Who Can and Cannot Witness a Will?

A will is notarized

A will is an important part of your financial plan. When you create a will and testament, you’re creating a legal document that determines how your assets will be distributed once you pass away. You can also use a will to name legal guardians for minor children. When making a will and testament, it’s important to follow the rules in your state to ensure the will is valid. One of those rules centers on the requirements for witnesses. For more guidance on the intricacies of wills and estate planning, consider enlisting the services of an expert financial advisor.

Why Wills Need to Be Witnessed

A will is a legal document but in order for it to be binding, there are certain requirements that need to be met. For instance, although state laws regarding wills vary, states generally require you to be of legal adult age to make a will. You must also have testamentary capacity, meaning you:

  • Must understand the extent and value of the property you’re including in the will
  • Are aware that you’re making a will to decide who will inherit your assets
  • Aren’t acting under duress in making the will

Having someone witness your will matters in case questions are raised over its validity later or there is a will contest. For example, if one of your heirs challenges the terms of your will a witness may be called upon in court to attest that they watched you sign the will and that you appeared to be of sound mind when you did so.

In other words, witnesses add another layer of validity to a will. If all the people who witnessed the signing of a will are in agreement about your intent and mental state when you made it, then it becomes harder for someone else to dispute its legality.

Who Can Witness a Will?

When drafting a will, it’s important to understand several requirements, including who can serve as a witness. Generally, anyone can witness a will as long as they meet two requirements:

  • They’re of legal adult age (i.e. 18 or 19 in certain states)
  • They don’t have a direct interest in the will

The kinds of people who could witness a will for you include:

  • Friends who are not set to receive anything from your estate
  • Neighbors
  • Coworkers
  • Relatives who are not included in your will, such as cousins, aunts, uncles, etc.
  • Your doctor

If you’ve hired an attorney to help you draft your will, they could also act as a witness as long as they’re not named as a beneficiary. An attorney who’s also acting as the executor of the will, meaning the person who oversees the process of distributing your assets and paying off any outstanding debts owed by your estate, can witness a will.

Who Cannot Witness a Will?

Two minors looking out a windowStates generally prohibit you from choosing people who stand to benefit from your will as witnesses. So for example, if you’re drafting a will that leaves assets to your spouse, children, siblings or parents, none of them would be able to witness the will’s signing since they all have an interest in the will’s terms. Will-making rules can also exclude relatives or spouses of any of your beneficiaries. For instance, say you plan to leave money in your will to your sister and her husband with the sister being the executor. Your sister can’t be a witness to the will since she’s a direct beneficiary. And since her husband has an indirect interest in the terms of the will through her, he wouldn’t qualify as a witness either.

But married couples can witness a will together, as long as they don’t have an interest in it. So, you could ask the couple that lives next door to you or a couple you know at work to act as witnesses to your will.

You may also run into challenges if you’re asking someone who has a mental impairment or a visual impairment to witness your will. State will laws generally require that the persons witnessing a will be able to see the document clearly and have the mental capacity to understand what their responsibilities are as a witness.

Note that the witnesses don’t need to read the entire will document to sign it. But they do need to be able to verify that the document exists, that you’ve signed it in their presence and that they’ve signed it in front of you.

How to Choose Witnesses for a Will

If you’re in the process of drafting a will, it’s important to give some thought to who you’ll ask to witness it. It may help to make two lists: one of the potential candidates who can witness a will and another of the people who cannot act as witnesses because they have an interest in the will.

You should have at least two people who are willing to witness your will signing. This is the minimum number of witnesses required by state will-making laws. Generally, the people you choose should be:

  • Responsible and trustworthy
  • Age 18 or older
  • Younger than you (to avoid challenges presented if a witness passes away)
  • Free of any interest in the will, either directly or indirectly
  • Willing to testify to the will’s validity if it’s ever challenged

When it’s time to sign the will, you’ll need to bring both of your witnesses together at the same time. You’ll need to sign, initial and date the will in ink, then have your witnesses do the same. You may also choose to attach a self-proving affidavit or have the will notarized in front of the witnesses.

A self-proving affidavit is a statement that attests to the validity of the will. If you include this statement, then you and your witnesses must sign and date it as well. Once the will is signed and deemed valid, store it in a secure place, such as a safe deposit box. You may also want to make a copy for your attorney to keep in case the original will is damaged or destroyed.

The Bottom Line

A last will and testamentMaking a will can be a fairly simple task if you don’t have a complicated estate; it can even be done online in some situations. If you have significant assets to distribute to your beneficiaries or you need to make arrangements for the care of minor children, talking with an estate planning attorney can help you shape your will accordingly. Choosing witnesses to your will is the final piece of the puzzle in ensuring that it’s signed and legally valid.

Tips for Estate Planning

  • Consider talking to a financial advisor about will-making, trusts and how to create a financial legacy for your loved ones. If you don’t have a financial advisor, finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool can help you connect with professional advisors in your local area in just a few minutes. If you’re ready, get started now.
  • A will is just one document you can include in your estate plan. You may also opt to establish a living trust to manage assets on behalf of your beneficiaries, set up a durable power of attorney and create an advance healthcare directive. A trust can help you avoid probate while potentially minimizing estate taxes.

Photo credit: ©iStock.com/djedzura, ©iStock.com/SanyaSM, ©iStock.com/Spanic

The post Who Can and Cannot Witness a Will? appeared first on SmartAsset Blog.

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COVID-19 Gives a Boost to Estate Planning: How You Can Get a Will Done—and Fast

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Here’s the macabre truth: With hundreds of thousands of confirmed cases of COVID-19 across the country—and the death toll steadily rising—estate planners are reporting an increase in calls and transactions by people wanting to put their affairs in order in case of their death.

But estate planning isn’t just for those with a life-threatening diagnosis. In fact, if you’ve never considered who will inherit your assets, or whom you’d appoint to be your power of attorney, now’s probably a good time. We spoke with several experts to find out everything you need to know about quickly securing your assets during the pandemic—or beyond. Keep reading for all the details.

Estate planning with a lawyer vs. online

If you’re panicked about getting your estate planning done quickly, maybe you’ve wondered: Can’t I just do it online?

While many lawyers advocate for working with a professional, there are situations in which it might make sense to take the do-it-yourself online approach.

“If you’ve already taken stock of your assets and decided on how it should be managed, creating an estate plan is rather straightforward,” explains Felix Sebastian of Legal Templates. “An attorney can draft one up for you in a matter of hours, or you can do so yourself by using forms provided by your state government.”

For those with relatively simple estate planning goals (i.e., a limited number of assets and beneficiaries, and no special circumstances), online services can be a great option, with the added perk of having an incredibly fast turnaround time.

“We have streamlined the process to make it easy and efficient,” says Patrick Hicks, head of legal at Trust & Will. “Most people finish in 15 to 30 minutes, but the process is driven by the individual, so anyone can take more or less time as they desire.

“Our process is much like TurboTax,” he adds. “One easy question at a time, and each question will then lead you through the process to collect and synthesize all of your information and decisions. Most people can complete it all with no preparation and no other documents needed.”

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Watch: Our Chief Economist’s View on the Pandemic, Mortgage Rates, and What’s Ahead

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The downsides of DIY estate planning

If this sounds good to you, you wouldn’t be alone. Hicks says their service has seen a 50% increase in activity even compared with other busy times of the year, and Mary Kate D’Souza, founder of online estate planning service Gentreo, reported a 143% increase in membership over the past week alone.

And while there are certainly potential perks of using an online service (e.g., getting documents faster or saving money on lawyer fees), just be sure you understand what you’re actually getting: a set of unnotarized forms that will likely not include any sort of legal advice.

“Creating an estate planning document such as a will only gets you halfway there,” Sebastian says. “Pretty much every single state and territory of the U.S. requires that these documents be signed by witnesses and/or notarized.”

And on that note: While putting your online forms together can be done relatively quickly, it may end up taking you much longer to get those forms notarized, even if you have the option to do so remotely.

Lawyers urge clients not to delay their wills and trusts

If you’re considering working with a lawyer for your estate planning, the experts are advising you get to it—and fast.

“Since the COVID-19 outbreak, we have experienced a 30% increase in calls from people wanting us to draft powers of attorney, health care powers of attorney, and wills,” says family law and estate planning attorney Chelsea Chapman of McIlveen Family Law Firm.

Plus, beyond those new clients, estate planners are trying to juggle their existing roster of clients, too—who are, understandably, concerned.

“With the COVID-19 outbreak, we’re receiving an exponentially greater number of existing-client calls than usual,” says Judith Harris, an attorney and co-chair of the Estate Trust and Tax Group at Norris McLaughlin.

Although many law offices typically take several weeks to complete estate planning packages, exceptions can be made for emergency situations.

“In the event of an emergency, we can get documents done in 48 hours,” says Eido Walny, founder of the Walny Legal Group. “That’s one heck of a rush job, however, and would require skipping over a lot of other people in the process. As a result, clients who ask for that kind of turnaround should expect to offer all the cooperation that is asked of them and also to pay a hefty premium for the service. But it can be done.”

The final word

Ultimately, however you choose to get your estate planning done, there’s one key takeaway.

“Don’t wait,” Walny says. “Get the planning process started now. Estate planning is not death planning—these documents will help you during life, during illness, and also in death. Hopefully this crisis will pass, and when it does, these documents will continue to be valuable, unlike the 1,200 rolls of toilet paper hidden in the basement.”

The post COVID-19 Gives a Boost to Estate Planning: How You Can Get a Will Done—and Fast appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

Your Guide to Claiming a Legit Home Office Tax Deduction

I’d bet that on just about every city block or long country road, someone is operating a business from their residence. According to the U.S. Small Business Administration, about 50 percent of businesses are home-based, with a larger percentage (60 percent) working as solopreneurs with no employees.

Having a home-based business is one of the easiest and least risky ways to become an entrepreneur, test your business ideas, and increase your income. No matter if you run a business full-time or as a side gig, claiming the home office deduction can significantly reduce your taxes.

No matter if you run a business full-time or as a side gig, claiming the home office deduction can significantly reduce your taxes.

I received an email from John, who says, “My New Year's resolution is to earn more money working during my off-hours and on weekends. Since the work will likely entail making deliveries for different mobile apps, I’m not sure if it qualifies me for the home office tax deduction. Can you explain more about it?”

Thanks for your great question, John! In this post, I’ll give an overview of the home office deduction. You’ll learn who qualifies, which expenses are deductible, and how to legitimately claim this money-saving tax break no matter what type of business you have.

Who can claim the home office tax deduction

If you work for yourself in any type of trade or business, either full- or part-time, and your primary office location is your home, you have a home business. The designation applies no matter whether you sell goods and services, are a freelancer, consultant, designer, inventor, Uber driver, or dog-walker.

If you work for yourself in any type of trade or business, either full- or part-time, and your primary office location is your home, you have a home business. 

You can have a home-based business even if you’re like John and mostly earn income away from home. This is common for many trades and solopreneurs, such as musicians, sales reps, and those working in the gig economy. If you’re self-employed and do administrative work like scheduling, invoicing, communication, and recordkeeping at home, you have a home business.

Note that employees who work from home can’t claim a home office deduction. W-2 workers used to be allowed to include certain expenses if they itemized deductions. But tax reform took away that benefit starting with the 2018 tax year.

The home office deduction is available for any self-employed person no matter whether you own or rent your home, with the following two requirements:

  1. Your home office space is used regularly and exclusively for business
  2. Your home office is the principal place used for business

You must regularly use part of your home exclusively for conducting business. For example, if you use a guest room in your house or a nook in your studio apartment to run your business, you can take a home office deduction for the space.

You don’t need walls to separate your office, but it should be a distinct area within your home. The only exception to this “exclusive use” rule is when you use part of your home for business storage or as a daycare. In these situations, you can consider the entire space an office for tax purposes.

Additionally, your home must be the primary place you conduct business, even if it’s just the administrative work you do. For example, if you meet with clients or do work for customers away from home, you can still consider the area of your home used exclusively for business as your home office.

Your home doesn’t have to be the only place you work to qualify for the deduction. You might also work at a coffee shop or a co-working space from time to time.

You could also consider a separate structure at your home, such as a garage or studio, your home office if you use it regularly for business. Also, note that your home doesn’t have to be the only place you work to qualify for the deduction. You might also work at a coffee shop or a co-working space from time to time.

RELATED: How to Cut Taxes When You Work From Home

Expenses that are eligible for the home office tax deduction

If you run a business from home, two types of expenses are eligible for the home office deduction: direct expenses and indirect expenses.

Direct expenses are the costs to set up and maintain your office. For instance, if you work in a spare bedroom, you might decide to install carpet and window treatments. These expenses are 100 percent deductible, no matter the size of the office.  

Indirect expenses are costs related to your office that affect your entire home. They’re partially deductible based on the size of your office as a percentage of your home. 

For renters, your rent, renters insurance, and utilities are examples of indirect expenses. You’d have these expenses even if you didn’t have a home office.

For homeowners, you can't deduct the principal portion of your mortgage payment, which is the amount borrowed for the home. Instead, you’re allowed to recover a part of the cost each year through depreciation deductions, using formulas created by the IRS.

Other indirect expenses typically include mortgage interest, property taxes, home insurance, utilities, and maintenance. Allowable indirect expenses actually turn some of your personal expenses into home office business deductions, which is fantastic!

Allowable indirect expenses actually turn some of your personal expenses into home office business deductions, which is fantastic!

However, expenses that are entirely unrelated to your home office, such as remodeling in other parts of your home or gardening, are never deductible. So, your ability to deduct an expense when you’re self-employed depends on whether it benefits just your office (such as carpeting and wall paint) or your entire home (such as power and water).

Also, remember that business expenses unrelated to your home office—such as marketing, equipment, software, office supplies, and business insurance—are fully deductible no matter where you work.

How to claim the home office tax deduction

If you qualify for the home office deduction, there are two ways you can calculate it: the standard method or the simplified method.

The standard method requires you to determine the percentage of your home used for business. You divide the square footage of the area used for business by the square footage of your entire home.

For example, if your home office is 12 feet by 10 feet, that’s 120 square feet. If your entire home is 1,200 square feet, then diving 120 by 1,200 gives you a home office space that’s 10 percent of your home. That means 10 percent of the qualifying expenses of your home can be attributed to business use, and the remaining 90 percent is personal use. If your monthly power bill is $100 and 10 percent of your home qualifies for business use, you can consider $10 of the bill a business expense.

To claim the standard deduction, use Form 8829, Expenses for Business Use of Your Home, to figure out the expenses you can deduct and then file it with Schedule C, Profit or Loss From Business.

The simplified method allows you to claim $5 per square foot of your office area, up to a maximum of 300 square feet. So, that caps your deduction at $1,500 (300 square feet x $5) per year.

The simplified method truly is simple because you don’t have to do any record-keeping, just measure the space and include it on Schedule C. It works best for small home offices, while the standard method is better when your office is larger than 300 square feet. You can choose the method that gives you the biggest tax break for any year.

But no matter which method you choose to calculate a home office tax deduction, you can’t deduct more than your business’ net profit. However, you can carry them forward into future tax years.

As you can see, claiming tax deductions for your home office can be complicated. I recommend that everyone who’s self-employed use a qualified tax accountant to maximize both home office and business tax deductions.

Yes, professional advice costs money. But it’s well worth it, and it usually saves money in the long run when you know how to take advantage of every legit tax deduction.

Source: quickanddirtytips.com

5 Tips for a Memorable Holiday Card for Your Business

In a time when most communication takes place online, receiving a personal holiday card in the mail is a welcome treat—and one that can help build stronger business relationships while supporting your company’s brand.

So how can you be sure that your company’s holiday card earns a place on the mantel or card display and isn’t just tossed in the recycling bin? Start with a high-quality card from a well-known stationer like Crane, and then remember these tips.

1. Reflect Your Brand

Although sending a holiday card spreads cheer and acknowledges the spirit of the season, it’s a marketing tool ultimately, giving you a chance to thank your customers for their business and maintain top-of-mind awareness. Therefore, it’s important that the design you choose reflects your company brand and sends the right message to customers. Try to choose card designs that align with your brand colors, imagery, fonts, and overall corporate identity. That doesn’t mean you have to stick to boring or conservative designs, but you should consider the message you’re sending. Even conservative businesses like accountants or attorneys can incorporate whimsical or colorful designs into their cards when done appropriately.

2. Consider a Photo

Photo cards are among the most popular design choices for holiday cards. After all, who doesn’t love seeing the smiling faces of friends and family that they might see all that often? Photo cards are also appropriate for businesses and are likely to get the recipients to look more closely at them. Photo cards work well both for businesses where customers have regular contact with your team and for those where your customers might not see you and want to put faces to names. They are also a great choice for family businesses. Including a family photo on the holiday card supports your “family-owned” brand and a personal touch to the card.

3. Make it Personal

Speaking of adding a personal touch, the most memorable holiday cards are those that have a personal touch. Nothing will send your card to the bin faster than a preprinted card that was clearly a mass mailing. People want to feel special and acknowledged, and adding a personal touch to the card creates that feeling. Hand-signing cards is ideal, but not always practical, but many printing companies can add digital signatures that mimic the look of a signature. Another option is to have your team send cards to specific clients with a personalized message thanking them for their business or mentioning a specific memory or project.

Sending business holiday cards is a key part of your marketing, so take the time to do it right.

4. Take Care with Messaging

Understanding your customer base and being culturally sensitive is important all the time, but in particular during the holidays. It’s important to choose holiday cards and write messages that are sensitive to your customers' religious and cultural preferences. This means avoiding cards with overtly religious messages or focused on the religious aspects of the season, instead opt for more neutral designs and greetings. The primary exceptions are if your business is devoted to a specific religion (eg. a Christian bookstore), if you are certain that your customer base is of a specific faith, or if you’re sending greetings for a holiday you celebrate (for example, if you’re of the Jewish faith and sending cards for Hanukkah). Even then, it’s best to opt for cards that have more subtle religious imagery and messages. If you’re unsure, choose a more universal “Season’s Greetings” or “Happy Holidays” theme.

5. Mail Carefully

There’s no point in putting time, effort, and money into your holiday card only to have many of them returned undeliverable because you have incorrect addresses. Devote some time to updating your mailing list, adding new contacts, removing old or outdated addresses, and removing duplicates. If you’re sending cards to contacts and clients at other companies, make sure that the recipients are still with the company and that you have their titles correct.

This means that you should begin working on your holiday cards well in advance. You might not be thinking about the holidays yet in October, but it’s best to get your company cards in the mail as close to Thanksgiving as possible. Not only does getting your card in the hands of your contacts early make it more memorable—it’s not going to get lost in the pile of cards filling mailboxes the week before Christmas—but it also ensures that people receive them before they head out of the office for the holidays. Many people take time off in the days before and after Christmas, and if your cards are mailed late, they won’t be seen until after the New Year. If you are running late with your holiday cards, consider sending New Year’s greetings instead.

Sending business holiday cards is a key part of your marketing, so take the time to do it right. Your customers will be happy to receive them and remember your company in the year to come.

Source: quickanddirtytips.com