Are there different types of Wills?
Preparing a Will begins with understanding the different types available. Which one you choose depends on your particular circumstances. The types available Wills fall into two distinct categories.
Wills that cover your estate when you pass
Last Will and Testament: A Last Will and Testament includes the preferences of a person, once they pass, for their heirs. Within this document is the naming of an executor to carry out the included directions, naming of beneficiaries to receive assets, instructions for any minor children, and the method of distribution of those assets, including any real estate and personal property.
Simple Will: For individuals who may not own significant assets, a Simple Will appoints an executor and provides instructions on how to distribute assets and belongings once a person passes.
Social Media Will: As a newer estate planning document, a Social Media Will allows an individual to designate a beneficiary (or beneficiaries) to have the right to access their social media accounts and digital assets once they pass.
Pour-Over Will: A Pour-Over Will is a companion to a Living Trust to ensure that any assets not included under that trust transfer over to it when the person passes. This type of Will is beneficial for making sure that no remaining assets or property is left out or must go through a separate probate process.
Wills that discuss your last wishes and desired medical treatment
Living Will (and Advanced Directive): A Living Will is a specific type of legal document that provides instructions and expressed wishes for health care, such as whether to remain on life support or not. It can also express what medical procedures and long-term care measures to include or refuse should they become necessary. A similar type of document is called an Advance Directive which also provides guidance to loved ones as to medical decisions and end-of-life care.
Funeral Planning Worksheet: A Funeral Planning Worksheet provides loved ones with knowledge of an individual’s wishes and helps guide them through the process of planning a memorial or funeral. Explicit details may be included, such as the preferred location of burial or dispersal of ashes.
Why are there different types of Power of Attorney?
Different types of Power of Attorney (POA) exist because an individual may only want or need to grant authority to another to make specific types of decisions on their behalf. Three of the most common types of Power of Attorney include:
Medical Power of Attorney: A Medical Power of Attorney authorizes a trusted individual or entity to make important health care decisions on behalf of another, should they become incapacitated or are unable to make medical decisions themselves. Should incapacitation occur, this legal document allows the named individual to work with medical providers in determining how care will proceed.
Durable Power of Attorney: A legal document known as a Durable Power of Attorney grants an entity or individual the ability to handle financial affairs and legal matters for someone else. The legal document differs from a General Power of Attorney because it will remain in effect should you become incapacitated.
Special Power of Attorney: A Special Power of Attorney grants a named individual rights to make specific types of decisions on behalf of another. These types of decisions may be legal or financial in nature, such as managing bank accounts, allocating holdings in retirement accounts (e.g., IRAs), monitoring annuities, or signing contracts.
What are the different types of trusts that can be set up?
There are several options when it comes to the type of trust that can be set up.
Living Trust: A Living Trust is one that an individual makes for use during their lifetime. This type of trust may provide for income payments to that individual, or use of the assets held in trust. When the person dies, the distribution of any remaining assets held in the trust can occur. A Revocable Living Trust allows the creator to make changes or even revoke the trust at any time prior to passing.
Joint Living Trust: A Joint Living Trust is for married couples to ensure joint assets remain protected and that the surviving spouse is provided for in the future. Such a trust also helps avoid the probate process.
Education Trust: Assets included within an Education Trust are to be used specifically for educational purposes. Rules are set in the legal document used to set up the trust, providing directions on when and how these funds are to be released.
Special Needs Trust: The unique Special Needs Trust is set up to benefit a disabled individual without threat to their qualifying for needs-based government benefits. The assets in this type of trust will serve as a supplement to cover additional expenses related to their care and living arrangements.
Digital Asset Trust: A Digital Asset Trust protects the digital information of an individual, whether that data or information be online or contained in computer files. Examples of an individual’s digital assets include email accounts, blogs, online documents, and photos maintained on a computer hard drive. When setting up this type of trust, the creator will choose who will manage and receive these digital assets once they pass.
Pet Trust: To arrange for the care of a pet after a person’s passing, an individual can set up a Pet Trust. This type of trust will name a pet caretaker, how funds will be disbursed, and what will happen to any remaining assets once the pet passes away.
When do I want to make or update my estate planning documents?
Making and updating estate planning documents need to be priorities for anyone who wishes to protect and ensure that any remaining assets upon their death go to the people or charities they choose.
Individuals should start making their estate plan as early as possible, regardless of age or level of assets. Making an estate plan means you can get in the habit of reviewing it annually or when you have major life changes, such as getting married, having or adopting a child, or becoming divorced. Already having an estate plan in place will also prompt you to review and update what is included whenever you acquire significant assets, like a home, artwork, jewelry, substantial inheritance, or other property.
Individuals should update their estate plans at least every one to two years. In particular, updating should occur whenever a major life event occurs, including:
- Marriage.
- Birth of a child.
- Death of any immediate family members.
- Death of someone named in an estate planning document (such as a Power of Attorney).
- Change in a relationship with someone named in an estate planning document.
- After buying or selling a home.
- Acquiring significant assets, such as through inheritance.
If you have more questions or need help making your estate plan, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
