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June 1, 2009

Estate Planning -- the Second Time Around

A second or third marriage, seasoned by age and experience, can bring wonderful comfort and intimacy -- but it can raise a host of legal and practical questions as well. For example, when it comes to making a will and other estate planning arrangements, how can you be fair to everyone you care about in your complicated blended family -- your current spouse, any younger children from your current marriage, your children from previous marriages and your stepchildren all need to be considered.

Who knew balancing the disparate needs of so many people could be so practically and psychologically difficult? And where is the instruction manual which will help you accomplish it?

Start by dividing your task into three steps, your first -- identifying your goals -- being the hardest. For example, if you still have minor children, your first goal might be to provide for them until they reach adulthood. And, of course, it's likely you'll have more than one goal -- perhaps the ongoing care of a special needs child and providing adequate income for a surviving spouse are goals two and three. 

Once your major goals are identified, step two is to discover the legal tools and techniques you'll need to best accomplish them. For example, if you have minor children, you'll need to adopt one of several mechanisms such as a child's trust or the Uniform Transfers to Minors Act to name a financial manager if you die before they are of age.

Step three is to use either self-help tools like Nolo's Online Will and Living Trust or a lawyer (or often a cost-effective combination of the two) to carry out your plans.

Of course, saying all this is far easier than doing it, which is why I strongly recommend Nolo's new book, Estate Planning for Blended Families, by Attorney Richard Barnes. There is simply no comparable source of reliable information for people who need to make an estate plan that balances the needs of a complicated, multi-generational family.
April 8, 2009

You Never Retire from Writing Your Will

A century ago it was common for people to write their will in their forties and die before they were 60 with the same will in place. People who lived longer might add a codocil (a kind of legal P.S.) to reflect changed circumstances, but it was relatively uncommon for the average person to make multiple wills.

Today, just about everything concerning making a will is different. Many of us will live up to 50 years after we make our first will, meaning that all sorts of important life events that occur in the interim will all but require changes. And codocils, which saved 19th- and 20th-century lawyers from having to retype and reproof wills, are as dead as the typewriters that created them.

The result is that today when you need to modify your will, you'll do one of the following:
  • go to a lawyer who will feed your info into a computer and print out a nice new one for you to sign in front of witnesses, usually charging between $300-$1,000 for their services
  • adopt a self-help approach by using software such as Quicken WillMaker, or
  • go online and use one of several reliable online wills at a cost of about $70. Since this is a Nolo blog you'll probably guess that I think that Nolo's Online Will is the most legally comprehensive and easiest to use -- but hey, you don't have to take my word for it.
OK, assuming you agree that 50 years is a long time to live with one will, what are the key events that indicate you need to make a new one pronto?

Continue reading "You Never Retire from Writing Your Will" »

April 5, 2009

Do You Need a Will or a Living Trust?

Both a will and a living trust are efficient devices to leave property to loved ones. Simply identify the property and who you want to receive it and either legal device will accomplish the task.

But unlike a will, a living trust lets your property bypass probate court -- something that will save your family money, delay, and hassle. The only drawbacks to a living trust are that you must transfer your property to the name of the trust, and living trusts don't work to name guardians for children.

So why doesn't everyone opt for a living trust over a will? The main reason is that these days there are many other and usually simpler ways to avoid probate. As set out in detail in Nolo's 8 Ways to Avoid Probate, bank accounts, brokerage accounts, and retirement plans, such as IRAs and 401(k)s, can all be transferred free of probate simply by designating a beneficiary in writing. And couples who own a house or other real estate together can take title in joint tenancy (or in some states, tenancy by the entirety) and also avoid probate.

Assuming you take advantage of all these probate avoidance approaches, a simple will is your best bet to pass the rest of your miscellaneous personal property. And again, no probate is likely to be required since most states exempt small estates.

So when might a retired, or soon-to-be-retired, person want to choose a living trust? Usually when a house or other real property is involved. Even if the property is co-owned in joint tenancy or tenancy by the entirety, living trusts will avoid probate automatically and pass the property to the survivor only when the first spouse dies. If the survivor dies still owning the property, probate will be required, unless a living trust has been drafted and the property transferred to it. And, of course, the same thing is always true if the owner is single and owns the property outright.

Okay, assuming you're convinced that as an older real property owner a living trust makes the most sense to pass your property to your loved ones, how do you go about getting one? Lawyers typically charge $800-$1,200 for a trust for a single person and up to $2,000 or more for a couple. (Nolo's Lawyer Directory, complete with detailed attorney profiles, is one good place to find a quality lawyer.) Or you can do your own living trust using software like Quicken WillMaker Plus. Finally, an increasingly popular option is to do the job online. Both Nolo and Legal Zoom offer reliable online living trusts. Nolo charged $149 and Legal Zoom charges $219 and up. What's the difference? Legal Zoom uses advertising to get the word out about its products, while Nolo relies on the positive recommendations of its satisfied customers. Plus, unlike Legal Zoom, Nolo's Online Living Trust allows you to access your completed trust documents online, from anywhere, whenever you'd like.