How to Make a Will

Many things can make you pause and reflect -- a marriage, a divorce, the passing of your loved ones -- but your thoughts do not always extend to your assets. Eventually you may be tasked with passing on your life's earnings, but you have no clue about writing a legally binding document.

California attorney Cheryl Barrett, who has specialized in will and estate planning in general for nearly a quarter-century, works for the law firm of Ferruzzo & Ferruzzo in Newport Beach. eHow spoke to her about the ins and outs of creating a will.

(Note that Barrett’s responses are based on California law and laws vary by state.)

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eHow: What is a will and why is it important to have one?

Cheryl Barrett: A will is certainly better than no estate plan at all. The object of a will is to tell the court who you want to administer the estate. Then (the will tells) the court where you want the estate to be distributed to. The purpose of the will is to give the court that information. The old saying that "if you don’t have a will the state has one for you" is true.

eHow: What happens when someone with a fair amount of assets dies without a will? Is that an occurrence that happens more often than people might think?

CB: When a person dies, if their gross estate -- everything they own that is not in a trust, joint tenancy or beneficiary designated -- exceeds $150,000, the estate will be subject to probate. Note that debts and mortgages are ignored. The cut-off for probate is based on the fair market value "gross" estate, not the net estate.

Less than that, things can go forward with things like affidavits. If there are assets the institutions know who to pay for, like joint tenancy, pay-on-death accounts like life insurance, IRA beneficiary, those are not included in the $150,000 because those companies know whom to pay.

The executor or administrator’s fees are based on the gross value of the estate, as are attorney fees.

eHow: Who does not need a will?

CB: Once in a while I will come across someone who has assets all tied into “pay-on-death” accounts -- CDs, IRAs, life insurance. So those companies know who to pay. And this person does not own real estate. Let’s face it, even in a down market, really nothing in California real estate is worth less than $150,000. If you own a home (in California), it is worth over $150,000.

So the next question would be: "Is a will the most effective way to handle your estate planning?" The answer is “no” 99 percent of the time because your estate will be subject to probate.

eHow: Is it important to divvy everything up down to the knickknacks?

CB: I think it is helpful. Some kids get along great, but you’d be surprised the emotional attachments to personal property. Something may be worth a lot less than the cash involved but it generates a lot more in emotion. But when you talk about Grandma’s picture over the mantelpiece or the picture Dad personally painted, that stuff really speaks to the soul and people get real fired up about those things.

eHow: You have expressed the importance of an executor, what considerations should go in making the decision on who that should be?

CB: It should be (a person who) makes good financial decisions. If you’re doing a will and it is court-monitored, it is hard to go too wrong. If you’re doing a trust then you’re having someone that is not being supervised by the court and it becomes more important that the person makes good financial decisions. I will also tell you that you should not be going to just any lawyer but one that specializes in wills and trusts.

Psychologically, how will it play mentally with the other kids if the eldest is named executor simply because he is the eldest? A lot of times when parents come in I ask how their kids get along, and they say "great." But they won't when (the person) dies, because out comes the whole sibling rivalry with (arguments) like: "Mom liked you best so you get the executor fee." (That fee) can be a significant amount of money on top of their share. So I work with the client to make sure they are feeling good about their choice.