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Retirement

Types of Wills: Which Is Right for You?

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If you’re reading this, you need to have a will. Seriously—every adult needs a will. The sad fact is, legal disputes have a nasty way of making life really hard at really inconvenient times. And getting a will is the only way to guarantee that you (and nobody but you) get to decide who will care for your children and get your stuff when you’re gone. But which type of will is best for your situation?

Understanding the different types of wills doesn’t have to be confusing. And it doesn’t have to be a painful experience—or an expensive one, either. We’ll break them down so you can make a smart choice and create a will that’s right for you.

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Simple Wills

simple will is a basic last will and testament without any fancy clauses or requirements. Despite its name, you can do a lot with a simple will. In addition to naming the people (called beneficiaries) you want to receive your stuff, you’ll also choose the person (called a personal representative or executor) who’ll make sure the terms of your will are carried out, like how you want your stuff given away and who gets it.

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With a simple will, you can also name a guardian for your kids so you know they’ll be taken care of if something happens to you. You can even name the person you want to care for your favorite ferret. A simple will can cover a lot of ground. And the best part? You can easily make one online.

Joint Wills

A joint will is a document created by two people who decide to leave their stuff to each other (think husband and wife). It’s a single document two people sign. In it, the couple agrees that when one spouse dies, the other inherits the whole estate. When the surviving spouse dies, their stuff goes to a person (or people) the couple decided on.

But a joint will can be a big headache because the surviving spouse can’t change it after the death of their spouse. So, if a surviving spouse remarries and has a stepchild, they can’t leave anything in the joint will to that stepchild. That’s not cool!

And this issue isn’t limited just to situations of remarriage and stepchildren. Sometimes people want to change their wills in situations where a child (and potential heir) goes off the rails or is living in an unhealthy way. Nobody wants to help fund dangerous habits, and the ability to adjust a will as circumstances change is important. But you can’t do that if you and your deceased spouse had a joint will. A better option is for both spouses to have mirror-image wills.

Mirror-Image Wills

Mirror-image wills are drafted almost identically, with each testator (the person making the will) signing his or her own will.

This option spells out:

  • What happens to the estate if he dies first
  • What happens to the estate if she dies first
  • That both wills have the same plan for who gets the estate if they both die at the same time

Often, mirror-image wills state that the surviving spouse inherits the estate and cares for the kids, but other details may be different. Because mirror-image wills are actually two different wills, part of the estate can go to someone besides the surviving spouse. So, you can leave the antique family brooch to your sister and give the rest of your stuff to your spouse.

The other advantage of a mirror-image will is you can change it. Like we said before, this can be important if you remarry, go through a divorce, or decide to disinherit a family member for other reasons. That flexibility is one of the reasons financial experts like Dave Ramsey recommend mirror-image wills.

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Holographic Wills

Nope, a holographic will wasn’t invented at a sci-fi convention. It’s a last will and testament that’s written entirely in the testator’s own handwriting, including the signature. Believe it or not, these wills are still around. People in life-threatening situations (a soldier in a combat zone, for example) may write one if they think they might not survive.

In some states, a holographic will must be dated by the testator, but it doesn’t need to be signed by a witness. But not all states even accept holographic wills as valid, so if you have one, make sure it’s accepted where you live. That’s one of the problems with handwritten wills. With today’s technology, it’s a whole lot easier to create a will online and save your family the possible legal fees, heartache and frustration of an invalid will.

Nuncupative Wills

Words like “nuncupative” are one of the reasons why people avoid doing wills—the legal jargon is just so weird. But a nuncupative will is just a last will and testament that’s spoken instead of written down. This kind of will is made because the testator (person making the will) may pass away soon.

Nuncupative wills have rules that differ from state to state, much like holographic wills. Some states require that the testator be in their final illness (like a terminal illness) without requiring them to be near death. Other states are more restrictive and require the testator to be near death with no hope of recovery.

In some states, a nuncupative will is valid only if three or more people witness the person speaking. Some states require the witness to write down the nuncupative will within a certain amount of time after being spoken, and other states won’t recognize a spoken will at all. Plus, even states that do accept spoken wills only allow them to give away personal property (stuff like cars, furniture or cash).

Deathbed Wills

A deathbed will is exactly what it sounds like—you create it if you’re facing certain death. You can write and sign it by hand, or you can type it out and sign it in the presence of witnesses. And it’s pretty similar to the holographic wills we mentioned above. The only real difference is that holographic wills are always handwritten—never typed.

The thing about deathbed wills is, they’re almost always written at times of very high stress for everyone involved. No matter how you create one, this kind of will can cause all sorts of problems. They’re often filled with errors because they’re written so quickly. And it might be  harder to prove them as valid.

Here’s something to keep in mind: This kind of will is very likely to get challenged. For example, your mental state (aka testamentary capacity) might be called into question because of things like stress, pain medications or the nature of your illness. It can also be challenged if it looks like you don’t understand what you’re giving away (and who you’re giving things away to). Seeing a pattern here? 

On top of that, there’s a chance you might accidentally leave out some of your estate assets, so that means the court would decide what happens to those things. Nobody wants that.

Trusts

While a trust is technically not a will, they do transfer assets and spell out how to distribute your assets when you die. So, it’s a good idea to know how they work.

A trust is simply property held by someone (the trustee) for the benefit of someone else (the beneficiary). The property generates income for the beneficiaries through things like investments or rental properties, etc. You can create a trust while you’re still living (living trust) or with a will (testamentary trust). Because of their flexibility, trusts are very useful estate planning tools.

Living Trusts

A living trust is a type of fund that actually owns your stuff even though you’re still alive. It also spells out who gets your stuff after you pass away.

If you want to talk like a lawyer, you can call these trusts will substitutes or probate avoidance devices. That’s because one of the main purposes of a living trust is to get around probate (the court process that deals with wills). It also gives you more privacy around your estate planning than a will does since a will becomes public once it goes through probate.

On the downside, a living trust can be expensive to set up—typically at least $1,000. They can also be complicated, so be sure to discuss your estate planning, tax, and property management goals with an expert before you decide if a living trust is right for you.

Living trusts come in two varieties: revocable trusts and irrevocable trusts. You can’t change an irrevocable trust, hence the name. There are benefits and drawbacks to both kinds, so make sure you know the differences between revocable and irrevocable trusts.

Testamentary Trusts

The second main kind of trust is a testamentary trust. This type of trust is written inside a will and created when you die.  It’s different from a living trust, which is created while you’re still alive.

After you die, all or part of your estate (your stuff) goes into the testamentary trust. You can create more than one testamentary trust in your will.

This kind of trust is often used when you want to provide for a relative with special needs or a child who’s a minor, or if you want someone to receive their inheritance when they reach a certain age or milestone. Typically, the trust assets (money, jewelry, land, etc.) are held until a specific time—like a person’s 25th birthday or after their college graduation.

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Sometimes the trust will last for the lifetime of the beneficiary, like in the case of providing for a special needs relative. Once that beneficiary dies, the trust will state who gets whatever is left over.

Testamentary trusts have several drawbacks, though. Since this kind of trust is inside a will, the whole kit and kaboodle has to go through probate after you pass away, meaning you lose the privacy advantages the other kinds of trusts have.

And until the beneficiaries receive their inheritance, the trustee (person who’s in charge of the trust) has to go to probate court every year to prove they’re taking care of your stuff like they’re supposed to and aren’t using it for personal gain. Those probate costs aren’t’ cheap—they can really add up over the years.

Living Wills

Even though the names are similar, a living will is not a last will and testament. A living will is a document that explains your wishes for your end-of-life medical care if you can’t speak for yourself. (Hey, it happens more often than you might think.)

This type of will lets you maintain control of your life and future even if you’re seriously injured or terminally ill. If you become literally unable to speak for yourself because of an accident or medical problem, a living will can speak to family and doctors for you. That way, you can make sure you won’t get a feeding tube or that crazy expensive, 1%-chance-of-success treatment if that’s not what you want.

Keep in mind, though, no matter how much you research the medical field, the living will is always going to be limited to what you knew when you wrote it. On top of that, nobody can know all the possible issues that might come up in a hospital. That’s why a detailed living will should always be paired with a medical power of attorney (POA).

With a medical POA, the person you named (like your spouse or trusted friend) knows what you would want done under the circumstances and will make the best possible choice for you. That’s a big advantage in a potential life-or-death situation!

But before naming a POA, you should talk to the person to make sure they’re on board and actually have a good handle on what your attitude toward certain scenarios is (and no personal, moral or religious objections to your wishes). Living wills and POAs go hand in hand—you shouldn’t have one without the other. In fact, in some states it’s illegal to have a living will without a POA.

For a family facing tough medical decisions about a loved one, a living will can be extremely helpful. It can go a long way toward helping them handle those challenging end-of-life choices.

But keep in mind, every state handles living wills differently. In many states, for a living will to be valid, it has to meet a list of particular requirements. Make sure you’ve jumped through all the hoops by checking your state laws.

Which Type of Will Is Right for You?

The kind of will you choose depends on a lot of factors—like how much money you have, whether you own a business, and if you have property that’s been in your family for multiple generations. With all the different types of wills out there, you need to find the right one for your situation.

If you read all this and decide a simple will seems like the right fit, we have good news! You don’t have to go to a lawyer’s office or spend a fortune to make your will. You can create your own will online with RamseyTrusted provider Mama Bear Legal Forms in less than 20 minutes! All you have to do is plug in your information, and the rest is done for you.

Creating a will is one of the most important and loving things you can do for your family. Why? Because everyone needs the peace of mind that comes with knowing the people and things they care about will be taken care of, no matter what happens. With a will in place, you get to make absolutely sure of that. And now, since you know their different features, you can get your will done and mark it off your list!

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Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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