Types of Wills: Which One is Right For You?
Your decision to have an estate planning attorney prepare a will is a good thing that is probably long overdue. Once it is completed, a will offers peace of mind knowing that the assets that make up your estate at death will be distributed according to your wishes.
Now that you took the first step toward having a will, you should be aware of the different types of wills. Yes, there are different types of wills, and a basic understanding of each of them comes in handy when deciding with the help of your attorney on the one that best meets your particular circumstances.
The types of will are governed by state law, so they may vary from one state to another. For example, only a few states recognize the validity of oral or noncupative wills. The types of wills recognized in most states include simple, testamentary, joint and living.
If you want a no-frills will to pass assets from your estate to the people you designate as beneficiaries, a simple will may be all that you need. Some of the provisions of a simple will include the following:
- Designation of an executor: An executor is a person you trust to take charge of settling your estate and carrying out your wishes for the distribution of assets. If you wish, you may designate more than one person to serve as co-executors, or you can name a primary executor and an alternate to take over in the event the primary executor cannot serve.
- Instructions for settling the estate: Settlement of your estate, which is handled by the executor, includes paying debts, taxes and funeral expenses. It also includes a statement about how the remainder of your estate should be distributed.
- Designation of beneficiaries: You have complete control over how the assets of your estate are distributed by including instructions in the will. This includes naming beneficiaries, which are the people you select to receive a share of your estate, and the amount or percentage of the estate each one should receive.
A common provision in a simple will written on behalf of a person with minor children is naming a guardian. Guardians to care for children must be appointed by a court, but you may express your preference for the person or persons you wish to serve in the role.
Testamentary trust will
You may have concerns about handing over a large sum of money or valuable assets to minor children or to an adult beneficiary who may not be capable of responsibly handling it. You could have your attorney create a trust during your lifetime, designate a trustee to manage the assets on behalf of children or anyone else you designate as a beneficiary.
However, there are differences between a will and a trust that you should discuss with an attorney before deciding on which one works best for you. An option may be to create a trust after your death with a testamentary trust provision in a will.
A simple will becomes a testamentary trust will by inclusion of a provision creating a trust after your death. The terms of the trust, including naming the person to serve as the trustee to manage it, are included in your will.
For example, you may decide that any portion of your estate passing to a beneficiary who is a minor at the time of your death shall be placed in trust. The will may include the age at which the beneficiary receives the proceeds and provide for use of the trust assets for support of the beneficiary or to pay for the person's education.
When two or more people decide to leave their entire estate to each other, a joint will offers the means to do so. A married couple, for instance, may have a will drafted by their attorney providing that their estate pass to the surviving spouse upon the death of either one of them. Upon the death of the second spouse, the estate passes to their children or other beneficiaries designated in the will at the time it was created and signed.
The obvious problem that arises with a joint will is that it cannot be changed or revoked after one of the parties has died. This lack of flexibility may be reason to discuss other options with your attorney before settling on a joint will.
Living wills play an important role in estate planning even though they do not serve the same function as the other types of wills. A living will allows you to provide instructions for the medical care you consent to receiving or want withheld in the event you cannot communicate those wishes due to physical or mental incapacitation.
What to include in a living will and other things to include in a will or estate plan is best discussed with your estate planning attorney. An attorney may offer suggestions consistent with the laws in your state.
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