Types of Wills
- Simple Will: This is a basic document in which you can name who receives your assets and choose a guardian for your minor children. You also can choose a person, called a representative or executor, who will make sure the will is carried out properly and represent your estate’s interests in probate court.
- Testamentary Trust Will: This type of will places at least some of your assets into a trust and names a trustee to handle the assets when you’re gone. This is often employed when your beneficiaries are children of a young age or unable to be entrusted to handle the assets on their own. You can place conditions on the inheritance, such as the beneficiaries having to reach a certain age before obtaining the assets or having the assets dispensed in a gradual fashion.
- Joint Will: A joint will is signed by two people, generally a married couple, leaving everything to the other should one die. When the surviving spouse dies, everything goes to the children. The problem with joint wills is that they contain a clause that prevents either spouse from changing the terms of the will alone — both have to agree. This applies even after one party passes away. Because of these restrictions, joint wills are seldom used these days.
- Living Will: A living will has nothing to do with the distribution of property, but with medical decisions made on your behalf should you become incapacitated. In a living will, you name someone to make medical decisions for you when you are unable to do so. A living will can exist alongside any other form of will.
Contents of Wills
Wills obviously include the distribution of anything with monetary value from the obvious big-ticket items like homes, vehicles, furnishings, jewelry, and other accumulated property. Wills would cover any business you own or co-own, but they can also include items with sentimental value like old photos, diaries, wedding rings, and the like.
Some inherited assets fall outside the scope of wills, and these include:
- Property you’ve transferred to a living trust
- Life insurance proceeds
- Funds in an IRA, 401(k), or other retirement accounts
- Securities or real estate held in a transfer-upon-death account
- Anything held in trust or joint tenancy
What Happens if You Die Without a Will?
If you die intestate — the legal term for not having a will — then everything will be decided in probate court. Depending on the size of the assets involved, probate can take many months, sometimes more than a year, and in the end, the court will literally determine the distribution of the assets. It may even have to name a guardian for your children. Intestate probate proceedings can be long and unpredictable. You need to plan ahead so your heirs don’t have to suffer through this process.
Differences Between a Will and a Living Trust
As you’ve read, a will can achieve the distribution of your assets and the care of your children as you desire, but wills need to go through probate court just as intestate cases do, though it is then mainly a process of paying taxes and creditors, selling off assets (if necessary), and then finalizing the distribution.
A living trust, in contrast, avoids probate court. There are no court or attorney fees after the trust is established. Your property can be passed immediately and directly to your named beneficiaries. A testamentary trust doesn’t establish the trust until after one’s death, so it still must go through probate, unlike a living trust.
With a trust, you appoint a trustee to administer your assets, who during your lifetime can be yourself. Then, if you become incapacitated or pass away, the trustee takes over to administer your assets as you have specified (they must follow your instructions). If couples own assets jointly, often both will serve as co-trustees. Otherwise, a trusted relative, friend, or professional can be named the trustee.
Seek Out Professional Help
I have been helping countless others like you in Columbus and throughout Central Ohio prepare for the future with proper estate planning, whether with a simple will or a more complicated living trust. Planning ahead will give you peace of mind so you can go about your everyday business of life without worrying about the future. You owe it to yourself and your loved ones to properly prepare and ensure the outcome you desire for your family, loved ones, and business partners.