Whether you are age 85 or 35, a will is a common way to make sure that your wishes are fulfilled when it’s your time to go. It doesn’t matter if you have a lot of money and assets or a little – planning ahead gives you and your beneficiaries peace of mind that your affairs are in order. Whether you’ve had a will for quite some time or are thinking about drafting one soon, it’s important to understand the legal terms involved with your will.
To avoid feeling like your attorney is speaking a foreign language when helping you draft a will, here are a few definitions of common legal terms that you’ll hear during the process:
What is a will?
A will is a legal document that defines how you want your money and property to be distributed after your death. If you have children under 18, it states whom you want the court to appoint as their legal guardian. In addition, the will can also outline your wishes regarding your funeral and burial.
What is the difference between a joint will and a mutual will?
A joint will is a single will shared by two people (usually married). For example, if one spouse dies, he or she might have the will state that all property will go to the surviving spouse, and when they are both deceased, everything would go to their children. Unfortunately, in many states, when one spouse dies, the joint will goes to probate court, which can get messy. However, mutual wills are two separate wills that are for the most part, identical. For example, you and your spouse each sign a will that states that you leave everything to your spouse. An estate planner can explain the advantages and drawbacks of both, and can help you determine which will is the best for your estate and family.
Do I need a witness?
Actually, you’ll probably need two or three (in some states). Witnesses must be there to verify that you were of sound mind when you signed the will. It’s sad, but true – there are people who take advantage of their “loved” ones when they can’t make decisions for themselves anymore. Witnesses must be adults who are not a beneficiary or an executor in the will. If necessary, they could be called to testify under oath that they watched you sign the will of your own accord and were under no pressure to do so.
What is an estate?
Your “taxable” estate is the total of everything you own at the time of your death – money, property, retirement funds and life insurance, minus any debt you owe. Your “probate” estate refers only to the assets covered by your will.
What is an executor?
An executor is the person you name in your will to be in charge of your estate. This is no small task, as an executor has to make sure that your wishes are carried out. They will have to pay any outstanding bills and taxes, and make sure that your assets are safe and secure.
What is a beneficiary?
A beneficiary is a person or organization (perhaps a hospital or favorite charity) who will receive your assets. There is no limit to the amount of beneficiaries you can name in your will.
What is probate?
Probate is a court process that usually lasts about six months, but in some cases can last more than two years! While it may seem tedious, it is the critical piece of the puzzle when it comes to asset distribution. The judge has the authority to validate the will and order the assets to be distributed via a court order. Without the order, a beneficiary cannot take ownership of the assets, even if they are explicitly named in the will.
While drawing up a will and determining who gets what can seem overwhelming, it’s a smart thing to do for your own peace of mind and decreases unnecessary disputes for your survivors. It’s important to consult an attorney or estate planner to help you decide what is best for your specific situation. However, understanding the legal terms involved with creating and fulfilling a will can make the process seem less stressful, less foreign and hopefully, a little more comforting.
Victoria Araj writes for Quicken Loans and loves that it’s one of the most amazing places to work. Check out the Quicken Loans YouTube page and learn more about what it’s like to work at QL.