Making a will is the primary way to transfer ownership of your belongings after your death. You’ll often hear that a will should be a comprehensive list of your assets so that they can be found quickly and easily without your estate undergoing probate. But there are some things you can’t or shouldn’t include in your will. For example, certain types of property can best be transferred without one.

  • A living trust avoids probate and is automatically inherited by beneficiaries. To change the beneficiaries, you need to refer to the trust documents and forms, not your will.
  • Life insurance proceeds automatically go to your beneficiary, often a spouse or minor children.
  • Retirement plan earnings, including money from a pension, IRA or 401(k), are inherited by your named beneficiaries.
  • Stocks and bonds automatically go to your desired named beneficiary. Talk to the brokerage company if you wish to change the named beneficiary.
  • Payable-on-death bank accounts follow beneficiary rules. To change the beneficiary, fill out another form with your bank.
  • Property that is held in joint tenancy usually includes a right of survivorship that is automatically granted to your joint tenant. That means that when you die, your share of the property passes directly to the surviving joint tenant. Any joint accounts go to the surviving account holder.

It’s important to avoid conflicts between documents, but that’s not the only reason to leave something out of your will.

Here are other times a will isn’t optimal.

  • Your funeral wishes are better discussed with your loved ones than left in a will. However, if you want something in writing, you may also include a separate document spelling out your wishes for the funeral and give it to your estate’s executor.
  • In movies or TV shows, wills bequeath property to inheritors with certain strings attached, but in real life, that might not be such a good idea. Suppose you include some money for your daughter but stipulate that she will only get it when she graduates college. Who will enforce that condition and for how long? Is that person recompensed with an executor’s fee?
  • You aren’t allowed to use a will to push an heir to marry, divorce or convert to a particular religion.
  • A will isn’t the place to arrange for the care of a special needs person. A special needs trust would be better because it addresses the management of the specific special needs of the beneficiary.
  • A will isn’t a good place to leave gifts to pets. Animals don’t have the legal capacity to own property. You may want to leave your pet with someone you know will provide it with good care. You can leave that person’s property or money to help with the care. Some states allow for trusts with an animal as a beneficiary.

The general rule of thumb is that your will doesn’t affect property you have arranged to leave by another method. Wills are a good idea, but they are only the first step in an estate plan. Contact an estate planning attorney to give you advice on what to include in your will and to explore other methods of bequeathing your property according to the rules of your jurisdiction.

Image of Flowers Rieger, Tucson CPA Firm, Tax Blogs, Business Tax Preparation, www.flowersrieger.com, Filing Taxes for the DeceasedFlowers Rieger & Associates, PLLC
www.flowersrieger.com
6125 E. Grant Road
Tucson, AZ 85712
(520) 327-8706
michael@flowersrieger.com
tim@flowersrieger.com