1. Estate Planning: Introduction
  2. Estate Planning: Estate Planning Basics
  3. Estate Planning: Introduction To Wills
  4. Estate Planning: Other Types Of Wills
  5. Estate Planning: Will Substitutes
  6. Estate Planning: Introduction To Trusts
  7. Estate Planning: Marital And Non-Marital Trusts
  8. Estate Planning: Charitable Trusts
  9. Estate Planning: Estate Taxation
  10. Estate Planning: Life Insurance In Estate Planning
  11. Estate Planning: Health Problems, Money Matters And Death
  12. Estate Planning: Conclusion

by Cathy Pareto, CFP®, AIF®

In addition to the traditional types of wills discussed in Part 2, there are other types of wills, which include the following:

  1. Simple Will: A simple will is usually used for small estates and is often used to avoid the complications involved with trusts and large estates, as well as minimize taxes that may apply. A simple will is usually executed using a single document .
  2. Joint Will: A single document executed by two parties. The parties make the will together, agreeing to leave their property to beneficiaries identified under the will. Typically, the parties agree to leave their assets to each other, but they can also agree to leave property to third parties. The will dictates what happens to the assets after the second party dies, and can be used by married couples to protect children from previous marriages. Joint wills can be revocable during the testator's lifetime.
  3. Mutual Will: A single or multiple documents by multiple parties who have agreed to dispose of their property in a manner agreed upon by all parties. Similar to joint wills, the parties agree to leave their assets to each other, but they can also agree to leave property to third parties. Mutual wills are intended to be irrevocable. Joint and mutual wills may not be advisable since these may in some cases disqualify the property for a marital deduction.
  4. Reciprocal Will: A type of mutual will in which each spouse names the other as the beneficiary of his or her property. In this case a couple will draft separate wills containing the same information, resulting in their property being left to each other. Reciprocal wills are commonly referred to as "mirror wills". Reciprocal wills are often discouraged for couples with large estates, as they can result in an increase in estate tax, or cause the individual to be subject to estate tax when they otherwise would not have been.
The importance of working with a competent estate planning attorney or other professional cannot be overstated. Incorrect language in a will can produce results that are different from the intent of the testators.

Clauses Within a Will
There are five main parts to a will, each containing specific clauses describing the administrator of the estate, legal powers, witnesses, distribution of assets and other important information. Here is a brief summary of each section along with a description of the clauses within each section.

1. Preliminary
  • Introductory or Exordium: The exordium clause identifies the testator of the will, declares that the document is meant to be the testator's will and that the testator of the will intends to revoke prior wills.
  • Death Tax: This clause establishes the source of funds for payment of taxes that may arise as the result of testator's death. Examples of these taxes include federal tax, estate tax, inheritance tax and generation-skipping tax.
  • Family Statement: This clause identifies the testator's spouse and family at the time of execution of the will.
2. Dispositive

  • Devise: A provision transferring title to real property.
  • Bequest or Legacy: a provision transferring title to tangible and intangible personal property.
  • Residuary: This clause distributes assets that are not otherwise distributed by other clauses in the will.
  • Distribution to Trusts: This clause will describe how, when and what trusts will be funded.
  • Distribution to Classes: This section describes how the assets will be distributed within a given class of beneficiaries.
For example:
  1. Per Capita: Distributing assets per capita means giving equal shares to the number of beneficiaries. For example, John dies and leaves his assets per capita to his daughter Mary and son James. If James dies before his father, leaving two sons behind, then James' two children and Mary will inherit the 1/3 of the estate each.
  2. Per Stirpes: Per stirpes distribution, also known as distribution "by representation," is done according to the "line" by which the beneficiary is related to the decedent. In the example given above, Mary will receive 1/2 of the assets and James' two sons will split their father's 1/2 of the inherited estate by right of representation.
  3. Per Capita at Each Generation:This type of distribution is similar to per stirpes distribution, except it guarantees that beneficiaries in the same generation will receive equal amounts.
3. Appointment
  • Fiduciary Appointment Clause: This clause names the fiduciary, the person or people that the testator would like to administer the estate and serve as guardian to any minor children.
  • Fiduciary Powers Clause: This clause grants and/or limits the powers given to the fiduciary.
4. Concluding

  • Testator's Signature: This clause establishes that the document is intended to be the will maker's last will and that the formal statutory signature requirement has been met.
  • Attestation: This clause acknowledges that the witnesses have witnessed the testator's signature for valid will execution.
  • Self-Proving: This clause allows the will to be admitted to probate without requiring the witnesses to appear at a formal hearing of the probate court.
5. Other
  • No Contest: This clause describes how a beneficiary may be penalized for contesting the will. A beneficiary can contest a will if he feels that the will was not properly executed, the testator lacked the mental capacity to create a valid will, the will contains a mistake or was the result of fraud. However, contesting the will can be costly and the will could have a no-contest clause, which may penalize the beneficiary for contesting the will by reducing or forfeiting the amount he/she was designated to inherit.
  • Disclaimer: This clause will describe how disclaimed property is distributed.
How to Create a Will
There are many ways you can create a will, including paying an online service to create the document or hiring a competent legal professional to draft one. However, you have to remember that in order for your will to be valid, it must meet certain rules as outlined earlier in this tutorial.

If you have a small estate, you may be able to do this on your own, but because estate planning can be complicated, especially with second marriages, young children or non-traditional unions, it is worth considering paying a visit to an estate planning attorney or other estate planning professional. The last thing you want is to make a mistake and disinherit a loved one. The investment you make in an attorney may be worthwhile for you and your loved ones. (Read more about how to identify beneficiaries in Problematic Beneficiary Designations – Part 1.)

Estate Planning: Will Substitutes
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