ASK NEALE: New Parents Need Will
Reprinted from Babycenter.com
What is a will, and what can it do for me?
A will is a document that specifies who will inherit your bank accounts, real estate, jewelry, cars, and other property after you die. You can leave everything to one person or divvy it up in small, specific portions, such as your video game collection to your brother or your sweaters to your best friend. But a will is much more than a means of distributing your property when you're gone – especially if you have kids.
For parents, making a will is the single most important thing you can do to make sure your child is cared for by the people you would choose if anything should happen to you. In your will you can designate a person (guardian) to care for your children if you die before they become legal adults. And you can designate a property guardian or trustee to manage your money for your children until they reach adulthood. You can appoint one person to act as both personal and property guardian, or choose two people to carry out the separate roles.
If you'd like to help streamline the wrap-up of your affairs after you're gone, you can name an "executor." An executor pays your debts and taxes and then makes sure the rest of your estate goes to the people you've chosen.
You can use a will for many things, including these: To make charitable contributions; to donate organs; to specify funeral arrangements; and to state your preferences about life support by creating a living will, healthcare directive, or directive to physicians as a separate document.
One caution: Certain assets such as life insurance policies, 401(k)s, and IRA accounts have beneficiary forms that trump wills. That means the funds in these accounts are distributed to whomever you named as beneficiaries, no matter what you specify in your will. Be sure to check the beneficiaries on these accounts – and make any changes – to align with your will.
What happens if I die without a will?
Without a will, there's no guarantee that when you die your money will go to the people you want or that your children will be cared for by the person you believe will do the best job.