Creating a will is one of the smartest estate planning decisions you will ever make. While there’s no right or wrong age for creating a will, as long as you’re legally competent, there’s no doubt that many people struggle with what property goes into the will and the ones that shouldn’t be included.
To help you and many others unsure of whether they’re adding the right properties or not, today this post delves on this thorny and confusing topic.
Read on for more information
Property that should not be in a will
These properties are not to be included in the will because they’re already subjects to other laws regarding their distribution after your death. They include:
1. Property that’s held with rights of survivorship
Most of the time, community property, property held under a joint tenancy or the ones under tenancy in entirety come with something called a right of survivorship. The right of survivorship means that upon your death, the property rights automatically transfer to the co-owner. These terms are non-negotiable, and nothing changes even if you name someone else as an heir to that property in the will. So, this property shouldn’t be in the will. You may download a last will and testament form for free from forms.legalforms.legal.
2. Properties held in a living trust
As a grantor, you set up a living trust to facilitate property transfer to a named beneficiary upon your death. This process will bypass probate.
With the living trust, listed beneficiaries receive property held in the trust automatically after you die. So, if you wish to change the list of beneficiaries on your living trust today, you should do that now – a will does not effectuate any changes on a will. Note that the change is only possible if you have a revocable trust.
3. Proceeds from Pension Plans, IRAs, Retirement plan, or 401(k)
The proceeds from these retirement plans will go to the named beneficiaries directly.
4. Life insurance or annuity proceeds
For life insurance policies, the named beneficiaries are the ones who receive the proceeds automatically after death.
5. Pay-on-death bank accounts
If you have money in your pay-on-death bank account, you should not consider this property to be included in the will because the money will be sent to the beneficiary named.
6. Transfer-on-death (TOD) property
You could hold bonds, stocks, vehicles, or real estate in your beneficiary’s name. In this case, the property will be passed to the named beneficiary directly.
What to include in the will?
All other properties not listed above.