A Will Does Not Cover Everything to Leave Assets to Heirs
While a will is one of the most important estate planning documents you can have, there are things that it won’t cover. A will is just one part of a comprehensive estate plan.
A will is a legally-binding statement directing who will receive your property at your death. It is also the way you appoint a legal representative to carry out your bequests and that you name a guardian for your children. Without a will, your estate is distributed according to state law, rather than your wishes. Property distributed via a will goes through probate, which is the formal process through which a court determines how to distribute your property.
Although a will is one main way to transfer property on death, it does not cover all property. The following are examples of property you can’t distribute through a will:
Jointly held property can not be distributed through your will.
Jointly held property, or property that is co-owned with another person, is not distributed through your will. Joint tenants each have an equal ownership interest in the property. If one joint tenant dies, his or her interest immediately ceases to exist and the other joint tenant owns the entire property.
Property in a trust can not be distributed through your will.
If you place property into a trust, the property passes to the beneficiaries of the trust, not according to your will.
Pay on death accounts are not distributed through your will.
With a pay on death account, the account owner names a beneficiary (or beneficiaries) to whom the account assets pass to automatically when the owner dies.
Life insurance does not get distributed through a will.
Life insurance passes to the beneficiary you name in the life insurance policy and isn’t affected by your will.
Retirement plans do not get distributed through a will.
Similar to life insurance, money in a retirement account (e.g., an IRA or 401(k)) passes to the named beneficiary. Under federal law, a surviving spouse is usually the automatic beneficiary of a 401(k), although there are some exceptions. With an IRA, you can name your preferred beneficiary.
Transfer on death accounts do not get distributed through a will.
Any investments you have in transfer-on-death accounts, or stocks and bonds that are held in these accounts, transfer on death to a named beneficiary. These accounts will bypass probate and go directly to the beneficiary.
Four More Things a Will Can Not Do
In addition to not being able to transfer certain types of property with a will, there are other things that you cannot use a will for. The following are examples of items that should not be included in a will:
Funeral instructions. A will is not the best place to put your funeral instructions. Wills are often not found until days or weeks after death. It is better to leave a separate letter of instruction that is located in an easily accessible location.
A provision for a child with special needs. If you are leaving money to a child with special needs, a will is not the best instrument. Receiving an inheritance directly can make the child ineligible for benefits. It is usually better to set up a special needs trust to provide for the child.
A provision for a pet. You cannot leave money directly to a pet in a will. You can name a caregiver for a pet and provide money to them to care for the pet, but the caregiver is not legally obligated to use the money on the pet. A pet trust is the most secure way to provide for a pet.
Certain conditions on gifts. You may be tempted to make gifts conditional on the recipient’s behavior or actions. However, there are certain conditions that are not allowed. The condition cannot be illegal, and the gift cannot be contingent on the marriage, divorce, or change of religion of the heir.
A will is not the only component of an estate plan.
Estate Planning Attorney in Avon Lake, Ohio
A will is not the only component of an estate plan. At Joseph L. Motta, estate planning firm in Avon Lake, OH, we specialize in putting our expertise to work to provide you with the best estate planning advice. To make sure your estate plan covers all your needs call 440-930-2826 to schedule a free consultation .
Estate Planning Guide
Probate. In terms of estate planning, there are two forms of probate to be concerned about: – death probate and living probate. This Estate Planning Guide covers them both, explains the difference and how to avoid expenses and burdens that can be associated with the probate process.
Drafting a Last Will and Testament. Why is relying on a Will alone is not part of a comprehensive estate plan.
Benefits of a Living Trust. What is a revocable living trust and how can it be an efficient tool to avoiding probate at your death, as well as to avoid living probate in the event of your incapacity.