Creating a will is one of the most basic elements of estate planning. There are different types of wills you can choose from, including a simple will. Simple or basic wills let you spell out how you want your assets to be distributed among your beneficiaries once you pass away. You can also use this kind of will to name an executor and choose a guardian for minor children. That can be a good starting point for shaping an estate plan, but there are times when you may need more than just a basic will.
Do you have questions about estate planning? Speak with a financial advisor today.
What Is a Simple Will?
A last will and testament is a legal document that outlines what you want to happen to your assets and estate once you pass away. A simple will is the most basic form a will can take.
This type of will can be used to do the following:
- Name an executor for the will
- Name a legal guardian for minor children
- Specify who (or which organizations) should inherit your assets when you pass away
- Make provisions for the care of pets
Simple wills are subject to the probate process when you pass away. This means the probate court reviews the terms of the will to make sure it’s valid, then your executor handles the collection and distribution of assets listed in the will. Your executor would also be responsible for paying any remaining debts owed by your estate.
Who Is a Simple Will Good For?
Whether you need a basic will or something more complex usually depends on a few factors, including:
- Your age
- The size of your estate
- Whether you have children and their ages
Generally, if you’re younger and don’t have that many assets then a simple will may be sufficient for managing your estate plan. You could use it to leave your assets to your spouse if you’re married or to siblings, parents or anyone else if you’re not. And if you have young children, you can use your will to specify who should be responsible for taking care of them physically and managing their inheritance for them until they reach adulthood.
When a Basic Will May Not Be Sufficient
Having a will in place can be a good starting point for estate planning. But whether that will should be simple or complex can depend on things like:
- The size of your estate and the amount of estate tax you expect to owe
- What type of assets and property you own
- Whether you own a business
- The number of beneficiaries you plan to name
- Whether those beneficiaries are individuals or organizations, such as charities
- Any life changes you anticipate, such as getting married or divorced or having more children
- Whether any of your children or beneficiaries have special needs
In those scenarios, you may need a more detailed will to plan out how you want your assets to be distributed. Or you might consider adding a trust into the mix as well.
A trust is a form of legal ownership in which you transfer assets to the control of a trustee. The trustee can be yourself, someone you have confidence in and who doesn’t have a vested interest in the trust or a third-party such as a bank or wealth management firm. It’s the trustee’s job to manage the assets in the trust on behalf of the beneficiaries you’ve named, according to the terms of the trust.
The trust terms are set by you when you create it. So, for example, if you have children you might specify that they can’t access their inheritance until they graduate from college or turn 30. Or if you own a business, you could use a trust to specify how it should be managed if you become incapacitated and pass away.
A revocable living trust can be changed or revoked during your lifetime. If you create an irrevocable trust, on the other hand, the transfer of assets is permanent. Trusts can offer advantages in that they can help to minimize estate and inheritance taxes while allowing your beneficiaries to avoid the probate process. Assets held in trust aren’t subject to probate the way they would be with a simple or complex will.
How to Create a Simple Will
Making a will is something you can do online using software programs or will-making websites. But make sure you understand the guidelines for making a legal will in your state. For example, your will may need to be witnessed by a certain number of people and properly notarized for it be legal. And if you’re making a simple joint will with your spouse, you should also be aware of whether your state allows for those types of wills.
In the case of a basic will, you’ll need to include:
- Your name
- Certification that you’re of legal adult age and sound mind
- A list of assets to be distributed
- Instructions on who should receive those assets
You’d also want to name your executor and legal guardian for children if that applies to you. Making a will online can be relatively simple if you don’t have a complicated estate and it can be cheaper than having an attorney draft a will for you.
Be careful to follow your state’s will laws if you need to change or revoke your will for any reason. If not, you could create problems for your beneficiaries, and even a will contest, when you pass away if there are multiple wills floating around that convey different wishes for how your assets should be distributed.
Having a basic will in place can offer some reassurance to you and your loved ones that your assets will be handled the way you want them to when you pass away. As you experience life changes or accumulate more wealth, however, you may need to upgrade it to a more complex will or consider whether a trust is better suited for meeting your needs. Talking with an estate planning attorney can help you decide which elements to include in your financial plan.
Tips for Estate Planning
- Consider talking to a financial advisor about what to factor in when making a will and how it fits with your financial plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- A simple will is not the same thing as a living will or advance healthcare directive. This type of document is used to express your wishes for end of life care or medical care in situations where you’ve become incapacitated and can’t make decisions on your own. Including a living will, along with a durable power of attorney and financial power of attorney, can make your estate plan more well-rounded so that you and your loved ones are prepared for any eventuality.
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