Don't Die Before Reading Thishttp://www.fool.com/investing/general/dont-die-before-reading-this.aspx Dayana Yochim
April 23, 2008
How do you know if you've got an ironclad estate plan? Ask your heirs that question when they conjure up your spirit from beyond the grave with their Ouija board.
While you'll never truly know -- in this life, at least -- if your final financial wishes were carried out glitch-free, you can leave less up to chance later by heavily scripting how you want your legacy to play out. With a little forethought, you can knock out three major estate-planning hurdles by:
For some, these tasks may simply require updating beneficiary forms for all of your assets and filling out two critical documents. If the laws in your state handle the dispersal of your assets, property, offspring, and Beanie Baby collection to your liking, simply revisit the topic as your family, fortune, and IRS tax code expand.
However, don't automatically assume that you can take the shortcut to the estate-planning finish line if you're single or you aren't filthy rich. The density of a plan depends entirely on the complexity of your family tree and finances. If you live in a state where probate is an issue, or if your estate is complex (due to the riches you've amassed or a tangled family tree), don't head to the pearly gates without adequate estate-planning reinforcements.
The no-will way
Dying intestate isn't necessarily a reason to draw up a will. But the equally grisly term of probate may sway you to call a lawyer, stat.
All states have probate laws; it's the variation in these laws that makes the process more of a headache in some locales than others. Having a will on record does not mean that your estate will avoid probate, but it does speed things up. Probate is not exactly a zippy process: It can drag on for anywhere from a few months to several years. (Estates that fall below the state-set maximum -- typically $50,000 -- with few creditors and beneficiaries are often ushered through a faster and less costly probate process.)
During probate, the accounting and dissemination of the fruits of your life's labor will take place in full public view. (Seen those newspaper ads soliciting beneficiaries and creditors? Now picture your family name splashed all over the classifieds.) After the court determines whether you have a legal will on file, it appoints an executor (typically a family member) who, under the court's supervision, divides up your assets to pay debts, taxes, and court fees.
The executor's last job is awarding your beneficiaries what's left. If both you and your spouse die intestate while your kids are young, the courts will take care of all decisions regarding your children, too. State laws limit the amount of property and assets minors can manage on their own (thus preventing your 16-year-old from cashing out your IRA to buy a Camaro). However, without a will naming a manager of your assets until your kids are adults, the state will pick someone to do the job.
Sound good? If not, put yet another check mark