What Is a Last Will and Testament?
A last will and testament (commonly referred to as simply a “will”) is a legally binding document which specifies a person’s wishes regarding the inheritance of his or her various assets. In other words, your last will and testament specifies how your loved ones will inherit your various digital, financial and other assets.
Of course, in your last will and testament, you can also specify that certain assets will be donated to charity or to a group or person other than your descendants.
In addition to inheritance instructions, a last will and testament can also contain instructions about the delegation of responsibility for various matters such as the custody of minor children, the management of accounts for financial assets and the maintenance of social network accounts.
A will is one of the documents which constitute an estate plan. The estate plan usually also contains a trust to protect the digital and financial assets of the testator against threats such as creditor claims and probate.
The estate plan, containing a will and a trust, ensures that the estate of the person is administered according to his or her wishes outlined in the plan.
Notarial Will vs. Holographic Will
You might often hear that there are two types of will – notarial and holographic – and wonder what the difference is. A notarial will is prepared with the help of a Trust and Estate attorney and is acknowledged before a notary.
The attorney helps to manage the potentially complex legal aspects, while the notary ensures that the will is actually prepared by the testator. A holographic will, in contrast to the notarial will, is much simpler. It is written by the testator, without the help of an attorney and without being acknowledged before a notary.
A holographic will includes details such as the date, signature of the testator and signatures of witnesses, but apart from this, it’s way simpler than a notarial will. Still, it is fully legally binding.
You might wonder, then, why you would need a notarial will when a holographic will is much simpler, cheaper and easier. Some people prefer a holographic will when their inheritance preferences are clear and simple.
Others prefer a notarial will when they have complex inheritance instructions. They use the help of attorneys to ensure that the will is crafted carefully and use the services of a notary to seal it. It’s entirely your choice.
How a Last Will and Testament Works?
When a person writes their will, the instructions of the will are triggered once the person has died. It’s important to note that you can change your will throughout your life. The latest will, indicated by the date in the document, always has preference over previously created wills.
The will has to appoint an executor of the estate. This is a person who will be responsible for administering the estate of the testator according to the instructions outlined in the will.
As we have already noted, the last will and testament is part of a person’s estate plan, ensuring that the various digital, financial and other assets are allocated to the designated beneficiaries as the testator wished.
It contains instructions about the assets, e.g., who will inherit which assets, in what amount and under what conditions. It can contain additional instructions for guardians, special care needs, responsibilities for financial and social accounts, and other important information.
Another term which you might frequently hear is Living Will. The primary difference between a Last Will and Testament and a Living Will is that the latter is used to appoint a person to take care of medical matters if the individual becomes incapacitated.
The Living Will doesn’t deal with actual inheritance and the designation of assets upon death but rather appoints a so-called healthcare proxy who will take care of all medically related matters if a person becomes incapacitated.
Wills vs. Trusts
Wills and trusts are usually both part of an overall estate plan, but they serve different purposes. A trust is a legal entity created to hold and manage the assets of the person (a.k.a. the settlor, trustor or grantor).
The trust practically owns the assets, and a trustee is assigned with the responsibility of managing the assets in the trust.
There are various types of trusts, such as revocable and irrevocable, and they are usually created to protect the assets from various threats and risks, such as probate court and creditor claims.
Trusts are created by experienced attorneys. In contrast to wills, they can’t be written alone by a person. In addition to the very different purpose between a trust and a will, a trust becomes active immediately after it is created. The will becomes active only after the death of the person.
A trust is also usually much more complex than a will. It specifies a trustee who manages the assets and controls their distribution, based on the wishes of the trustor specified in the trust documents.
What Should Be Included in a Will?
A will usually includes all your digital, financial and other assets, such as :
- bank accounts
- real estate properties
- accounts in online trading platforms
- investment portfolios
- company shares
- company stocks
- stock options
- cryptocurrencies and pension funds
It’s important to note that your will can also specify your preferences regarding business shares, e.g., if you possess shares in a company. In this case, you can specify who will get these shares and under what conditions.
Your will can also specify whether you want certain parts of your estate to go to charity, e.g., which assets and in what percentage to go to the charity of your choice.
You can also decide that a company or other type of organization should inherit some of your assets. A will must include the names of your beneficiaires. Whether they are private persons or organizations, they must be named.
The will usually contains named witnesses, their signatures, and the date and place of signing. The date is very important as it is one the primary means of identifying your latest will, if you have several.
The will also contains information about the executor of the will. This is a trusted person whose primary responsibility is to handle and execute the instructions outlined in the will by the deceased.
People can also designate guardians in their will if they are parents of minor children. A guardian takes care of the children in the event of the death of the parents.
Finally, the will must be signed and the person must be of sound mind. To prove that, most jurisdictions require at least two witnesses above the age of 18 to witness and sign the will.
Consequences of Not Having a Will
When a person dies without having made a will, the person is said to have died intestate. This means that the state or the country where they live becomes the executor of their estate and manages their inheritance.
In most cases, of course, the state will try to arrange the inheritance in the best possible way for all heirs, but needless to say, this can’t take into consideration any special arrangement that might have been put in a will.
In the absence of a will, the state decides how to distribute the estate, who receives what asset, and in what percentage.
In the case of minor children, the court can also decide on guardianship for the children, again by trying to arrange this in the best possible way for the children.
Usually, every jurisdiction has clear inheritance rules, but in most cases, the distribution of assets starts with the surviving spouse and living children.
In some cases, when the next of kin can’t be found, the state can become the owner of the estate.
How Much Does a Last Will and Testament Cost?
The first big differentiator when we speak about cost is whether a person would go with a holographic or a notarial will.
A holographic will is the cheapest option, as it practically incurs no cost – the person writes the will themself with their inheritance preferences. A notarial will incurs costs for the attorney who helps the person to craft the will, as well as the cost of a notary.
In the case of a notarial will, the total cost largely depends on how complex the estate is – how many assets and how many types, the family situation, the inheritance preferences of the individual, and the geography where the last will and testament was prepared.
The cost can be lowered if the person uses an online will maker tool, which is becoming more and more popular. Online will makers usually charge less than a hundred dollars, while hiring a lawyer usually costs more than a thousand dollars.
You can always change your will, for example, if you acquire new assets which you want to include in your will, or if your family situation or beneficiary preferences change.
In this case, you have two options. If the changes are too many, you can write a new will altogether. Your new will will have precedence over your old wills. If your changes are not so many, you can decide to make a codicil.
A codicil is an update to your already existing will, a.k.a. an addendum. A codicil allows you to specify changes to an already existing will, e.g., if you want to change only certain parts of the will. A codicil can be made only by the person who created the will.