Among the most fundamental of money tasks is creating a will, yet nearly six in 10 adults don't have one, according to a recent survey by FindLaw.com, a legal information Web site.
It's a shame to spend money wisely during your lifetime and then lose control afterward, as state law and probate court decide how to divvy up all you own and siphon money from your estate in the form of fees and taxes you might not otherwise have incurred. And for parents with minor children, not having a will means the state will decide who raises your children if you and your spouse die.
Wills aren't only for rich people.
"Very often people are wealthier than they think," said Don Silver, an estate-planning attorney and author of A Parent's Guide to Wills & Trusts (For Grandparents Too). "Even a simple plan is better than no plan. This is not an area where procrastination pays off." Here's how to spend smarter when drafting a will:
This is absolutely free. Make sure all your financial accounts have up-to-date primary and secondary beneficiaries. These accounts include retirement plans and life insurance policies.
*Do it yourself.
With computer software, online sites, books and kits, you can create your own will for a reasonable price, often less than $100. As long as do-it-yourself wills are done correctly, signed and witnessed, they are as legally binding as ones completed by a lawyer. There are many options, such as the Will & Trust Kit by personal finance guru Suze Orman and such Web sites as ItsMyLife.com and LegalZoom.com.
Among the most consistently recommended programs is Quicken WillMaker Plus by Nolo. It costs $25 to $50, depending on where you buy it and whether it's stand-alone software or has an accompanying book. Amazon.com recently had some of the best prices for WillMaker. Louisiana residents cannot use WillMaker.
*Use a lawyer.
There are worse ways to spend a few hundred dollars than seeking advice from an estate-planning attorney who will draft a will for you. It might be best to spend money on a lawyer if your situation is the least bit complicated - you have a blended family, people who might fight over the estate, a child with special needs or if you have a lot of wealth, say, over $1 million in assets. People with significant assets might need to plan tax strategies that an estate attorney is best equipped to advise you about. Ask your accountant, friends and relatives for recommendations on an estate-planning attorney.
If you will be charged an hourly fee, you can minimize the cost by doing a lot of the discussion and decision-making before you enter the attorney's office, Silver said. That means listing your assets and liabilities and deciding which beneficiary would receive which asset. You will need to decide on an executor of the estate, which is the person who manages the assets right after you die. And, if you have minor children, decide who's going to be their guardian.
*Try a hybrid approach.
You might be able to save money on lawyer fees if you use software to create a will and take it to an attorney for a quick review. But the hybrid plan could backfire if the lawyer finds big problems with the document and has to start all over. Then you could pay for the review and creation of a will from scratch, Silver said.
*Be wary of living trusts.
There's nothing inherently wrong with a revocable living trust, which is often suggested as an alternative or supplement to a will. This legal document allows you to transfer assets into a trust while you're living, which can help bypass the court process called probate. It might save money on legal and court fees during probate and make the process quicker and more private. But living trusts are oversold and cost much more to prepare than a will, said Clark Howard in his book Get Clark Smart.
A living will is a pull-the-plug medical document. It tells your doctor what artificial life-support measures you want. A medical power of attorney, also called a health care power of attorney, gives someone the power to make decisions regarding your medical care options. A durable financial power of attorney gives someone else the power to run your money affairs if you are incapacitated.
Gregory Karp writes for The Morning Call in Allentown, Pa.