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Creating a last will and testament is an essential task for any adult, but most of us put it off until some life-changing event occurs. It’s understandable: We’re uncomfortable and uncertain about the process.
An important part of that process is deciding what type of will to use. Some types aren’t valid in every state. Some are ineffective. That’s why experts always recommend creating your will under the guidance of an estate planning attorney licensed in your state to make sure your wishes are legally upheld.
And it’s advantageous to understand the different types of wills and who they’re best suited for so you can have an efficient, informed conversation with your lawyer.
No will
Not having a will doesn’t mean there’s no plan for what will happen with your assets when you die. It means that you have no say in the plan.
“If you don’t create a will, the state creates a will for you,” said Michele Collins, director of advanced sales in MassMutual’s Boston office.
Many people aren’t aware of intestacy statutes, she explained. These are laws each state follows to determine how to distribute assets after death when the deceased doesn’t have a valid will.
Intestacy laws can lead to undesirable outcomes, such as a long-term partner or minor children receiving nothing, or an estranged spouse inheriting everything.
No matter how young or old you are, you’ve worked a lifetime to accumulate what you have, and there’s probably at least one person or charity you really care about. Creating a valid will ensures that what you have today — and, if worded correctly, what you acquire in the future — will benefit them. (Learn more: Wills and the basics of estate planning)
Simple will
A simple will or basic will may be all you need if you have a simple estate and aren’t concerned about avoiding probate or paying estate taxes. It typically leaves everything to one person, such as a spouse, friend, or sibling. Or it might divide assets equally among your survivors — say, your three adult children.
It also names an executor or personal representative to carry out your wishes and can be used to name a guardian to care for minor children and manage their inheritance.
This type of will is one way to get started creating your estate plan. However, it doesn’t take advantage of planning techniques that may be better suited to certain situations.
Indeed, other wills (and trusts) may be more powerful in certain circumstances.
Testamentary trust under a simple will
Parents of minor children may prefer a testamentary trust to receive assets, including life insurance proceeds, for their kids, ensuring a fiduciary manages the inheritance in the children’s best interests. The trust outlines spending rules that align with the parent’s values. A testamentary trust is a trust created after death under the terms of your will and can be named a beneficiary of your assets. If your will does not include a testamentary trust for minors, then assets may be held in a court-supervised conservatorship.
The trustee doesn’t have to be the same person who tucks your kids in at night. It could be a financial institution that provides trust services, so the money will be in expert hands and your children’s guardian will have one less thing to worry about.
Pour-over will with a revocable living trust
A revocable living trust, created while you’re alive, holds assets you want to control but keep out of probate. It transfers assets efficiently and privately: No one can go down to the courthouse and read the terms of your trust document like they can your will. However, it’s only effective if you properly fund it by retitling your assets in the trust’s name while you’re alive and use a pour-over will for your individual assets.
“You shouldn’t have a revocable trust without a pour-over will,” Collins said. “They are meant to work together.”
A pour-over will acts as a backstop, not your first line of defense, transferring any missed assets to your trust upon your death. That said, the assets transferred by a pour-over will must go through probate. (Learn more: How to set up a trust)
Living will
Despite the confusing name, a living will does not provide instructions for what should happen to your assets after your death. Rather, it specifies your health care wishes so your doctors and loved ones can honor them if you’re incapacitated and are not expected to recover.
Living wills, in addition to a health care proxy / durable power of attorney for health care, are part of the advanced directives that all adults should create. Not having these documents in place is like dying intestate: State laws will apply, and the outcome may be one you wouldn’t have chosen. It can lead to a battle between your family over what you would have wanted. (In 2005, for example, the Terri Schiavo case resulted in a very public battle that eventually involved the state’s governor and legislature.)
Holographic will
A holographic will gets its name from the secondary definition of “holographic,” meaning “handwritten.” However, it’s even more basic than a simple will and has serious shortcomings.
Only about half of the states recognize holographic wills, and validating one in probate can be challenging. For example, family members or a probate judge may have questions about handwriting authenticity or other versions of wills the deceased created.
This validation process can add time, expense, and stress for your heirs. Even if your state allows holographic wills, estate planning experts do not recommend them. (Learn more: How to make sure your heirs won’t fight)
Oral will
An oral will, also called a nuncupative or deathbed will, is a spoken will. Few states consider it valid, and even then, it might only be accepted if the testator created it when death was imminent, two people witnessed it, and at least one witness writes it down a short time afterward. Some jurisdictions further restrict its use to members of the armed forces engaged in conflict.
Electronic will
E-wills are not valid in most states, and those that do allow them have varying laws about what makes them valid. Printed and signed wills created with software are another option, with at least 10 companies offering such services. However, these companies may not guarantee their products and may share your information. Also their forms may not address complex situations.
Collins generally doesn’t recommend DIY will-creation services, especially for people who own businesses, have digital assets, want to make large gifts, or have other complex situations that generic forms may not address.
Collins acknowledged that a software-generated will may be adequate for someone with a simple estate worth less than $1 million. Still, the program’s documents may not be as current on state law as an attorney would be, which could cause problems down the line. (Related: 5 mistakes to avoid when deciding who should be your beneficiary)
Finding an attorney to create a valid will
“We definitely see a lot of people who are intimidated by the idea of hiring an attorney,” Collins said. But she noted that one of the benefits of working with an attorney is the guidance and advice about estate planning options that software may not provide.
She suggested contacting your local bar association for referrals to at least three attorneys. Contact them to discuss your needs and obtain pricing.
As another option, some employers offer discounted legal service plans as an employee benefit that you can sign up for during open enrollment. Collins said she used such a service to find her own estate planning attorney.
“You will have access to the same attorney you might end up calling anyway, but at a much better price,” Collins said.
When using these services, verify the attorney’s license and work with an attorney specializing in your needs.
“Don’t use your friend who is a real estate attorney when you need an estate planning attorney,” Collins said.
Avoid procrastinating on your estate plan
By understanding the different types of wills and consulting an estate planning attorney licensed in your state, you can make sure your assets are distributed smoothly and according to your wishes after your death. You can also work with a MassMutual financial professional to help make sure you’re maximizing your assets during your lifetime and beyond.
Learn more from MassMutual…
7 situations where a trust might help
Planning for your pet’s care after your death
Who is responsible for debt after death?
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