Writing out a will is an important step in protecting your family and the legacy you leave behind. A will is a legal document outlining what you would like to happen to your property and assets upon your death. It’s recommended that everyone over the age of 18 take the time to create a will, but that’s especially true if you have dependents, significant savings, investments, or other assets like property. Regardless, having a place like Pillar to organize legal documents is so important in beginning the will creation process.
If you don’t have a will, the state where you reside will decide where your belongings go in a process called probate, which can be lengthy, messy, and costly. Usually all three. In the end, assets usually go to your surviving spouse or other close relatives. Your property is still subject to probate under a will, but if you’ve been thorough with the estate planning process, probate tends to be much quicker and cleaner.
Read more about how trusts can help you avoid probate
But not all wills are the same and this is especially true when it comes to trusts and other similar legal documents. Many people ask, “What is the difference between a will and a trust?” And depending on your unique circumstances, one type of will or trust may better fit your needs than another. Here’s a quick guide to the four basic types of wills and when you might want to use each one.
What are the 4 Types of Wills?
The four most common wills include:
- Simple wills
- Testamentary trusts
- Joint (or Mutual) wills
- Living wills
What is in a Simple Will?
Simple wills are free from lots of complicated clauses and conditions, but can still be quite strong in their own right. Key components of a simple will include:
- Designating an executor (a person responsible for ensuring your wishes are followed)
- Naming guardians for a minor child, pet, or dependent.
- Instructions for how property and assets should be distributed.
Simple wills can be effective for individuals with small, or uncomplicated estates. You can even figure out how to prepare a will on your own with just a little guidance. But if you’re someone with a larger or more complex estate, you may also want to learn how a trust—as well as a will—can help protect and distribute your assets in accordance with your wishes.
What is a Testamentary Trust Will?
Testamentary trust wills are not actually trusts, not in the way that most trusts work. That’s because these trusts aren’t actually formed until you die. Sometimes referred to as “will trusts”, or “trust under wills”, these documents are used to direct how you would like your assets distributed upon your passing.
Unlike typical trusts, testamentary trust wills won’t keep your estate out of probate court, but they do offer more direction than other wills over how assets are dispersed. Testamentary trust wills can be helpful in cases in which care for minor children or dependent adults must be set up over a long period of time.
What is a Joint Will or Mutual WIll?
A joint will is a single document that allows a married couple to make each other beneficiaries of their entire estate when one passes away. Their children then become the final beneficiaries after both parents have passed. It’s important to realize that when the first spouse passes away, a joint will automatically become irrevocable, meaning it can never be changed.
Joint wills are similar to mutual wills, however, mutual wills are two separate documents and therefore have more flexibility. Most couples find that mutual wills better meet their needs.
What is a Living Will?
A living will is different from a last will and testament. Living wills, sometimes called advance directives, are intended for end-of-life planning as it pertains to health care, not your assets.
Living wills specify your wishes for what types of healthcare you would like to consider should you become incapacitated and unable to speak for yourself. These legal documents also designate a person who can make decisions for you. And unlike traditional wills, living wills expire upon your death. Living wills vary by state, so be sure to find one specific to your medical wishes.
Other Types of Wills
In addition to these common wills, there are five other types of wills that aren’t as widely used. These will include:
Holographic Wills (also known as Handwritten Wills)
Holographic, or handwritten wills, are not generally used, and not always legally recognized. They are typically used only in dire circumstances or emergencies in which there is no other option.
Oral Wills (also called Nuncupative Wills)
Oral wills – when a person verbally expresses their final wishes before they die – may be recognized as valid under unique circumstances, but usually are not. Some states are more likely to recognize them if they are immediately written down by witnesses. In general, oral wills aren’t a good option unless there is absolutely no other choice.
Pour-over wills are designed to work with revocable living trusts, essentially acting as a safety net to ensure that any of your assets that aren’t designated for a specific beneficiary to “pour over” or become the property of your trust. However, your property is still subject to probate before it goes into your trust.
Another last-ditch only option, deathbed wills are made out when a person is, as the name suggests, on their deathbed. These wills are better than none at all but tend to be prone to problems, including questions about the testator’s mental stability, or suspicions of undue influence.
Online will companies are not all the same, nor are the products they offer. Some are very trustworthy, and this can be a cost-effective way to create a valid will without consulting a traditional law firm. However, to prevent problems for your loved ones after you pass, be sure to research the company beforehand. Read reviews from previous users and ensure that their documents are created by estate planning attorneys. Above all, be sure that the document you use is valid in your state.
Wills versus Trusts
Some people choose to create trusts rather than wills. While either can give direction for how to distribute your assets upon your death, there are a few key differences between the two.
- Wills don’t take effect until after your death, while trusts do so as soon as they are signed.
- Wills are considered public record. They require a process of probate, which can be lengthy, messy, stressful, or costly if the will is weak or incomplete.
- Trusts are private and can avoid the probate process altogether.
- Trusts give you greater control over how your assets are distributed and tend to make more sense for large or complicated estates.
- Wills are usually easier and less expensive to set up. (If you’re wondering how much does a will cost, we are here to help.)
Keep Your Will Safe and Accessible
Knowing what to put in a will can help you figure out which type of will you need. Whichever route you decide to take, for your loved ones’ sake, get some legal documents in place if you want to make the transition of your assets as painless as possible. Once you do, be sure to keep your will up to date and in a safe, accessible place. And make sure to review your will periodically – at least every 3-5 years – as well as after moving to a new state, or any major life events, such as births, deaths, marriages, and divorces.
Some people place their will in a safety deposit box, however, this can make it difficult to obtain after your death. Having the executor keep it in a fireproof safe may be a better option. You can also keep your will in a secure, online document storage platform, like Pillar.
Start your free 14-day trial and see if Pillar is the place for your important documents. The ability to view, share, and update essential documents in one safe, secure online platform will give you and your loved ones the peace of mind that when the time comes, you’ll be as prepared as you can be.