A will is a fundamental estate planning tool. While we do not recommend relying solely on a will, it is certainly the starting point of a proper estate plan. This document is used to designate how you would like your assets to be distributed after your death. Some people also include instructions for funeral or burial preferences and some wills are used to name guardians for surviving children.
However, not all assets can (or should) be included in your will. Your estate planning attorney at North County Legal can help you to understand which assets you should put in your will and which assets you should include in other planning documents like trusts. Here are some examples of things that should not be included in your will.
Assets with A Right of Survivorship
A will only covers assets solely owned by you. Property held in joint tenancy, tenancy by the entirety, and community property with the right of survivorship, cannot be passed on to loved ones. These types of assets automatically pass to the surviving co-owner(s) when you die, so leaving your share to someone else in your will would have no effect. If you want someone other than your co-owner to receive your share of the asset upon your death, you will need to split up the joint tenancy as part of your estate planning process.
Assets Held in A Trust
Assets held by a trust automatically pass to the named beneficiary upon your death or incapacity and cannot be passed through your will. This includes assets held by both revocable “living” trusts and irrevocable trusts.
In contrast, assets included in a will must first pass through the court process known as probate before they can be transferred to the intended beneficiaries. To avoid the time, expense, and potential conflict associated with probate, trusts are typically a more effective way to pass assets to your loved ones compared to wills.
This method is not completely foolproof, though. It can be incredibly difficult to transfer all of your assets into a trust before your death, especially if you are regularly acquiring new assets. In situations like this, we can create what is known as a “pour over” will. In this kind of will, you would be able to establish a trust, and declare that the property in your estate be distributed to the trustee of the trust upon your death.
Assets with A Designated Beneficiary
Several different types of assets allow you to name a beneficiary to inherit the asset upon your death. In these cases, when you die, the asset passes directly to the individual, organization, or institution you designated as beneficiary, without the need for any additional planning. These assets should therefore be excluded from wills
Common examples of these types of assets include retirement accounts, IRAs, 401(k)s, pensions, life insurance or annuity proceeds, as well as payable-on-death bank accounts. Some people have set up transfer-on-death properties, including bonds, stocks, vehicles, and real estate.
Your Pet and Money for Its Care
Because animals are considered personal property under the law, you cannot name a pet as a beneficiary in your will. If you do, whatever money you leave it would go to your residuary beneficiary (the individual who gets everything not specifically left to your other named beneficiaries), who would have no obligation to care for your pet.
It’s also not a good idea to use your will to leave your pet and money for its care to a future caregiver. That’s because the person you name as beneficiary would have no legal obligation to use the funds to care for your pet. In fact, your pet’s new owner could legally keep all of the money and drop off your furry friend at the local shelter.
Money for The Care of A Person with Special Needs
There are a number of unique considerations that must be taken into account when planning for the care of an individual with special needs. In fact, you can easily disqualify someone with special needs for much-needed government benefits if you don’t use the proper planning strategies. To this end, a will is not a suitable way to pass on money for the care of a person with special needs.
If you are making provisions for someone with special needs in your estate plan, be sure to consult with your estate planning attorney at North County Legal. We can ensure that the proper considerations are made so that your loved one will be protected.
Don’t Take Any Chances
Although creating a will may seem fairly simple, it’s always best to consult with an experienced planning professional to ensure the document is properly created, executed, and maintained. There are so many scenarios in which a will won’t be the right planning option, nor would a will keep your family and assets out of court.
Schedule a free consultation today, to get started with this critical estate planning step.