A Financial Advisor's Guide to Navigating Different Types of Wills
Advisors should understand why most Americans do not have even the most basic estate plan
in place. Advisors should also pay attention to the validity of wills for those people who do have
a will or are engaged in the estate planning process. Will contests are surprisingly common, and
nontraditional wills such as handwritten and oral wills, as well as do-it-yourself wills prepared
without an attorney, may be less likely to meet legal requirements.
Why Fewer Americans Are Making Wills
If you want to nudge a client toward creating a will, you need to understand why they have
neglected this task - and what could inspire them to take action. The top reasons cited for not
having a will in a recent Caring.com survey1 are
- procrastination (43 percent),
- a belief that they are too poor or do not have enough assets (40 percent),
- unsure how (16 percent), and
- costs too much (16 percent).
Respondents who say they do not have a will are made up of various ages and races and have
a range of incomes and educational backgrounds. There are also different ages, genders, and
income levels among those who reported what finally motivated them to create a will. But,
unfortunately, among all groups, 23 percent said nothing would motivate them to get a will.2
Types of Wills
A will is a legal document that states how a person wishes to pass down their assets (money
and property) when they die. A will should reference the beneficiaries who will receive the
deceased's assets, how much each beneficiary will receive, who will administer their estate and
wind down their affairs, and, if they have minor children, who will serve as their guardian (and
backup guardian).
Ideally, a will is typewritten and signed by the willmaker (the testator) and two or three witnesses
(depending on state law). Additionally, it is recommended that the testator engage the
assistance of an experienced estate planning attorney to help ensure that the will meets all
applicable legal requirements. An attorney can also help navigate through potential issues that
could otherwise lead to a will contest in the future.
Some states allow handwritten wills (known as holographic wills) and oral wills (known as
nuncupative wills).
- A holographic will is handwritten and signed in the testator's own hand, and it may not
require witnesses to be valid. Requirements vary in states that recognize holographic
wills.
- A nuncupative will, informally referred to as a "deathbed will," is stated orally, usually in
a recording or to a witness. Most states do not recognize oral wills as valid; if they do,
only certain people under limited circumstances are allowed to use them.
Why would somebody create a handwritten or oral will instead of a traditional, typewritten one?
Often, it is because they have not yet created a formal will, and an emergency forces their hand.
Sensing that time is of the essence, they either jot down their wishes or tell them to a loved one,
hoping that their loved ones will follow their instructions after they have passed away.
Potential Issues with Oral and Handwritten Wills
Informally created wills can raise numerous issues. Such a situation famously occurred with the
estate of Aretha Franklin. The Queen of Soul had a handwritten will that was recognized in her
home state of Michigan. However, difficulty deciphering her intentions due to scribbles and
hard-to-read passages led to a lengthy legal dispute among her heirs.
This is a major issue with handwritten and oral wills: they are more prone to containing mistakes
and ambiguities that cause confusion or lead to extensive litigation. The validity of holographic
and nuncupative wills can also be harder to prove.
It is up to the court to validate a will. If the court does not accept the offered will, state law -
rather than the testator's wishes - could dictate how estate assets are divided among loved
ones.
An unclear will can also lead to an heir contesting it. Research suggests that up to 3 percent of
all wills in the United States are contested in court.3 Will contests undermine the testator's intent
and can deplete estate assets and turn loved ones against one another.
Beyond Simple Wills
Planning how your money and property will be passed down to your loved ones is the most
fundamental function of a will. Even the most basic will includes provisions naming a personal
representative, beneficiaries, and guardians of minor children. A will can also include more
advanced planning provisions that provide more context and details about distributions, such as
instructions for pet care or for an inheritance left to a minor child or other individual who may
need their inheritance managed and safeguarded for a period of time or indefinitely.
A will is a must-have estate planning document for anyone 18 or older. It just scratches the
surface, though. Clients, especially those with larger estates, should also consider a revocable
living trust to manage their assets without court involvement, powers of attorney that provide
trusted decision-makers the authority to make financial and medical decisions on the client's
behalf, and a living will (if allowed in your state) that gives instructions about medical care and
end-of-life decisions.
Financial Planning for the Present and Future
Working together, we can bring greater effectiveness and continuity to clients' big-picture
financial goals of investing, saving, tax strategies, estate planning, philanthropy, and legacy.
Collaborating ensures we are serving the best interests of our clients.
To discuss how we can help you use estate planning considerations to deliver a better client
experience, build loyalty, and introduce new revenue streams, please reach out and schedule a
meeting.
MEREDITH | PC
4325 Windsor Centre Trail
Suite 400
Flower Mound Texas 75028
214-513-1013
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.
You have received this newsletter because I believe you will find its content valuable. Please feel free to Contact Me if you have any questions about this or any matters relating to estate planning.
