Your Money_ The Missing Manual - J. D. Roth [122]
Depending on your situation, you may need something more than just a simple will. Here's a rundown of a few of the most common estate-planning documents:
A will (also called a last will and testament) lets you decide who inherits your property (both land and personal possessions). This is also where you designate who you want to be your children's guardian. MSN Money has a good article on mistakes to avoid when preparing a will: http://tinyurl.com/MSN-willmistakes.
A living will (or advance medical directive) lets you tell your family what to do if you're incapacitated and terminally ill. This is the kind of document you need if you don't want to be kept alive on life support. The Mayo Clinic has more info on living wills at http://tinyurl.com/LW-mayoc.
Note
You may also want to draw up a power of attorney, which gives another person the legal authority to act on your behalf if you're incapacitated. For more info, visit http://tinyurl.com/AARP-poa.
A living trust (or revocable trust) can help your survivors avoid probate, the court process used to pay your debts and distribute your property to the people who inherit it. (Some living trusts also reduce taxes or protect financial privacy.) The older and wealthier you are, the more likely you can benefit from having a trust. (But note that, even if you have a living trust, you still need a will.) You can learn more about living trusts here: http://tinyurl.com/NOLO-livtr.
Not everyone needs a living will or a living trust, but most folks should have a will. They're the best place to note that you want certain family heirlooms to go to specific people. If you're married and have children only by your spouse, your will can be pretty simple. (If your kids are minors, you may want to specify a legal guardian.)
The need for a will increases significantly in more complex situations: multiple marriages, multiple children by multiple partners, mixed families, and so on. You'll reduce hardships and hurt feelings in the future if you're clear in your will about what you want to happen to your property and what you want to do for specific people.
Drawing up a Will
Though modern software and various websites let you draft simple estate planning documents yourself (see the box below), you're usually better off hiring an attorney to do it for you—especially if you have complex finances. (As comedian Jerry Seinfeld says, "A lawyer is basically the person that knows the rules of the country. We're all throwing the dice, playing the game, moving our pieces around the board, but if there's a problem, the lawyer is the only person who's read the inside of the top of the box.")
Making a will isn't about walking away from a lawyer's office with a piece of paper in your hand. It's about evaluating your estate—as meager as it may be—and deciding what you want to happen to it after you die. This process is easier when somebody who knows the system is there to show you the way.
On The Money: Creating Your Own Will
Over the past decade, there's been a boom in personal estate planning as people have become increasingly comfortable downloading forms from the Internet and using legal software. If you're the do-it-yourself type, here are some good places to turn for help:
LegalZoom.com is an online service that creates legal documents. You fill out a form or questionnaire, submit it to LegalZoom, and the company uses this info to create a legal will or living trust. (They can help you with other legal documents, too.) LawDepot.com offers similar services.
Quicken Willmaker is a desktop program that guides you through creating your own will. Some versions can help you create living wills and living trusts, too.
Nolo.com is an excellent source for books and software about legal topics. The site offers info on a variety of subjects, including estate planning. (Most public libraries have a good selection of