You probably know it’s important to have a will so your wishes are honored after your passing. But the reality is that you may need to draft more than one document to cover all of your financial, health, and child guardianship preferences.
Accordingly, different types of wills and other estate planning documents are available. Understanding which documents you need—and which versions you may want to avoid—can help you make the right choice for your circumstances.
Understanding the Different Types of Wills
When creating an estate plan, you may need to prepare multiple documents to ensure your wishes are carried out. Some wills also have greater legal validity than others. The more you know about different wills, the easier it is to manage your assets and receive the medical care you desire.
Simple Will
When you imagine a will, a simple will likely comes to mind. A simple will is a legal document that outlines your wishes for distributing your assets upon your death. It typically includes basic details such as the beneficiaries you want to inherit your property, the executor to manage your estate, and, if applicable, the guardians for your minor children.
This will is ideal if you have a simple estate where the assets are easy to identify and distribute. A simple will doesn’t typically address more complicated requirements like distributing assets with certain conditions.
The main advantage of a simple will is its simplicity and ease of creation, often requiring minimal legal assistance. However, while a simple will can serve many people’s needs, it may not be sufficient if you have a more intricate financial situation or specific estate planning goals.
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Testamentary Trust
A testamentary trust is sometimes included within a will. The trust’s purpose is to manage and protect assets for your beneficiaries, such as minor children or individuals with special needs, over a specified period. The trust outlines how the assets should be distributed, who the trustees will be, and when and how the beneficiaries will receive the assets.
Including a testamentary trust in your will gives you more control over the distribution of your estate assets, ensuring they’re used responsibly and align with your wishes. Having a trustee oversee your assets can also help prevent your beneficiaries from mismanaging their inheritance. A testamentary trust is particularly useful for estates that need to address long-term financial planning and care for vulnerable beneficiaries.
Joint Will
A joint will is a legal document that two people, typically spouses, create together to outline how they want their combined assets to be distributed. Unlike individual wills, both parties agree upon and sign a joint will.
Having a single document that covers both spouses may seem like a simple, more cost-effective way to help with estate planning, but it can come with risks. When you and your partner are alive, you can change the joint will with both parties’ legal consent. But when one person passes away, the will becomes irrevocable—you can’t revise the document.
That can prove problematic if, for example, the surviving spouse remarries or has children. For that reason, many estate planning professionals recommend that even married individuals create separate wills.
Living Will
A living will—also known as an advance directive—outlines your medical treatment wishes if you can’t communicate or make decisions for yourself. It’s primarily used to specify the medical care you do or don’t want if you become terminally ill, seriously injured, comatose, or otherwise incapacitated.
Key components of a living will include:
Life-Sustaining Treatments
Your instructions on the use of treatments such as mechanical ventilation, resuscitation (CPR), tube feeding, and dialysis.
End-of-Life Care
Your preferences regarding pain management, palliative care, and comfort measures.
Organ Donation
Your wishes concerning organ and tissue donation after death.
Healthcare Power of Attorney
A healthcare power of attorney—or healthcare representative—is an advance directive where you name someone to make medical decisions on your behalf when you’re incapacitated. The purpose of this power of attorney is to specify who will make healthcare decisions for you, whereas a living will clarifies what those decisions should be.
Pour-Over Will
A pour-over will stipulates that any assets you own when you pass should be wrapped into an existing living trust you’ve already created. Having a living, or revocable, trust can be an important part of your estate plan. When you create the trust, you transfer ownership of certain assets to it and manage them for as long as you’re of sound mind. Should you become incapacitated or pass away, a trustee manages the trust’s assets.
After establishing a living trust, you may accumulate assets you never transferred over to it. A pour-over will ensures any property your trust doesn’t specifically mention is managed according to the trust’s terms.
Holographic Will
A holographic will is one the testator—the person creating the will—has handwritten and signed.
A holographic will’s validity varies by jurisdiction. Most states don’t recognize them because of the difficulty in providing their authenticity. However, a few states—including Michigan, Texas, and Virginia—accept these wills as long as they meet specific criteria. For instance, the will must be entirely in the testator’s handwriting and signed and dated.
Oral Will
An oral will is communicated verbally to one or more witnesses. Otherwise known as a nuncupative will, this statement expresses the testator’s desires when they become mentally incapacitated or die. Often, oral wills are used when the individual is in imminent danger or seriously ill and can’t type out their intentions.
Because they’re not valid in most jurisdictions, oral wills are a less-than-ideal way to convey your last wishes. New York is one of the few states to allow them, but only if the testator has at least two witnesses who testify to the will’s validity in court.
Financial Protection for the Ones You Love
Preparing the proper estate planning documents is one of the most important ways you can take care of your family after you’re gone. So too is providing them with financial security.
To learn more about the types of wills that best suit your needs and goals, consider contacting an experienced financial professional.
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