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Wills & Trusts Kit For Dummies
Going with a Pro ........................................................................................................... 31
How lawyers and accountants can help ......................................................... 31
Do you save money in the long haul? ............................................................. 32
Working with a Professional ....................................................................................... 34
Hiring a lawyer ................................................................................................... 34
Meeting with your lawyer................................................................................. 35
Reviewing and executing the documents....................................................... 35
Taking the final steps ....................................................................................... 35
Safeguarding Your Estate Plan ................................................................................... 36
The problem of the disappearing document ................................................. 36
Storing your will or trust .................................................................................. 38
Registration of wills and trusts........................................................................ 38

Chapter 3: Gathering Per tinent Information . . . . . . . . . . . . . . . . . . . . . .39
Asking Yourself Some Basic Questions ..................................................................... 39
Identifying Your Assets ............................................................................................... 40
Real estate .......................................................................................................... 42
Personal property ............................................................................................. 42
Titled personal property .................................................................................. 43
Savings ................................................................................................................ 44
Investments ........................................................................................................ 44
Insurance policies and annuities..................................................................... 44
Retirement savings............................................................................................ 45

Pensions ............................................................................................................. 45
Considering Community and Jointly Owned Property............................................ 45
Valuing Your Property................................................................................................. 47

Chapter 4: Planning Your Bequests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Calculating Your Assets .............................................................................................. 49
Determining Your Intended Heirs and Beneficiaries ............................................... 50
Individuals .......................................................................................................... 51
Institutions or charities .................................................................................... 52
Other bequests .................................................................................................. 53
Thinking about Your Family Circumstances ............................................................ 53
Estate Planning for Second Families .......................................................................... 54
Giving your new spouse a life estate .............................................................. 54
Using trusts to hold your assets ..................................................................... 55
More tools to consider ..................................................................................... 56
Estate Planning for Your Business ............................................................................. 57
Inheritance of your sole proprietorship......................................................... 58
Inheritance of your share of a business ......................................................... 59
Appointing the People Who Will Carry Out Your Estate Plans .............................. 60
Choosing your personal representative or trustee ...................................... 60
Choosing a successor ....................................................................................... 62
Discussing your estate plan with your helpers ............................................. 63
Finding Professionals to Assist You .......................................................................... 63
Getting help from a lawyer ............................................................................... 64
Hiring an accountant ........................................................................................ 64
Using professional trust services (institutional trustees) ........................... 65

Chapter 5: Providing for Your Children and Dependents . . . . . . . . . . .67
Choosing a Guardian.................................................................................................... 67
Making the decision .......................................................................................... 68

Choosing a guardian other than the noncustodial parent ........................... 69


Table of Contents
Managing Your Child’s Assets .................................................................................... 70
Providing for Your Child’s Needs............................................................................... 71
Your child’s education ..................................................................................... 71
Your child’s special needs ............................................................................... 73
Your child’s financial stability ......................................................................... 74

Chapter 6: Dipping into Your Pocket: The Tax Man (and Others) . . . .75
Tallying Up Your Estate’s Tax Liabilities .................................................................. 75
Federal estate taxes — a moving target ......................................................... 76
The generation-skipping transfer tax ............................................................. 76
State estate taxes .............................................................................................. 77
Gift taxes............................................................................................................. 78
Minimizing Tax Costs and Liabilities ......................................................................... 80
Leaving your estate to your spouse................................................................ 80
Making gifts ........................................................................................................ 81
Using trusts to avoid estate taxes ................................................................... 83
Creating a Family Limited Partnership ........................................................... 84
Seeing the Big Picture: Tax Avoidance Should Not Dictate
Your Estate Plan ....................................................................................................... 85
Paying Your Estate’s Debts ......................................................................................... 86
Medical costs and Medicaid reimbursements............................................... 87
Payment of bills, loans, and mortgages .......................................................... 89
Payment of funeral expenses ........................................................................... 89
Covering Administration Costs .................................................................................. 90
Court costs ......................................................................................................... 90
Legal fees ............................................................................................................ 90

Administrator’s fees.......................................................................................... 91
Trustee’s fees ..................................................................................................... 92

Part II: Everything You Need to Know about Wills ........ 93
Chapter 7: Writing and Signing a Will . . . . . . . . . . . . . . . . . . . . . . . . . . .95
Deciding Whether a Will Serves Your Needs ............................................................ 95
Simplicity often leads you to a will ................................................................. 96
Assets not covered by a will ............................................................................ 97
Exploring the Types of Wills ....................................................................................... 99
The statutory will .............................................................................................. 99
The handwritten (holographic) will ............................................................... 99
A will of your own ........................................................................................... 100
Other wills ........................................................................................................ 100
Elements of a Will ....................................................................................................... 102
Who you are ..................................................................................................... 103
What are your assets ...................................................................................... 103
Who are your beneficiaries ............................................................................ 104
What are your bequests ................................................................................. 104
Reference to a tangible personal property memorandum......................... 107
What happens with the residue (if any) of the estate ................................ 107
Payment of debts by the estate ..................................................................... 107
Describing your funeral and burial wishes .................................................. 108
Designating a personal representative ......................................................... 108
Designating a guardian for any minor children ........................................... 109
Your signature ................................................................................................. 109
Executing a Valid Will ................................................................................................ 109

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Choosing the right witnesses ........................................................................ 110
Signing and executing your will ..................................................................... 110

Chapter 8: Navigating the Land Mines . . . . . . . . . . . . . . . . . . . . . . . . . .111
Identifying Common Land Mines ............................................................................. 111
Disinheriting heirs, known and unknown .................................................... 112
Avoiding invalidating part or all of your will ............................................... 115
Lashing out from beyond ............................................................................... 119
Handling simultaneous death of spouses .................................................... 119
Realizing Why You Must Update Your Will............................................................. 121
Your goals and wishes may change over time ..................................................121
Your assets may change over time ............................................................... 121
Family changes may invalidate your will ..................................................... 123
Family changes may dramatically alter who inherits under your will ..... 123
Knowing What to Do If You Lose Your Will ............................................................ 126

Chapter 9: When You Already Have a Will . . . . . . . . . . . . . . . . . . . . . .127
Reviewing and Updating Your Will .......................................................................... 127
Changes in your family circumstances......................................................... 128
Changes in your wishes .................................................................................. 130
Changes in your financial situation .............................................................. 131
Changing Your Will .................................................................................................... 133
Adding to your will (amendment by codicil) ............................................... 134
Executing a valid codicil................................................................................. 134
Revoking Your Will..................................................................................................... 135
How to revoke a will........................................................................................ 135
What to do with a revoked will...................................................................... 136

Chapter 10: Estate Administration:
What Happens in Probate Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137
Navigating Probate Court.......................................................................................... 137
Discovering How Estate Size Affects Probate Procedures.................................... 138
Probate for small estates ............................................................................... 138
Probate for larger estates .............................................................................. 139
Understanding the Role of the Personal Representative ...................................... 139
Giving notice to legal heirs ............................................................................ 140
Collecting property for distribution ............................................................. 141
Notifying and paying creditors ...................................................................... 142
Distributing bequests ..................................................................................... 142
Hiring a Lawyer........................................................................................................... 143
Overseeing Probate: The Judge................................................................................ 143
Avoiding Will Contests .............................................................................................. 144
Validity.............................................................................................................. 145
Mental incapacity ............................................................................................ 146
Undue influence ............................................................................................... 148

Part III: Trust Me! How Trusts Work .......................... 149
Chapter 11: The Anatomy of a Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . .151
What’s a Trust and Why You Need One .................................................................. 151
Benefitting from Trusts ............................................................................................. 152
They’re flexible ................................................................................................ 153
You can provide for your incapacity ............................................................ 153


Table of Contents
You can avoid taxes ........................................................................................ 154
You can avoid probate ................................................................................... 155

A trust can help protect your privacy .......................................................... 155
Selecting a Trustee..................................................................................................... 156
Choosing Your Beneficiaries .................................................................................... 158
Transferring Assets into Your Trust........................................................................ 158
Staying in control ............................................................................................ 158
Giving (or limiting) your trustee powers ..................................................... 159
Cancelling the trust ......................................................................................... 159
Distributing trust assets ................................................................................. 160
Putting Your Trust into Effect .................................................................................. 161
When the Trust Ends ................................................................................................. 162

Chapter 12: Dead or Alive: Picking Your Trust . . . . . . . . . . . . . . . . . . .163
Why So Many Choices?.............................................................................................. 163
The Revocable Living Trust ...................................................................................... 164
The benefits ..................................................................................................... 164
Possible drawbacks ........................................................................................ 165
Choosing from Other Trusts ..................................................................................... 167
Trusts to avoid the tax man: Asset protection trusts ................................ 168
Trusts for people who can’t manage money:
Spendthrift trusts ........................................................................................ 169
Trusts for doing good: Charitable trusts...................................................... 169
Trusts to avoid gift taxes: Crummey trusts ................................................. 171
Trusts for people who receive government benefits:
Special needs trusts .................................................................................... 172
Trusts to protect your estate plan if you predecease
your spouse: Bypass trusts........................................................................ 172
Trusts where you control the trust assets .................................................. 174
Trusts that own life insurance: Irrevocable life
insurance trusts (ILITs) .............................................................................. 176
Trusts for multiple generations: Dynasty trusts

(generation-skipping trusts) ...................................................................... 177
Trusts to postpone estate taxes: Qualified terminable
interest property trusts (QTIPs) ............................................................... 178
Trusts for your pet .......................................................................................... 178
Deciding Which Trust Is Right for You .................................................................... 179
Serving your personal needs ......................................................................... 179
Serving the needs of your family ................................................................... 180
Thinking about the tax man ........................................................................... 181

Chapter 13: When You Already Have a Trust . . . . . . . . . . . . . . . . . . . .183
Creating the Trust Isn’t the End of the Story.......................................................... 183
Transferring Assets into Your Trust........................................................................ 184
Real estate ........................................................................................................ 184
Financial accounts .......................................................................................... 185
Other assets ..................................................................................................... 186
Reviewing Your Trust ................................................................................................ 186
Does the trust still serve your needs? .......................................................... 186
Does the trust still fulfill your goals? ............................................................ 187
Is the trust adequately funded? ..................................................................... 188
Amending Your Trust ................................................................................................ 188
Restating a Trust ........................................................................................................ 189
Revoking a Trust ........................................................................................................ 190

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What Happens If You Die? ......................................................................................... 190

Can you avoid probate?.................................................................................. 191
Should you also have a will? .......................................................................... 191

Part IV: Carrying Out the Intent
of Your Will and Trust ............................................... 193
Chapter 14: Planning for Your Incapacity . . . . . . . . . . . . . . . . . . . . . . .195
Planning for Incapacity Has Many Benefits ............................................................ 195
You avoid guardianship and conservatorship proceedings ..................... 196
You get to choose who cares for you ........................................................... 196
You ensure that your wishes are followed .................................................. 197
Drafting a Living Will.................................................................................................. 197
Discussing your wishes .................................................................................. 199
Executing a living will ..................................................................................... 200
Distributing copies of your living will........................................................... 201
Reviewing your living will .............................................................................. 201
Looking into Other Advance Directives .................................................................. 202
Healthcare proxies .......................................................................................... 202
Your medical advocate ................................................................................... 203
Special instructions: Your wishes for your care ......................................... 204
Executing a Healthcare Proxy................................................................................... 207
Distributing copies of your healthcare proxy ............................................. 207
Revoking a healthcare proxy ......................................................................... 208
Designating Your Financial Powers of Attorney .................................................... 208
Selecting power of attorney ........................................................................... 209
Deciding between durable powers of attorney or
periodic renewal.......................................................................................... 210
Drafting your durable power of attorney ..................................................... 211
Executing power of attorney.......................................................................... 214
Revoking a power of attorney........................................................................ 214

Chapter 15: Those Cushy Retirement Funds . . . . . . . . . . . . . . . . . . . . .217
Exploring Retirement Savings Accounts ................................................................. 217
Retirement savings accounts available to anyone...................................... 219
Employment-based retirement savings accounts ....................................... 220
Self-employed retirement savings accounts ................................................ 221
Putting Off the Tax Man............................................................................................. 223
Moving Assets from One Tax-Deferred Investment to Another ........................... 223
Designating a Beneficiary .......................................................................................... 225
Selecting your beneficiary.............................................................................. 225
Changing your beneficiaries .......................................................................... 227
Maintaining Control Over Your Accounts............................................................... 227
The Tax Consequences of Putting Your Retirement
Savings into Your Estate ....................................................................................... 228

Chapter 16: Life Insurance: Making Sure It Doesn’t Backfire . . . . . .229
Taking a Look at the Different Types of Life Insurance......................................... 229
Term life ........................................................................................................... 230
Whole life.......................................................................................................... 231
Universal life .................................................................................................... 231
Variable life ...................................................................................................... 232


Table of Contents
Deciding Who Owns the Life Insurance .................................................................. 232
Ownership by a spouse .................................................................................. 233
Ownership by a child or children ................................................................. 234
Ownership by a qualified plan ....................................................................... 234
Ownership by a trust ...................................................................................... 235
Designating Beneficiaries for Your Insurance Policy ............................................ 236
Spouse .............................................................................................................. 236

Child or children ............................................................................................. 237
Another individual .......................................................................................... 237
Multiple beneficiaries ..................................................................................... 238
A trust ............................................................................................................... 238
Your estate ....................................................................................................... 239

Chapter 17: Your Castle: How It’s Owned
Makes a Huge Difference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .241
House, Condo, Co-op, or More: Exploring the Types
of Residential Properties....................................................................................... 241
The single-family home................................................................................... 242
The condominium ........................................................................................... 243
Housing cooperatives (co-ops) ..................................................................... 243
When your residence is a manufactured home or boat ............................. 244
Ownership of Your Residence .................................................................................. 244
Ownership by one person: Sole ownership ................................................. 244
Ownership by two or more people ............................................................... 245
Life estates ....................................................................................................... 246
Community property laws ............................................................................. 247
Special issues for domestic partners............................................................ 247
Should Ownership of Your Home Be Held by Your Trust?................................... 248
The Drawbacks Of Adding Your Heirs to the Title ................................................ 249
The cons outweigh the pros .......................................................................... 249
Possible tax consequences ............................................................................ 250
Possible Medicaid consequences ................................................................. 251
Leaving Real Property by Will or Trust ................................................................... 251
Remembering Other Properties ............................................................................... 252
Vacation properties ........................................................................................ 252
Investment properties .................................................................................... 253
Business real estate ........................................................................................ 254

Farmland........................................................................................................... 254

Part V: The Part of Tens ............................................ 257
Chapter 18: Ten Common Will Mistakes . . . . . . . . . . . . . . . . . . . . . . . .259
Not Updating Your Will ............................................................................................. 259
Being Too Specific in Your Bequests....................................................................... 260
Forgetting to Address the Residuary of Your Estate ............................................. 261
Leaving Everything to Your Spouse......................................................................... 262
Leaving Nothing to Your Spouse.............................................................................. 262
Including Items in Your Will That Pass Outside of Your Estate ........................... 263
Improper Witnessing of Your Will............................................................................ 263
Losing Your Will (or Making It Impossible to Find) ............................................... 264
Forgetting to Leave Good Financial Records.......................................................... 264
Forgetting That Your Estate Needs Cash ................................................................ 265

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Chapter 19: Ten Reasons to Have a Trust. . . . . . . . . . . . . . . . . . . . . . . .267
You Avoid Probate ..................................................................................................... 267
You’re Prepared for Incapacity ................................................................................ 268
You Avoid a Will Contest .......................................................................................... 269
You Protect Your Heirs ............................................................................................. 269
You Can Protect Estate Assets from Creditors and Lawsuits .............................. 270
You Plan for Second (and Third, and Fourth) Marriages ..................................... 270
You Plan for the Future of Your Business............................................................... 271
You Can Transfer Real Property Located in Another State .................................. 271

You Have Continuity of Investments ....................................................................... 272
You Avoid Taxes ........................................................................................................ 272

Chapter 20: Ten Tax Traps to Avoid
When Planning Your Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273
Not Planning Your Estate .......................................................................................... 273
Focusing Too Much on the Estate Tax .................................................................... 274
Assuming that the Estate Tax Will Not Change ...................................................... 275
Trying to Guess How the Estate Tax Will Change .................................................. 275
Not Taking Advantage of Your Lifetime Gift Exclusion ......................................... 276
Not Engaging in Business Succession Planning ..................................................... 276
Hiding Property Transfers and Gifts from the IRS ................................................. 277
Having Your Estate Be the Beneficiary of Your Life Insurance ............................ 278
Not Preparing Your Estate to Pay Any Estate Tax Owed ...................................... 279
Forgetting That Your Estate Will Grow Over Time ................................................ 279

Part VI: Appendixes................................................... 281
Appendix A: State Signing Requirements . . . . . . . . . . . . . . . . . . . . . . .283
Alabama ....................................................................................................................... 283
Alaska........................................................................................................................... 284
Arizona ........................................................................................................................ 284
Arkansas ...................................................................................................................... 284
California ..................................................................................................................... 285
Colorado ...................................................................................................................... 286
Connecticut ................................................................................................................. 286
Delaware ...................................................................................................................... 287
Florida.......................................................................................................................... 287
Georgia ........................................................................................................................ 287
Hawaii .......................................................................................................................... 288
Idaho ............................................................................................................................ 288

Illinois .......................................................................................................................... 289
Indiana ......................................................................................................................... 289
Iowa .............................................................................................................................. 290
Kansas.......................................................................................................................... 290
Kentucky...................................................................................................................... 290
Louisiana ..................................................................................................................... 291
Maine ........................................................................................................................... 292


Table of Contents
Maryland ..................................................................................................................... 292
Massachusetts ............................................................................................................ 292
Michigan ...................................................................................................................... 293
Minnesota.................................................................................................................... 293
Mississippi .................................................................................................................. 294
Missouri ....................................................................................................................... 294
Montana....................................................................................................................... 294
Nebraska...................................................................................................................... 295
Nevada ......................................................................................................................... 295
New Hampshire .......................................................................................................... 296
New Jersey .................................................................................................................. 296
New Mexico ................................................................................................................. 296
New York ..................................................................................................................... 297
North Carolina ............................................................................................................ 298
North Dakota............................................................................................................... 298
Ohio.............................................................................................................................. 298
Oklahoma .................................................................................................................... 299
Oregon ......................................................................................................................... 299
Pennsylvania ............................................................................................................... 300
Rhode Island ............................................................................................................... 300

South Carolina ............................................................................................................ 301
South Dakota............................................................................................................... 301
Tennessee ................................................................................................................... 301
Texas............................................................................................................................ 302
Utah.............................................................................................................................. 302
Vermont....................................................................................................................... 303
Virginia ........................................................................................................................ 303
Washington ................................................................................................................. 304
West Virginia............................................................................................................... 304
Wisconsin .................................................................................................................... 304
Wyoming...................................................................................................................... 305

Appendix B: State Inheritance Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .307
The Impact of Federal Estate Tax Reform............................................................... 307
States That Don’t Tax Estates................................................................................... 308
States That Impose Only Inheritance Taxes ........................................................... 308
States That Impose Only Estate Taxes .................................................................... 309
States That Impose Both Estate and Inheritance Taxes ....................................... 309

Appendix C: Estate Planning Worksheet. . . . . . . . . . . . . . . . . . . . . . . .311
Estate Plan................................................................................................................... 311
Personal information ...................................................................................... 311
Goals and priorities......................................................................................... 312
Family information .......................................................................................... 312
Assets................................................................................................................ 315
Debts ................................................................................................................. 318
Bequests ........................................................................................................... 319
Your advisors .................................................................................................. 320
Estate planning documents............................................................................ 320

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Will ............................................................................................................................... 320
Personal representative ................................................................................. 321
Guardian for minor children .......................................................................... 321
Bequests ........................................................................................................... 322
Estate taxes ...................................................................................................... 323
Disinheritance.................................................................................................. 323
Trust provisions .............................................................................................. 324
Funeral and burial arrangements .................................................................. 324
Living Trust ................................................................................................................. 325
Trustees and alternates.................................................................................. 325
Property to transfer into trust* ..................................................................... 326
Disinheritance.................................................................................................. 327
Distribution of trust assets ............................................................................ 327
Conditions on distribution ............................................................................. 328
Special concerns ............................................................................................. 328
Durable Power of Attorney ....................................................................................... 328
Choice of agent ................................................................................................ 328
Powers granted................................................................................................ 329
Preferences for the sale of property ............................................................. 329
Healthcare Proxy........................................................................................................ 329
Choice of medical advocate ........................................................................... 329
Living Will.................................................................................................................... 330
When should treatments cease ..................................................................... 331
Treatments that may prolong life ................................................................. 331

Comfort and pain relief................................................................................... 331
Place of death .................................................................................................. 332

Appendix D: About the CD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .333
System Requirements ................................................................................................ 333
Using the CD ............................................................................................................... 333
What You’ll Find on the CD ....................................................................................... 334
Troubleshooting ......................................................................................................... 335

Index ....................................................................... 337



2

Wills & Trusts Kit For Dummies

A Special Note for Residents
of Louisiana
If you’ve been shopping around for books on drafting your own will, you’ve
probably found that most of them say, “This book is valid for all states except
Louisiana.” You see this warning for two reasons:
ߜ Louisiana’s laws governing the execution of a will are more complicated
than those of other states, and a mistake can invalidate your will.
ߜ More importantly, Louisiana’s unique forced heirship laws will trump
inconsistent bequests in your will, and you’re severely limited in your
ability to deviate from the state’s mandatory bequests.
Even if you create an otherwise valid will, without a good understanding of
forced heirship laws, a court may end up largely disregarding your will or
allocating your estate in a way that bears little resemblance to what you

directed.
It’s beyond the scope of this book to give you the state-specific understanding you need to be sure that a Louisiana court will uphold your will. I thus
reluctantly urge residents of Louisiana to have their wills drafted by a legal
professional.

Conventions Used in This Book
Whenever you see a word in italics, I’m either introducing a new term or
using it for emphasis. Likewise, all Web addresses appear in monofont type.

What You’re Not to Read
Throughout the book, I include sidebars that contain information and anecdotes that expand on the topics discussed in the chapters. You’ll easily spot
the sidebars by their gray background color. The sidebars can be amusing and
informative, but there’s nothing in them that you have to read to understand
the material in this book. If you’re pressed for time, skip over the sidebars. If
you find the time to read them later, they’ll still be there.


Introduction

Foolish Assumptions
When writing this book, I had to make a few assumptions about you, the
reader. If you meet any of these qualifications, you can find what you need in
this book:
ߜ You don’t know much about estate planning and want to get a comprehensive understanding of what is involved.
ߜ You have a small to average estate and want to create your own estate
plan composed of a will and possibly a living trust.
ߜ You have a large estate and want to do the basics of your estate plan
yourself while getting professional assistance with specialized trusts
and tax planning.
ߜ You have absolutely no desire to plan your own estate, but want to

know how the estate planning and probate processes work and want to
know what you’re doing when you hire an estate planning professional
to create your estate plan.
I also assumed that you have a computer and can use it to print the worksheets from the accompanying CD to create your own estate planning documents. (You don’t have a computer? Then I’m assuming you have a friend
who can print the forms for you.)

How This Book Is Organized
This book is organized into six parts that guide you through the estate planning process and specific estate planning documents. I include some stories
and anecdotes to help you understand the concepts I discuss.

Part I: Getting Started with Your Will
or Trust
This part explains why you need to plan your estate, the dangers of failing
to do so, and the many benefits you get from completing your estate plan. I
also cover some of the most important aspects of estate planning, and some
of the biggest mistakes people make. You find out when you should get help
from an estate planning professional, what professionals can do for you, and
how to work with them.

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Wills & Trusts Kit For Dummies

Part II: Everything You Need
to Know about Wills
This part helps you understand the central role of your will in your estate
plan and the importance of keeping your will up-to-date. You also find out

what you need to know about probate court.
In addition, you discover common landmines that can disrupt your estate
plan and what you can do to avoid will contests.

Part III: Trust Me! How Trusts Work
If you’re considering using a trust for your estate plan, it’s important to know
exactly what trusts are and what they can do for you. You’ve heard of a
revocable living trust, but what about other types of trust. How can trusts
help you avoid estate taxes? This part has all the answers.

Part IV: Carrying Out the Intent
of Your Will and Trust
After you figure out the basics of your estate plan, you still have a bit more
work to do. You need to take a look at how your retirement and life insurance
plans figure into your estate and the special issues that can arise from your
real estate holdings. You also need a plan for your personal and financial care
in case of illness or disability. This part addresses those topics and more.

Part V: The Part of Tens
This part contains lists to help you with common estate planning issues and
traps. I describe mistakes people often make when planning their wills and
highlight situations where you may benefit from having a trust. I also tell you
how to avoid traps that may increase your estate taxes.

Part VI: The Appendixes
This part contains supplemental information to help you complete your
estate plan. Appendix A describes state law signing requirements for wills.

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Wills & Trusts Kit For Dummies

Where to Go from Here
You don’t have to start at the beginning of this book and read straight
through if you don’t want to. This book is designed so that you can look at
a topic you’re interested in and flip straight to that discussion. However, if
you’re new to estate planning, consider reading through this book to get an
overview of what’s involved.
ߜ If you’re about to do something dangerous and need an estate plan “yesterday,” you need a will so start with Chapter 7.
ߜ If you’re concerned about how much of your estate will get eaten up by
taxes, the news (good and bad) is in Chapter 6.
ߜ If you have young children and want to be sure that they’re taken care
of, proceed to Chapter 5 for some quick guidance.
ߜ If you have a will or trust already, Chapters 9 and 13 cover how to
update your estate plan and amend or replace wills and trusts.





10

Part I: Getting Started with Your Will or Trust

The Good, the Bad, and the Ugly:
What Can Happen When You
Don’t Plan Your Estate
Simply put, if you don’t plan your estate, the government has an estate plan

in store for you. Your state’s laws of intestate succession will apply, and the
state will decide who inherits your assets, usually your spouse and children.
But that’s not all:
ߜ In the event of your incapacity, a court may appoint people to make
decisions for you regarding your personal and medical care and the
management of your money. A stranger may end up deciding where you
live, what medical treatment you receive, and perhaps even whether you
really need $20 for a haircut.
ߜ If you have minor children, a court will have to decide who will care for
them, but will not have the benefit of your input.
ߜ The business you spent a lifetime building may end up failing or in the
hands of a court-appointed receiver.
Planning your estate isn’t a one-time task. Changes in your life circumstances
can dramatically alter both your wishes for your estate, and whether your
original estate plan even remains viable.
Sometimes it seems like your life doesn’t change much, so you may be wondering what sort of changes I am talking about. Consider the following:
ߜ Your estate will probably grow substantially over the course of your life,
although it may also shrink.
ߜ You may marry, divorce, separate, have or adopt a child, or experience
a death in your family.
ߜ Your children will grow up and establish their own households.
ߜ You may move between states, buy and sell property, or start your own
business.
ߜ Your designated trustee or personal representative may no longer be
available, or your relationship with that person may change.
ߜ Laws may change. In fact, they will. You can expect a new estate tax bill
to be working its way through Congress within the next year or two, and
it won’t be the last.
In all probability, you’ll update your estate plan several times during your
life, and on occasion you may even start over from scratch.