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Starting to write a will is one of the most basic estate planning tools. While relying solely on a will is rarely a suitable option for most people, just about every estate plan includes this key document in one form or another.
A will is used to designate how you want your assets distributed to your surviving loved ones upon your death. If you die without a will, state law governs how your assets are distributed, which may or may not be in line with your wishes.
While you should always consult with an experienced estate planning professional like us when creating your will, here are a few of the different types of assets that should not be included in your will.
1. Assets with a Right of Survivorship
A will only covers assets solely owned in your name. Therefore, property held in joint tenancy, tenancy by the entirety, and community property with the right of survivorship, bypass your will. 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.
2. 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.
3. 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.
The following are some of the most common assets with beneficiary designations, and therefore, such assets should not be included in your will:
- Payable-on-death bank accounts
- Life insurance or annuity proceeds
- Retirement accounts, IRAs, 401(k)s, and pensions
- Transfer-on-death property, such as bonds, stocks, vehicles, and real estate
4. Certain Types of Digital Assets
Given the unique nature of digital assets, you’ll need to make special plans for your digital assets outside of your will. Indeed, a will may not be the best option for passing certain digital assets to your heirs.
Regardless of the type of digital asset involved, NEVER include the account numbers, logins, or passwords in your will, which becomes public record upon your death and can be easily read by others. Instead, keep this information in a separate, secure location, and provide your fiduciary with instructions about how to access it.
For more information on transferring ownership of your digital assets upon your death, read 5 Steps to Adding Digital Assets To Your Estate Plan and What Happens To Your Facebook Account When You Die?
5. 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. 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.
The best way to ensure your pet gets the love and attention it deserves following your death or incapacity is by creating a pet trust.
6. 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.
Get Help Today & Consult With An Estate Planning Attorney
If you want to provide for the care of your child or another loved one with special needs, you must create a special needs trust. However, such trusts are complicated, and the laws governing them can vary greatly between states. We will offer you the support and guidance you need at Hurban Law.
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