Properly Witnessed, Prepackaged Will Is Valid in California, but Is It Any Good?

Q A friend of mine is willing to help me write a will using a computer program he purchased. Are these types of wills valid and legally binding? Can they survive a

challenge? May I transfer ownership of a note on which I am being paid interest to the heir of my choice with this type of will?

--C.R.

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A In general, for a will to be valid and binding in California it needs only to be properly witnessed. What does this mean? A will that is not completely written in the handwriting of its author, such as one that is typed or computer-generated, must have the signatures of two witnesses. A will completely written in the author’s own handwriting, a so-called holographic will, needs only the signature of its author.

That said, you should consider the quality of the estate-planning and asset-distribution strategy offered by an out-of-the-book or computer-generated master will. Although these are perfectly legal and allow you to transfer assets such as an interest-paying note, they are best used in only the simplest estates.

If you have more than a modest amount of assets or any complications among potential heirs, you should seek the help of a professional.

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Q

My wallet was recently stolen and I lost all its contents. I immediately contacted my credit card issuers, the Department of Motor Vehicles, Social Security and my auto insurer to cancel those cards, and I had new ones issued. Did I handle this correctly? Did I forget anything? I find that I’m having nightmares about this.

--J.Y.

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A Our experts say you took exactly the correct steps. In general, after losing your wallet or purse, you should immediately notify the issuers of all the cards you were carrying to alert them of the loss, including libraries, auto insurers, video stores, health clubs, gasoline companies, the bank that issues your ATM card and department stores.

Don’t forget to notify your bank if you routinely carry blank checks or a checkbook. Remember, time is of the essence in protecting yourself from fraud.

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Q

I was recently widowed and was told I need to have my home appraised to determine its stepped-up tax basis. My plan is to purchase another home of equal or greater value than this one. Should I wait and have the replacement home appraised? Also, am I better off with an appraisal on the high or low side, assuming that I can influence it in any way?

--R.H.

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A You should have the home that you shared with your late wife appraised immediately to determine its current market value. This would set your tax basis in the house and presumably would set the price at which you should put in on the market.

The higher the home’s appraisal, the lower your potential taxable gain will be when you sell it, assuming that the home appreciates between the time of its appraisal and its sale. If there is no interval, there’s no gain, taxable or otherwise, and no need to invoke the $125,000 profit exclusion--assuming you’re eligible to use it.

However, the higher the appraisal, the higher the price of the home you must purchase as its replacement, unless you want to use the $125,000 here to lower your replacement home cost obligation. Also, the higher the appraisal, the higher the value of your estate, which could have an effect on your heirs, depending on the value of your other assets.

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Q

I plan to retire to Spain after spending a lifetime working and contributing to Social Security. May I use my Medicare benefits while residing abroad?

--J.M.

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A With only minor exceptions, largely involving extraordinary events occurring in the neighboring countries of Mexico and Canada, Medicare benefits do not apply outside the United States. However, taxpayers who are otherwise eligible for full Medicare benefits may receive them upon reentry into the United States, provided that they have continued to participate in the Part B (medical treatment) portion of the program by paying their monthly premiums.

Perhaps the largest single obstacle to extending Medicare benefits to Americans living abroad, Social Security officials say, is the potential bureaucratic nightmare of administering the program through literally hundreds of foreign medical delivery systems.

By the way, cash disbursements of Social Security benefits generally are portable and are paid regardless of where the recipient lives. Supplemental Security Income, or SSI, benefits, which are administered by the Social Security Administration, terminate at the U.S. border.

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Carla Lazzareschi cannot answer mail individually but will respond in this column to financial questions of general interest. Write to Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or e-mail [email protected]