution is to draft a separate written will for both you and your spouse. In order for a will to be valid it should be in writing, signed by you and two witnesses in the presence of a Notary Public. To best insure that your minor children are adequately cared for upon your death the will should include the following:

1. The establishment of a custodial account or a minor trust, in which the assets of your estate are transferred for the benefit of your children

2. The designation of a custodian for the custodial account or a trustee for the minor trust

3. The designation of an appropriate guardian to care for your children

4. Designating an executor to your estate who you believe will put your children's interest first

You need to secure a competent attorney who is well versed in Estate law and the Probate process. The cost of creating a very basic will can range in price. My experience has been that attorneys typically charge anywhere from a minimum of $125 an hour and up for drafting a will. Depending on the complexity of your will it may take a few hours or more for an attorney to draft. If after reading the above you are not immediately agitated enough to pick up the phone to schedule an appointment with an attorney, while we don't recommend this as a long term solution, you can purchase one of many "Draft your own will" software programs available in the marketplace. It should take you no more than two hours to craft a very simple, standard will. Keep in mind that what you get is a basic will that may not be sufficient to protect the rights and welfare of your children or other beneficiaries. You should have two witnesses sign each of six copies of the will in the presence of one another. One copy will go into a secure place within your home, one will go into a safe deposit box at your local bank, one will go to the designated guardian, one will go to the custodian or trustee of the minor trust and one will go to the executor of your estate. The sixth copy will go to the attorney you will run to to have a proper will drafted, as soon as possible.

Tom is a Certified Public Accountant, a Certified Financial Planner, CLTC (Certified Long-Term Care) and President of Cerefice & Company, the largest CPA firm in Rahway, New Jersey. Tom works with clients helping them manage their money, retirement planning, college savings, life insurance needs, IRAs and qualified plan rollovers with an eye towards maximizing tax benefits and minimizing taxes. Tom is founder of the Rich Habits Institute and author of "Rich Habits".

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