It is a sound decision to make a last will and testament. Your will states exactly what you want with respect to your properties and affairs. But not all things should be included in the will.
Types of property you can’t include when making a will
Some properties are governed by certain rules that include disposition upon your death, and are independent of your will.
Joint tenancy property – Joint tenancy property gives the joint tenant an automatic right to get the property upon the joint tenant’s death through what is called as right to survivorship. So a joint tenancy property goes to the other tenant regardless of what the will says.
Property in a living trust – Putting into a will a property that is already in a living trust will create inconsistencies and confusion. Since property in a living trust will already go to the named beneficiaries, you should no longer include these properties in your will.
Life insurance proceeds that have a beneficiary – Just like in the case of properties in trusts, life insurance proceeds go directly to the named beneficiary.
Retirement plan proceeds, including money from a pension, IRA, or 401(k) – Same as properties in trusts and life insurance proceeds.
Stocks and bonds held in beneficiary – Goes to the named beneficiary. If you wish to change the name of the beneficiary, contact the brokerage company.
Proceeds from a payable-on-death bank account — The beneficiary on such accounts are also identified in the forms.
Avoid leaving funeral instructions when making a will
The settlement of the estate and probate generally don’t start until after the funeral. Therefore do not include your instruction regarding this matter in your will. If you have specific wishes for a funeral, speak with your loved ones about it or create another document for this purpose.
Avoid using a will to escape estate taxes
A will does not exempt from estate taxes. If you want to avoid or at least minimize estate taxes, consider different kinds of trust that will suit your needs. Because a trust enables you to give a property directly to the beneficiary, the property will not be included in your estate and therefore not included when calculating estate taxes.
Wills do not escape probate
Whether a person has a will or not, their estate will go through probate process upon their death. What having a will would do is to speed up the process because the court would already know how to deal with your estate as stated in your will. But when a person dies without a will, or intestate, the court decides on its distribution, guided by the laws on intestacy of your state. This could take months or even years before your estate is distributed to your heirs.
Be careful with what conditions you put on gifts
Conditions that include divorce, marriage or change of religion cannot be included in a legal will. Even if it is put there, it is unenforceable. You may still put conditions to certain gifts such as those that involve graduation from college or how they are to use the property. But remember that attaching conditions to gifts can create complications.
Avoid leaving gifts or money for illegal purposes
You cannot leave gifts with conditions of something that is illegal attached. For example, you cannot instruct a beneficiary to use your gift of a piece of land to grow marijuana or tell a daughter that she could have the gift if she has a martini before she reaches 21 years.
Do not arrange care for a special needs person when making a will
The will is not the proper document you could use to give instructions for a care of a special needs person. You can establish a special needs trust for this purpose.
Avoid leaving gifts to pets in a will
Pets are not allowed to inherit or own property. You can look for someone who you know can take care of your pet and possibly leave that person money or property to help them in their expenses for taking care of your pet. There are states that allow trusts that have an animal as a beneficiary; you may want to consider this. Check with your state’s laws if it is possible to establish a trust for the benefit of your pet.