Why do you need to create a will? A will gives you control over who will receive your assets when your time comes.  When you create a will it outlines what happens to your estate. This type of estate planning is not only beneficial to you, but to others as well. It’s important to create a will especially when you have young children. You want to ensure you’re transferring their guardianship over to the person(s) you most trust. If you die and didn’t create a will (intestate), the state then decides who will inherit your assets and who will watch over your children.

Due to many considerations involved when you create a will, it’s be wise to enlist the help of an estate planning professional. Simple wills, living wills, pour-over wills, trusts, power-of-attorneys… these are just some of the options to consider when you create a will.

The following article excerpt by CNN Money covers in detail the benefits you reap when you create a will.

Why do I need a will?

If you don’t have a will, a court decides who gets your assets.

A will is a device that lets you tell the world whom you want to get your assets. Die without one, and the state decides who gets what, without regard to your wishes or your heirs’ needs.

So-called intestacy laws vary considerably from state to state. In general, though, if you die and leave a spouse and kids, your assets will be split between your surviving mate and children. If you’re single with no children, then the state is likely to decide who among your blood relatives will inherit your estate.

Making a will is especially important for people with young children, because wills are the best way to transfer guardianship of minors.

You may amend your will at any time. In fact, it’s a good idea to review it periodically and especially when your marital status changes. At the same time, review your beneficiary designations for your 401(k), IRA, pension and life insurance policy since those accounts will be transferred automatically to your named beneficiaries when you die.

A will is also useful if you have a trust. A trust is a legal mechanism that lets you put conditions on how your assets are distributed after you die and it often lets you minimize gift and estate taxes. But you still need a will since most trusts deal only with specific assets such as life insurance or a piece of property, but not the sum total of your holdings.

Even if you have what’s known as a revocable living trust in which you can put the bulk of your assets, you still need what’s known as a pour-over will. In addition to letting you name a guardian for your children, a pour-over will ensures that all the assets you intended to put into the trust are put there even if you fail to retitle some of them before your death.

Any assets that are not retitled in the name of the trust are considered subject to probate. As a result, if you haven’t specified in a will who should get those assets, a court may decide to distribute them to heirs whom you may not have chosen.

 

Living wills and health-care proxies

Making your medical wishes known through living wills and health-care proxies now can save a lot of heartache later.

A living will (also known as an advance medical directive) is a statement of your wishes for the kind of life-sustaining medical intervention you want, or don’t want, in the event that you become terminally ill and unable to communicate.

Most states have living will statutes that define when a living will goes into effect (for example, when a person has less than six months to live). State law may also restrict the medical interventions to which such directives apply.

Your condition and the terms of your directive also will be subject to interpretation. Different institutions and doctors may come to different conclusions.

As a result, in some instances a living will may not be followed. Nevertheless, a patient’s wishes are taken very seriously, and an advance medical directive is one of the best ways to have a say in your medical care when you can’t express yourself otherwise.

You increase your chances of enforcing your directive when you have a health-care agent advocating on your behalf.

You can name such an agent by way of a health-care proxy, or by assigning what’s called a medical power of attorney. You sign a legal document in which you name someone you trust to make medical decisions on your behalf in the event that you can’t do so for yourself.

A health-care proxy applies to all instances when you’re incapacitated, not just if you’re terminally ill.

Choose your health-care agent carefully. That person should be able to do three key things: understand important medical information regarding your treatment, handle the stress of making tough decisions, and keep your best interests and wishes in mind when making those decisions.

Writing a will: Why should I assign power of attorney?

When you can’t control your financial life, make sure someone you trust will by assigning power of attorney when writing your will.

No one is immune from aging or the loss of mental clarity that may come with it. And you’re never immune to health crises that may leave you unable to handle the business of your life: paying bills, managing investments or making key financial decisions.

Granting someone you trust the power of attorney allows that person — known as your “agent” or “attorney in fact” — to manage your financial affairs if you are unable to do so.

Your agent is empowered to sign your name and is obligated to be your fiduciary — meaning they must act in your best financial interest at all times and in accordance with your wishes.

There are different kinds of powers of attorney, but in estate planning there are two essential types you should know:

• The first is the “springing power of attorney,” which only goes into effect under circumstances that you specify, the most typical being when you become incapacitated.

Often that means your agent cannot act until he or she provides doctors’ letters and sometimes court orders to prove you are incapable of making decisions for yourself.

• There is also the “durable power of attorney.” It is effective immediately, and your agent does not need to prove your incapacity in order to sign your name.

An attorney can help you decide which form makes the best sense for your circumstance. In any case, take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs and financially secure.

If you choose a relative or friend as your agent, you probably won’t have to pay them. But if you name a bank, lawyer or other outside party, you will have to negotiate compensation, which can range from hourly fees to a percentage of your assets paid annually.

If you do become incapacitated without having assigned power of attorney, the court will step in to appoint a guardian. This process might cost your family well over $1,000, not including the cost of the guardian’s annual visits to court to report on your situation. Plus, the person chosen may not be someone you would have picked.

Since nobody is immune from aging and illness, the powers of an attorney are generally included when you create a will. They help ensure that your needs and wishes are met should you face a health crisis. If you were to become incapacitated without having assigned the power of attorney, the court would step in to appoint a guardian on your behalf. When you create a will there is a peace in knowing in advance what will happen to your assets and/or children.

Two important points of interest when you create a will: intestacy laws vary from state to state and you may amend your will at any time. Remembering this as you move through the many stages and transitions in your life will serve you well.  You’ll want to be sure that you create a will and consistently keep it up to date.

If you’re looking to create a will, our estate planning professionals are experienced, up-to-date and easy to work with. Call on TJ Woods Insurance Agency to guide you through the will-writing process.