Types of Wills and Trusts
Wills and trusts come in many forms that cater to an individual's planning of their assets. Wills take effect after death and distributes nearly all an individual's assets, while trusts take effect immediately after its established and usually handles specific needs like taxes, property and planning for disability. Consult an estate planning attorney to assist with making a will or a trust.
Wills
A holographic will must be completely handwritten, dated and signed by the testator. Typically, a holographic will is created when the testator is alone or caught in an emergency or near death situation. In some states, a holographic will's lack of witnesses make it an invalid document, while other states accept holographic wills based on requirements like competency and witnesses.
A statutory will (simple will) distributes assets for an uncomplicated estate. A statutory will can be found in a stationery store, book or online. The testator can fill it out himself without assistance from an attorney.
A nuncupative will (oral will) distributes personal property only and requires two witnesses. A nuncupative will is also known as the “deathbed” will because it allows a terminally ill individual unable to write a will to distribute personal property orally. The two witnesses must put the testator's request down immediately after death. Active duty military personnel can also use a nuncupative will.
A joint will is established by two people (husband and wife) leaving all assets to each other. When one spouse dies all specified assets go to the other spouse. After the second spouse dies, all assets go to the beneficiary stipulated in the will by both spouses.
Trusts
A testamentary trust (will trust) appears in a will to specify how to distribute a testator's assets after death. A testamentary trust appoints a trustee to distribute the assets to the beneficiaries.
A revocable trust can be revoked or altered during a grantor's lifetime. After the grantor's death, the assets identified in the trust are distributed as specified.
An irrevocable trust cannot change or overturn without permission from the beneficiary. It has tax advantages a revocable trust does not have.
A life insurance trust is an irrevocable trust created solely for owning a life insurance policy. When a person dies, their life insurance policy becomes taxable with the rest of their assets. Establishing a trust can protect a life insurance policy from taxation. The trust becomes the policy's legal owner, thereby removing the policy from an individual's assets and exempting it from taxes.