Making a last will and testament is a wise decision. It tells your surviving loved ones exactly your wishes regarding your property and assets in a legal document. However, there are certain provisions you should not include in your will.
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Making a will is important for the loved ones you leave behind. Without a will, you die “intestate,” and the probate court follows state laws to distribute your money, personal property, and real estate. A will outlines who you want to manage your estate, who will inherit your property, and who will care for your minor children. However, there are some things that you cannot or should not include in your will.
Types of Property Not To Include When Making a Will
Some types of property carry rules that govern what happens after you die. These rules are independent of your will, mainly because the nature of these types of properties is to name a beneficiary or avoid the probate process.
Joint Tenancy Property
Property held in joint tenancy grants the right of survivorship to your joint tenant automatically by law. Therefore, when you die, your share of the property passes directly to the surviving joint tenant, regardless of what your will says.
To learn about shared property between spouses, look at community property laws in your state.
Property in a Living Trust
One of the ways to avoid probate is to set up a living trust. The property included in a living trust avoids probate, whereas property in your will does not. Additionally, leaving property to someone in your will when that property is already in a living trust is inconsistent. The property in the living trust is managed by a trustee and goes to the beneficiaries when you die. If you want to change this arrangement, you must do it through trust forms and documents rather than through your will.
Consider a transfer-on-death deed as an alternative to putting property in a trust.
Types of Assets Not To Include in Your Will
Life Insurance Proceeds With a Beneficiary Designation
When you name a beneficiary on a life insurance policy, that policy operates outside your will. In this case, like with the trust, the proceeds from life insurance policies automatically go to the beneficiaries, often a spouse or minor children.
Proceeds from Retirement Plan, Pension, IRA, or 401(K)
The forms for these retirement accounts contain a section for you to include your desired beneficiary.
Stocks and Bonds Held “In Beneficiary”
This is yet another type of property that automatically goes to your named beneficiary. Talk to the brokerage company if you wish to change the designated beneficiary.
Proceeds From a Payable-on-Death Bank Account
A payable-on-death (POD) or transfer-on-death (TOD) allows you to name a beneficiary on the account to receive the proceeds when you die. The form for this account asks you to name your beneficiary and contingent beneficiaries. To change the beneficiary, you simply fill out another form with your bank.
When completing beneficiary designation forms for the above, list your primary beneficiary and any contingent beneficiaries if your primary beneficiary dies before you. Any of these assets without a beneficiary designation will go into your probate estate. Make it a regular practice to check that all your beneficiary designations are correct.
Types of Provisions Not To Include in Your Will
Funeral Instructions
Usually, the settling of the estate and the probate proceedings do not happen until after the funeral. The funeral arrangements are among the first matters of business after someone dies. Therefore, family members may not even notice your funeral wishes stated in your will until after the funeral.
Instead of leaving your funeral wishes in your will, talk with your loved ones about what you want. You can even make a separate document that spells out your wishes for the funeral and give this document to the executor of your estate.
Conditional Gifts
Avoid putting conditions on gifts. Not all of those conditions are legal. Conditions that include marriage, divorce, or the change of the recipient’s religion cannot be provisions in a legal will. Therefore, a court will not enforce them.
There may be a temptation to add other conditions on gifts. Usually, these types of conditions are to encourage someone to do or not do something. For example, when making a will, you could say, “to Anita, if and when she graduates from college.” You could also say something like, “to Paul, so long as he uses the property as an art studio.” What if Anita decided not to go to college because she started a catering business? What if Paul could sell the property for a huge sum to have a studio and extra money? Just keep in mind that putting conditions on gifts complicates things and leads to unintended consequences.
If you have serious misgivings about leaving money or property to someone because they can’t manage it, consider contacting an estate planning attorney for legal advice for creating a trust.
Care for a Person With Special Needs
Although it is possible to arrange such special needs for a person with a mental or physical disability, a will is not the place to do it. Certain types of trusts, such as a special needs trust, hold assets for the person’s benefit, which will not affect their eligibility for other benefits such as disability or social security payments.
Gifts to Pets
Animals cannot legally own property; therefore, you can’t leave them money. Instead, you can name someone to care for your pet and give money to the caregiver for your pet’s care.
Another alternative is to set up a pet trust. Requirements differ, so check your state law before setting one up. However, if you trust the person you leave your pet with, you probably do not need a pet trust.
Tax Avoidance Provisions
Your estate may be subject to probate fees and estate taxes. Instead of trying to use your own will to avoid estate taxes, consider creating a trust. There are different types of trusts that take assets out of your name, and therefore your estate, and become the trust’s property. When you die, the trust property goes to the beneficiaries and is not part of your probate estate.
Illegal Provisions
Although this is uncommon, some people will try and sneak in some illegal condition or purpose for the gift. A court will not honor these provisions. For example, you would not be able to include “to Mary, so long as she uses the property to grow marijuana,” or “To Kai, so long as they have their first beer before they are 21 years old.”
Wills Help Speed Up Probate
A common misconception is that valid wills do not have to go through probate proceedings. This is not true. Wills are part of probate and help speed up the probate process. Your loved ones, lawyers, and the probate court are not left having to divide all of your property for you. You have already explained how they should distribute your property, and the court will follow your wishes.
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Write Your Own Will
It is never too early to start estate planning for peace of mind. If you have simple needs for your will, the process is not too time-consuming. In fact, you can easily write an online will from home using state-specific last will and testament templates.
Your will is one of many important documents you will need to create a comprehensive estate plan. You should also plan for health emergencies so your treatment wishes are respected if you cannot communicate. Use a health care directive forms to document your preferences and appoint a medical power of attorney. And name someone to manage your financial affairs if you are suddenly incapacitated with a financial power of attorney.
