Estate Planning 101: The Different Types of Wills

Let’s be honest; no one likes to talk about their last wishes when they pass away. Unfortunately, this is a conversation everyone should have with their family members to ensure their assets are transferred to their designated beneficiaries without any issues.

Several types of wills are available that work best for specific situations and others that may not fit your needs. To learn more about these different wills and how they can benefit you and your family, continue reading below. We will cover all you need to know about these different types of wills and who you can contact for more information.

Will Types in Greenville, South Carolina

The Simple Will: A Foundation for Estate Planning

Of all the different types of wills available to those living in Greenville, SC, the simple will is relatively straightforward and serves as a foundational document for many individuals. At its core, a simple will allows you to clearly outline your wishes regarding the distribution of your assets and the guardianship of your minor children in the event of your premature passing.

With this type of will, you can declare precisely how you wish to give away your assets, specifying who receives what kind of asset – whether it’s a piece of property, a financial account, or personal belongings. Furthermore, you designate an executor for your estate, the individual or entity responsible for carrying out the instructions laid out in your will and managing the probate process. The executor ensures that your debts are paid, assets are distributed as you’ve directed, and all legal formalities are observed.

While seemingly comprehensive, a simple will is best suited for estates that are not overly complex. If you own a business, have a substantial estate that might be subject to significant taxes, or possess intricate financial arrangements, a simple will may not be sufficient. In such cases, other, more specialized types of wills or estate planning tools might be more appropriate to address the nuances of your financial situation and minimize potential tax burdens.

There are also specific situations where relying solely on a simple will might not be the most effective strategy. For instance, if your intention is to leave land to your children or other family members, or if you have children from a previous marriage, a simple will might not adequately address the complexities of these arrangements. 

Similarly, if you need to establish a special needs trust for a beneficiary with a disability to ensure they can receive financial support without jeopardizing their public assistance eligibility, a simple will won’t suffice. 

Lastly, if you have any reason to believe that your will might be challenged by an estranged family member or another party, a simple will may not offer the robust legal protections needed. In any of these situations, seeking the guidance of a reputable estate planning attorney is highly recommended to determine the best type of will and overall estate plan for your unique circumstances.

Testamentary Trust Will: Conditional Bequests and Beneficiary Protection

A testamentary will introduces an element of conditional giving through the creation of a trust. Unlike a simple will, which directly distributes assets, a testamentary will establishes a trust into which certain assets are placed for the benefit of named individuals. A designated trustee is then responsible for managing this trust on your behalf after your passing. This option is particularly valuable if you have beneficiaries who are minors or individuals you prefer not to have direct, immediate control over a large inheritance.

The power of a testamentary will lies in its ability to place conditions on how your beneficiaries receive their assets. For example, you can stipulate that a certain amount of money or a particular asset becomes available only when a child graduates from college, reaches a specific age, or gets married. This allows for a more controlled and responsible distribution of wealth, aligning the inheritance with specific life milestones or needs. It provides a layer of protection, ensuring that assets are used wisely and for their intended purpose, especially for younger or less financially experienced beneficiaries.

Living Will: Your Healthcare Directives

While often discussed alongside other types of wills, a living will isn’t a document that dictates the distribution of your assets. Instead, it serves as a crucial statement of your last wishes regarding your medical care and end-of-life decisions. This legally binding document outlines your preferences for medical treatment, including whether or not you wish for life-saving measures to be employed in specific circumstances. For instance, you can specify whether you would want to be kept alive via machines if you were to enter a vegetative state or if you would prefer to be taken off life support.

The primary benefit of having a living will in place is that it alleviates the immense burden of making difficult healthcare decisions from your family during an emotionally challenging time. It ensures that your medical wishes are honored, providing clarity and peace of mind to both you and your loved ones. To guarantee that your medical-related wishes are respected and followed, establishing a living will is an essential component of comprehensive estate planning.

Holographic Wills: The Handwritten Exception

Holographic wills are often misunderstood, conjuring images of futuristic, floating documents. In reality, a holographic will is a will that is entirely written in your own handwriting. What distinguishes them from other wills is that the typical requirements for witnesses and notarization are often less stringent or even waived in jurisdictions that recognize them.

However, the main drawback of holographic wills lies in their potential for ambiguity. Because they are often written without the guidance of legal professionals, the language used can be open to different interpretations. This can lead to significant problems and disputes among your beneficiaries, as one individual might interpret your wishes in one way, while another may have a completely different understanding. This lack of clarity can result in prolonged legal battles and family discord, making them a less desirable option for most people.

Joint Wills: The Shared Estate Plan

Joint wills are typically created by a husband and wife, outlining their shared wishes for the disposition of their assets. A common arrangement is for one spouse to agree to leave their entire estate to the other in the event of their passing. Historically, joint wills were a more common choice due to their perceived efficiency in saving time and money in the estate planning process.

However, times have changed, and the limitations of joint wills have become more apparent. A significant restriction of a joint will is that the surviving spouse generally cannot alter the will without the permission of the deceased spouse’s estate or, in some cases, without the consent of the beneficiaries named in the joint will. 

This inflexibility can create considerable challenges, particularly if the surviving spouse remarries. For example, assets held within a joint will cannot easily be transferred or bequeathed to stepchildren from a new relationship, limiting the surviving spouse’s ability to adapt their estate plan to new family dynamics. For these reasons, joint wills are far less common today, with most couples opting for individual wills or other estate planning strategies that offer greater flexibility.

Oral Wills: The Spoken Word

As the name implies, oral wills are wills that are spoken verbally to one or more witnesses. While they might seem convenient, most states do not legally recognize these types of wills. The primary reason for this lack of recognition is their inherent lack of concrete evidence and the difficulty in accurately deciphering and verifying the testator’s true intentions. Without a written record, there is significant room for misinterpretation, forgetfulness, or even fraudulent claims.

Generally, oral wills are only considered acceptable in very limited and extraordinary circumstances, such as when a person is on their deathbed and facing imminent demise, and there is no opportunity to create a written will. Even in these rare situations, strict legal requirements typically apply, and proving the validity of an oral will can be an arduous process, often leading to challenges and disputes among potential beneficiaries.

Wills vs. Trusts: Understanding the Differences

Both wills and trusts are invaluable tools in estate planning, designed to manage and distribute your assets. However, they operate under different principles and offer distinct advantages. The fundamental difference lies in their timing and how they function. Wills only become effective upon your passing. They are essentially a set of instructions for the probate court to follow in distributing your assets after your death.

Trusts, on the other hand, can be effective during your lifetime or become effective upon your passing, depending on the type of trust created. A trust involves transferring ownership of assets to a trustee, who then manages those assets for the benefit of designated beneficiaries according to the terms of the trust agreement. This allows for greater control over asset distribution, potential avoidance of probate, and can offer privacy that a will does not. While both are set up while you are alive, a will’s power only truly kicks in after your death, whereas a trust can provide ongoing management and protection of assets both during your life and beyond.

Different Types of Trusts: Beyond the Basics

Just as there are various types of wills, a diverse range of trusts exists to cater to specific estate planning needs. Each type of trust offers unique benefits and serves different purposes. For instance, an irrevocable trust is a powerful tool for protecting your assets from creditors and can also offer significant tax advantages. 

With an irrevocable trust, once you transfer assets into it, you generally give up your ownership rights to those assets. A named trustee manages these types of trusts, ensuring they are administered according to your instructions and for the benefit of your beneficiaries. This loss of direct control is often balanced by the asset protection and tax benefits it provides.

Special Needs Trust: Protecting Vulnerable Beneficiaries

As mentioned earlier, a simple will is not suitable if you need to establish a special needs trust. If you are concerned about the financial well-being of a beneficiary with a disability, a special needs trust is an indispensable legal arrangement. These trusts are specifically designed to enable your beneficiaries to receive financial support from the trust without jeopardizing their eligibility for state or federal public assistance programs, such as Supplemental Security Income (SSI) or Medicaid.

Without a properly structured special needs trust, an inheritance could be considered an asset by government agencies, making the beneficiary ineligible for crucial public benefits. This could leave your loved one without the essential financial assistance they rely on for medical care, housing, and other necessities. 

Therefore, if you have a beneficiary with special needs, it is absolutely critical to contact a reputable estate planning attorney to ensure the trust is meticulously drafted to comply with all relevant laws and regulations, safeguarding your loved one’s access to vital governmental support. The complexity of these trusts necessitates expert legal guidance to avoid inadvertently disqualifying a loved one from essential benefits.

Will vs. Trust

Trusts and wills are both excellent tools used for estate planning, but one only works during a significant life event, whereas you can use the other while alive. Wills and trusts are both set up while you are alive, but wills only kick into effect when you pass away. A trust can be used during your life or go into effect when you pass away.

Different Types of Trusts

Just like there are several different types of wills available for you to use, there are other trusts that you can use. For example, you can use an irrevocable trust to protect your assets from creditors. With an irrevocable trust, you give up your ownership rights to assets when you transfer them. A trustee manages these types of trusts.

Special Needs Trust

As mentioned earlier, if you need a special needs trust, you won’t be able to list your wishes in a simple will. If you are concerned about the financial need of a beneficiary with a disability, you can create a special needs trust.

These legal arrangements enable your beneficiaries to receive financial support from the trust without jeopardizing their state or federal public assistance program eligibility. You should contact a reputable estate planning attorney if you need a special needs trust. The last thing you need is for your loved one to lose access to supplemental security income or other federal benefits because the trust affects their income.

What Happens if You Die without a Will?

If you die without a will, the distribution of your assets and property must go through probate. The state handles this process. In general, the court must declare someone as the executor of your estate before they can handle sorting through your debts and assets.

In general, the court allows a portion of your estate to go to your surviving spouse, and they will divide the remaining assets amongst your children if you have any. The court does not take in any factors that may influence it to divide the assets unequally. For example, if you don’t want one child to receive something, the court won’t know that. They will treat all your heirs as equals.

So if you have specific assets that you wish to go to one particular person, you should create a will. This will lessen the burden that your family has to go through with probate court. Depending on the size of your estate, it could take months, if not years, for the probate process to complete.

How to Create a Will or a Trust

If you wish to create a will or a trust, you can do so without the need of an attorney, but that is not recommended. There are specific tax considerations and laws that you must keep in mind when creating these types of documents.

The last thing you want is to create a will online that does not have the proper protection or clear intentions. When you pass away, if the will is not direct on your last wishes, your beneficiaries are left to try to interpret your wishes.

Estate Planning Attorney

If you want to ensure your last wishes are honored and well understood, it would be best if you reached out to an attorney to create the document on your behalf. You may be tempted to pay the small fee online to file your paperwork, but if there are any discrepancies or mistakes made, it will cause problems down the road. Partnering with an estate planning attorney will ensure you have honored all your last wishes.

Help with Different Types of Wills

Making sure that your last wishes are honored is a big deal to your family, so it is best that you get a will that clearly states what you want to happen you pass away.

Whether you need help creating your living will or a simple will, reputable attorneys can help you navigate the different types of wills. If you are ready to create your will or you have questions about what option is best for you and your situation, contact us.