Saturday, May 10, 2003

A story published today in the Charlotte Observer reports that all too many people say they want to write their Last Will and Testament, but put off actually doing it.

Attorneys and financial planners say major life changes typically cause people to create or revise wills. Everyone should have one, but changes such as having children or inheriting money often prod us to action, said Patricia Guarnieri, a certified financial planner with Rinehart & Associates in Charlotte.

Homes are the most valuable asset for many people, so buying a home can be one of those changes.

Making sure that home passes to the person of your choice -- particularly if you are single -- can be an excellent reason to make a will.

Inheritance is more of an issue with sole owners than with joint owners, said attorney and CPA Todd Stewart of Charlotte. "When it's a husband and wife buying a home together, they'll take joint title, or tenancy by the entirety. If you take title with your (spouse) and then you pass away, your (spouse) then owns the property entirely by right of survivorship," he said.

For a single person, however, the issue of who inherits a home is more complicated. In this case, "your will controls where your property goes," he said.

The more complicated your family situation, the more important it is to have your wishes explained in writing.

"One of the most difficult situations involves a second marriage with two sets of children," said lawyer and CPA Jerry Reed of Charlotte. Making sure that all -- or just some -- of the children are provided for can be an issue.

"My suggestion to clients is that if they're only providing for some of their children, to include a paragraph that says they are not providing for certain children and why," Reed said.

You're in control

A will allows people to distribute their possessions however they wish to whomever they wish. This legal instrument can be used to divide personal property such as autos, stocks, bank accounts and real property such as homes. Recipients can be children, spouses, friends or charitable institutions.The Workmans established what Anja called "the whole package." It included wills for her and her husband, powers of attorney (financial and health care), a living will and a trust.

Health care issues

Establishing who will make decisions for you if you're incapacitated is another big issue -- and one that becomes more crucial if you are single or not legally wed to a partner. "In some ways, for single people, I think the powers of attorney and living wills are even more important" (than traditional wills), said Guarnieri.

Under the law, spouses have the right to make life and death decisions for an incapacitated partner; in the case of a single person or an unmarried couple -- whether heterosexual or homosexual -- such decisions often pass to the closest blood relative. However, unmarried people can grant health-care power of attorney to a friend or domestic partner, thus bypassing other legal mandates.

A person with health-care power of attorney makes decisions such as what treatment you receive, how that treatment is administered and the like.

A living will is a separate document that allows you to state how and if your life will be sustained if you are incapacitated.

The separate financial power of attorney gives the designated person power to control your finances if you are rendered unable to do so.

"If you were incapacitated for six months, it would be good to have somebody who could see that your mortgage was paid, for example" said Guarnieri.

If you choose not to create a will, the state will settle your estate for you, although specific laws differ from state to state.

"Most people are surprised to find that it's not the (surviving) spouse who (automatically) gets everything," Stewart said. If there is more than one child, for instance, the children get two-thirds of the personal property and the real estate, and the spouse gets one-third.

This division occurs after the distribution of a "threshold amount" of $30,000 of personal property, which goes to the spouse. If there's only one child and a remaining spouse, they will split the estate evenly after the threshold amount is distributed to the spouse.

"A related problem that comes about is that if you leave property or if property passes to a minor, you'll need a guardianship that's done through the court," Stewart said. "A four-year-old, for example, can't inherit $50,000."

If no guardian is recommended in your will, the court will appoint whomever it deems acceptable.

Mistaken beliefs

Many people mistakenly believe that their property will go to the state if they don't make wills, Reed said. Not so.

"For a single person (who doesn't leave a will) without a spouse or children, (the inheritance) will go up the family tree to the parents, then to the brothers and sisters or their children."

If this type of arrangement is acceptable, you may not need a written will. If you have special requests, you need to put them in writing.

You might, for example, have three children, including one who doesn't manage money well. You can leave equal amounts to all three but establish a trust for the child with poor money management skills. This way, you can determine how much he or she can access and under what circumstances.

Wills and other estate planning documents can cost anywhere from a few hundred dollars to several thousand dollars, depending on how complicated your situation is. Lawyers have standard fees for each service, Stewart said, so you can begin by asking about those.

If you don't have an attorney, ask friends or relatives for suggestions, or contact your bar association.

These days, will-writing software programs are available for $25 to $50.

While such wills can work, they may not be a good idea of you have any kind of complicating circumstances.

"I've reviewed a couple of wills I've seen over the Internet, and they hadn't been executed properly and weren't valid," Stewart said. "In North Carolina, for example, most wills that have been done through law firms need to be witnessed by two witnesses."

They sign it in the presence of the person making the will, and in the presence of the notary. Plus, "the witnesses should definitely not be anyone who is or may be a beneficiary under the will."

While holographic, or handwritten, wills are legal in North Carolina, people may inadvertently render them nonlegal -- or at least open to debate -- via simple mistakes in language.

"The biggest difficulty I've had with holographic wills through the years is that the person's clear (intent) of what they want isn't reflected in the document," Reed said. For example, the person writing the will might give property to an individual, but not explain what should happen if that individual dies first.

Making decisions about your estate -- and dealing with the inevitability of death -- can be intimidating. However, most people say they feel better after having gone through the process.