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Saturday, Dec. 20, 2014

Dave Ramsey says: Everyone needs a will

By Dave Ramsey

Published: Tue, Aug. 5 4:50 p.m. MDT

 No one is getting out of this thing alive. You need a will, a full estate plan with specific instructions on what to do with all your stuff after you die.

No one is getting out of this thing alive. You need a will, a full estate plan with specific instructions on what to do with all your stuff after you die.

(kzenon, Getty Images/iStockphoto)

Dear Dave,

Do you think it’s unreasonable to ask my 76-year-old husband to have a will drawn up? He had one made when we lived in Florida, but we've moved to Georgia. Now he won’t do it because he says wills aren’t recognized in Georgia.

— Cam

Dear Cam,

Wills aren’t recognized in Georgia? Where did he get his legal advice, in a bar or pool hall?

OK, let’s straighten this out. The will he had drawn up in Florida wouldn’t be recognized in Georgia, but he could have one made in Georgia that would be absolutely valid and legal. Everyone: No matter where you live, you need a will. If you die without a will in place, your family has to go through the court and jump through all sorts of hoops to settle the estate. The process can take several months. No one should leave their loved ones in that kind of predicament when having a will drawn up is such a simple and inexpensive process.

Everyone needs a will, Cam. Human beings have a 100 percent mortality rate, OK? No one is getting out of this thing alive. You need a will, a full estate plan with specific instructions on what to do with all your stuff after you die.

— Dave

Dear Dave,

What’s the difference between a Chapter 7 bankruptcy and Chapter 13 bankruptcy?

— Claudia

Dear Claudia,

Chapter 7 bankruptcy is what most people think about when they hear the word “bankruptcy.” It’s total bankruptcy, almost like dropping an atomic bomb on your entire financial picture.

Virtually all of your unsecured debt (except student loans, child support and money owed to the IRS) is wiped out. These things are not bankruptable. About 98 percent of the time, creditors of your other unsecured debt — things like credit cards — get nothing. Items that are secured debt, such as your car or house, are treated a little bit differently. If you’re behind on payments, you may be allowed to get current. In most cases, banks will allow you to re-sign in a process called reaffirming the debt.

Chapter 13 bankruptcy is a payment plan structured over five years. In it, you have to pay all of your secured debt. If it has a lien on it, you pay 100 percent to keep the item. You also have to pay a portion of your unsecured debt. Again — like in Chapter 7 — debt to the IRS, child support and student loans don’t go away. For any other unsecured debt, you can pay a percentage of what’s owed. An overall payment plan is developed, and you make those payments for five years.

I’m not a big fan of either one.

— Dave

Follow Dave on Twitter at DaveRamsey and on the web at daveramsey.com.

Recommended
1. morpunkt
Glendora, CA,
Aug. 5, 2014

As my father always used to say, "where there is a will, there is relatives."

2. AlanSutton
Salt Lake City, UT,
Aug. 5, 2014

Nice article, but I think he is wrong about one thing: he writes, "If you die without a will in place, your family has to go through the court and jump through all sorts of hoops to settle the estate. The process can take several months."

That's true even if you have a will. It's called the probate process. The property of someone who dies with a will must be probated just like the property of those who die without a will. The difference is that, with a will, you decide who gets your property; without a will, the laws of "intestate succession" determine who gets your property when you die.

3. SharpHooks
Lake Sammamish, WA,
Aug. 5, 2014

Consider a trust instead of a will.

A will will ALWAYS be dissected in probate court.
A trust is FAR easier on those left to deal with it.

Leaving a will is essentially saying "This document will not be honored until a judge decides it will."

4. Aggie5
Kuna, ID,
Aug. 7, 2014

how much does it cost to set up a trust? i assume i need to work with an attorney?

5. MAYHEM MIKE
Salt Lake City, UT,
Aug. 8, 2014

@ Aggie5: Some lawyers(and I'm one) assert that a trust is more difficult to set up than a will (and should, therefore, cost the client more). They point out that for the trust to be effective they must retitle your assets in the name of the trust (to avoid probate and make assets subject to the terms of the trust). In contrast, they imply that using a will is easier and doesn't require retitling of assets. That is false. For assets to be subject to the terms of a will, they must be retitled either in the client's sole name or, in the case of life insurance, payable to the client's "estate." In fact, I consider it malpractice for an attorney to draft either document and not assist the client in retitling assets. As far as preparing either document, it is no more difficult to draft a trust than a will and just as easy for a laser printer to print either one. I suggest you "shop" for an estate planning attorney who will prepare your estate plan for less than $1000. Higher fees are justified only because a lawyer has too high an office overhead.