A will is a legal document that determines how your money and property will be distributed upon your death. When you create your will, you designate an executor who will be responsible for guiding your will through probate and distributing the proceeds. You also designate beneficiaries, those who will benefit from the proceeds of your estate.

An astonishing two out of three Americans die without having a will or a trust in place that determines how their assets will be distributed upon their death! If you die without a will, the state you live in will decide how your money and property will be distributed. Usually, the state divides your property equally among all of your family members and hires an expensive probate lawyer at your estate's expense to make decisions you could easily have made.

If you have dependent children, creating a legal will is essential. Not only do you need to provide for their financial welfare, you need to designate guardians. Avoid any ideas of hastily writing down instructions and presuming it becomes a legal will. State laws vary, and what you think will suffice very often absolutely will not. Wills have to go through probate court. The simpler you keep the will, the less it will cost to distribute your assets to your heirs, but having a legal will drawn up by a lawyer will keep the cost of probate lower and better serve your intentions.

Unless your financial holdings are complicated, most of the time a simple will is sufficient. You can use forms found on the Internet or in books that help you gather all pertinent information, create a list of all your assets, cover all your bases, and clarify your wishes.

Once you've created a first (or second, or third) draft, do yourself and your children a huge favor and consult with a lawyer. You don't have to select an expensive lawyer, or draw out the process. If you've done your homework well, a lawyer can draw up a legal will and process it for a reasonable fee ($500 to $1,000). A lawyer will also make sure you've covered everything a will needs to cover. It's safeguarding your children, and, therefore, a worthwhile expense.

If your children are under the age of 18, it's very important to specify whom you want to take care of them and their inheritance. A durable power of attorney gives the authority to someone you trust to make legal decisions regarding your estate; an executor processes your will through probate;a guardian is someone you designate to take care of your children.

Basic requirements for a will are as follows:

• You have to be at least 18 years old and of sound mind.

• Your will must be typed or computer printed.

• It must state clearly that it is your will.

• You must leave property to at least one beneficiary and appoint at least one guardian for minor children.

• You must sign and date your will in the presence of at least two witnesses, who do not have to read your will but must sign it as a witness to your signing.

As stated earlier, laws vary state by state. If you're going to draw up a will yourself, make sure you know the laws in your state and abide by them. In general, wills have to be neither notarized, nor submitted to the court, nor stamped with any legal imprint prior to your death.

Living Trusts

A living trust is a document that assigns a trustee to handle your estate in the event of your death. It's essentially a will that doesn't have to go through probate. You create a list of your beneficiaries, the name of a guardian or guardians, and how you wish matters to be handled. You then draw up a living trust that allows your designated trustee to distribute your estate according to your wishes.

A living trust makes more sense if you own a business or have complicated real estate holdings. It is possible to name yourself “trustee” and to name a “substitute” who will take over when you die or become incapacitated, but doing so means you have to transfer your house title and all other assets to yourself as “trustee” and sign all your checks in a way that clearly indicates this position.

Trusts are revocable — meaning you can change your mind at any time, but they can be expensive and unnecessary. Beware of seminar leaders who warn of probate nightmares. Ask your financial consultant or your lawyer if you need a living trust. If so, do the legwork ahead of time and save money without sacrificing your children's welfare.

Neither a will nor a living trust has to be complicated. In both cases, the most important information you need to gather is the following:

• A list of all your assets: Write down everything you want to pass on to your children or family, including real estate, bank accounts, safe deposit boxes, money market accounts, corporations or businesses, vehicles, insurance policies, retirement plans, commodities, stocks, bonds, artwork, precious metals, antiques, collectibles, and computer equipment, right down to jewelry, books, china, silverware, and even clothing.

• A list of all your liabilities: These will be deducted from your assets to establish the net worth of your estate. You may want to designate how the liabilities are to be paid, but at the very least, you need to know the real net worth of your estate.

• A list of beneficiaries: Gather all insurance policies, bank account applications, and retirement fund documents, and review the beneficiaries named and the proportion of distribution.

• Guardian(s): Indicate one or more people that you want to have physical custody of your children, and the name(s) of the person(s) you want to manage your children's inheritance until they reach an age you designate. Backup guardians are a good idea.

• Trustee(s): Name the person you want to designate as trustee of your living trust and the person(s) you want to have durable power of attorney or to serve as your health care proxy. You will also name one or two “successor trustees” in case your chosen trustee dies before fulfilling her duties.

• Executor(s): An executor is the person you designate to handle the probate and distribution of your will. You assign this person the legal responsibility for the carrying out the terms of your will, including establishing an estate bank account, processing probate, filing taxes, and distributing proceeds. Executors are frequently paid for their services; you affix a price and specify it in your will.

It's your job as a single mother to make crucial decisions that directly affect your children's welfare. In the event no will has been created, a legal system that may, or may not, make the best decisions will be in charge of your estate. Spare your children. Do all the research required, and then create a will or a living trust that will safeguard their future.

Living Will

A living will, also called a health care directive, is a legal document that directs doctors and your family what to do if you are permanently unconscious, irreversibly brain damaged, suffering from dementia, or dying and unable to speak or make decisions. While it feels gruesome, imagine how your children would feel if they were ever asked to make a decision about whether you lived or died. Spare them the anguish and make these decisions for yourself.

Also, it's wise to name a health care proxy or assign “durable power of attorney” to someone you trust to give and receive medical information and enforce your living will. Choose someone you trust implicitly, someone with exceptional judgment who would stay calm under dire circumstances and who has your best interests at heart.

It's ideal to select someone who lives close to you, but if your most trusted person lives 1,000 miles away, choose her and make sure she's listed on your emergency information. This prevents strangers from overriding your living will.

Your living will normally comes into play when you have one of the following situations:

• You are close to death from a terminal illness or are permanently comatose.

• You cannot communicate your own wishes orally, in writing, or through gestures.

• The doctor in charge has been notified that you have a living will.

Thus, it is wise to give copies of your health care directives to your attorney, your primary-care physician, your close relatives, and your local hospital.

You can find forms on the Internet or in books that will help you sort out all the issues and make firm decisions. Do this when you are formulating a will and save money by having your lawyer draw up the documents at the same time.

Put Your Financial Papers in Order

Wills do not have to be officially recorded or filed in a court, which means it's up to you to keep yours in a safe place. If you keep all your important papers such as insurance policies, birth certificates, mortgage papers, house deed, and your will in a safe deposit box, make sure your executor has access to it. It's perhaps wiser to keep them in a waterproof and fireproof box at your home, as long as the executor knows where to find it.

It's also wise to include any and all papers that would assist in handling your estate — a list of all credit card numbers, bank accounts, retirement funds, insurance policies, and creditors. Make it a habit to review these documents annually and update any information so that you'll have everything in order in case of an emergency.