As you move through the estate planning process, one of the most important estate planning documents you will create is your last will and testament. Your will lets you control how to distribute your estate after you pass away. If there are specific assets or personal possessions you want a certain family member or loved one to have, your will is where you would put those instructions.
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Creating your own will can be an emotional process, but it can help give you and your loved ones peace of mind knowing that your wishes are recorded. Your will sets the foundation for your estate plan, and as a result, there are many things you want to make sure you include in your will.
What Is a Last Will and Testament?
A last will and testament, or simply a “will” is a legal document that is used as a direction for the distribution of your estate when you pass away. When you die, your estate will go through the probate process. Probate is the process of legally distributing assets in your estate to the intended beneficiaries. However, outlining your intended beneficiaries is not the only thing a will does.
In your will, you will name an “executor” (or personal representative) who will be in charge of administering your estate. The probate court must appoint the personal representative, and once that is done, they have the authority to act on your behalf. An executor is different than an agent under a power of attorney because a power of attorney is only valid until you die. However, it is often the case that a person will name the same person as their power of attorney and executor of their estate.
In addition to naming an executor, you can name a guardian for any minor children or dependents you were taking care of when you passed away. By including a guardian for your dependents, you can ensure that the loved ones you cared for at your death do not go without an adequate caretaker in your absence.
You hear that you should create a will because if you don’t, your estate will go through the probate process as intestate. An intestate estate must go through probate without the guidance of a will and thus will follow your state’s intestate succession laws. Each state has its own intestate succession plan and does not allow the executor to go outside the parameters set by your state’s laws. If you wanted certain assets to go to specific beneficiaries, your executor cannot distribute them legally unless you created a will.
What Assets Should I Include in a Will?
As the drafter of a will, you are the “testator.” As a testator, you are in a position to name beneficiaries for all of your assets. When starting to list your assets, you may want to begin with your monetary assets, such as:
- Bank accounts (checking and savings accounts)
- Retirement accounts (Roth IRA or 401(k))
- Cryptocurrency
- Stocks
- Bonds
- Mutual Funds
Once you have completed making a note of your monetary assets, you should look at other types of property you own, including:
- Real estate
- Business ownership
- Safe deposit boxes
Finally, you should include any personal property for whom you want to name a specific beneficiary. Personal property to list in a will may include:
- Vehicles
- Antiques
- Sentimental items
- Furniture
- Jewelry
- Pets
- Personal items
Once you make beneficiary designations for specific assets, you should name residuary beneficiaries who will receive any of the assets you did not give to a single person. Often, a person will name a surviving spouse, children, or a charity as a residuary beneficiary.
What Assets Should Not Go in a Will?
In addition to knowing what assets you should list in a will, there are assets you want to avoid listing in a will. Assets that are owned jointly with a right of survivorship should not be listed in your will. Because the assets are owned jointly with a right of survivorship, the property interest you held automatically transitions to the other owners. You often cannot name a beneficiary because your ownership interest ends upon your death.
Additionally, don’t include life insurance policies in your will. When you get life insurance, your insurance company will have you fill out a beneficiary designation form. Life insurance proceeds do not need to go through the probate process and will are paid on death. As a result, if you have named a different beneficiary in your will than what was on your life insurance beneficiary designation form, the beneficiary you previously named will still receive the assets. Thus, if you want to change who receives your life insurance proceeds, you should contact your insurance company to change your beneficiary designation.
Lastly, you do not want to include any assets placed in a living trust. If you created a living trust and named beneficiaries, the beneficiaries you name in your will cannot receive those assets. When you place assets in a living trust, you name the trust as the owner of the property instead of yourself. Naming separate beneficiaries in a will and a living trust will result in your trust beneficiary receiving the asset.
Requirements for Creating a Will
The requirements for creating a will vary by state. Some states are stricter in their requirements, so it is important that you consult your state’s laws to ensure you are creating a valid will. In most states, the minimum requirements are that you are over the age of eighteen (18) and are of sound mind (have not been deemed incompetent by a court).
In addition to the minimum requirements, some states require your will to be notarized by a notary public. If your state requires your will to be notarized, most banks and local shipping companies will have notaries on staff.
If your state allows handwritten wills (called “holographic wills”), you still may want to get a notary to authenticate your will. The last thing you would like is for any legal issues to arise following your death and invalidate any of the planning you made. Having a non-valid will can create animosity between beneficiaries and inevitably result in your loved ones enduring a lengthy and expensive court battle.
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Creating Your Own Will
If you are ready to create your own will, you can use do-it-yourself estate planning forms to assist you. The documents are crafted with each state’s laws in mind and can help you meet your state’s legal requirements. However, if you need further assistance or need legal advice, you should reach out to a local estate planning attorney to assist you.
