Dear Dollar Stretcher,

My husband and I do not currently have wills.  How important it is to actually have everything legally documented? We have very little savings, but we do have one child and want to be certain guardianship is established properly. We contacted several local agencies but learned that free wills are only offered in this area to people who have terminal illnesses. We also checked and learned that it will cost us close to $500 if we pay for the legal service ourselves. 

Should we try to get a loan to pay for this in order to assure everything will be handled correctly in the event of our deaths?  Are there publications available to help us do this ourselves?  Just how technical does a will have to be in order to be valid?

Amy

Amy asks a question that should interest all of us. Everyone dies, but unfortunately less than one third of Americans have a will when they do. 

We first need to look at what a will is meant to do. A properly drawn will should appoint someone called an executor who will carry out your final wishes. It specifies how you'd like your assets to be distributed and any other final wishes. 

Many people think that they don't need a will. Usually they're wrong. Many young single adults think a will is unnecessary because they don't own much. But, without a will no one will have the authority to sell their car or pay bills for months.

The other common myth is that married people don't need a will if they put all their assets into joint accounts. There are two problems with that. First, everything can't be titled jointly. For instance, your jewelry doesn't have a title. Second, what happens if you both die at the same time? Perhaps in a car wreck. A will allows you to specify where that jewelry will go and also to say who gets your stuff if you spouse dies before or at the same time that you do.

If you die without a will, the laws of your state will determine who gets what. Typically money would go first to your spouse, then your children, then other living relatives. 

If you have children, a will is essential. That's the best place to say who you want to raise your children. Without a will the state will decide who gets the kids. 

It's also possible that in some states all of your assets won't go to your spouse. Some could go to your children. That might not be what you would want.

If unmarried couples want assets to go the survivor, a  will is very important. State laws treat them as nothing more than friends and the survivor will not inherit anything unless it's specified in a will.

Now let's find out what makes up a will. Each state has it's own laws. In most cases they will specify that a will must contain certain elements. Any missing elements could mean an invalid will. The requirements generally aren't difficult. But finding an error after your death means there's no way to correct it.

Most states want you to clearly identify the document as your will. They'll also want you to sign it and have it witnessed by at least two other people who won't inherit anything. Your signature and the witnesses' signature should be notarized.

Don't take our word for the requirements. Find out specifically what your state requires. And that will take a little work. Call the information number for your state. It's in the phone book. Ask who can provide information on wills. Call them for a brochure or fact sheet. 

OK, so who can write a will? Legally, anyone can write their own will. Since avoiding mistakes is critical you might want to ask yourself, "what's the worst that could happen if I goof?" If the risk seems too great or you are uncomfortable with trying to write a legal document, then you probably should see a lawyer. 

There's no need to record your will with the state. Just keep it in a safe place. Make sure that the executor knows where the will is and has access to it. Locking the will in your safe deposit box isn't a good idea unless the executor has a key. 

If you do write your own will, you'll want to be as formal as possible. Very few states still accept a hand-written will. A typed document that follows standard format and has proper witnesses will be more readily accepted.

Many good self-help books are available. Kits are available that will provide you with basic forms. They'll give you the fancy "lawyer-speak" that you need. Compare their standard format to the requirements of your state. State law rules, not the kit.

And, remember, too, that calling in a lawyer isn't an all-or-nothing proposition. Some are willing to answer your questions for a fee even if they don't prepare the document. They may also be willing to review a will that you've prepared. And you can also negotiate the fees for a complete will. In simple cases a few phone calls could unearth an attorney that would do it for a lot less than $500.

There is no clear dividing line as to when you should use a lawyer. If you own a business, have assets large enough to trigger estate taxes or have a disabled beneficiary, you'll want to have an attorney involved. 

But it's a much tougher question for a couple with a baby, two cars and a house payment. What should they do? Unfortunately, there's no easy answer.

You're buying two things when you use an attorney. First, the will should end up correct, and second, the peace of mind that it is done correctly.

While we always like to save money, this might be a case where the risk of finding out too late that it's wrong might make it worthwhile to call in a professional. But, that sure doesn't need to keep Amy from shopping around to find a less expensive attorney.

Gary Foreman is a former Certified Financial Planner who currently edits The Dollar Stretcher web site www.stretcher.com/save.htm

The Complete Guide to Wills, Estates & Trusts (Feb. 2000)

The Complete Idiot's Guide to Wills and Estates (Sep. 1997)

Quick & Legal Will Book, 2nd Ed. (Mar. 1999)

Nolo's Will Book (May 1997)