What You Cannot Do With a Will

While a will is one of the most important estate planning documents you can have, there are some things it just won’t cover. A will is just one piece of a comprehensive estate plan.

A will is a legally binding statement directing who will receive your property upon your death. It is also the way you appoint a legal representative to carry out your bequests and name a guardian for your minor children. Without a will, your estate is distributed according to state law, rather than your wishes. Property distributed via a will must go through probate, which is the formal process through which a court determines how to distribute your property.

Although a will is one main way to transfer property upon death, it does not cover all property. The following are examples of property you cannot distribute through a will:

• Jointly owned property with right of survivorship. Property that is co-owned with another person is not distributed through your will. Joint owners with right of survivorship each have an equal ownership interest in the property. If one joint owner dies, his or her interest immediately ceases to exist, and the other joint owner owns the entire property.
• Property in trust. If you place property into a trust, the property passes to the beneficiaries of the trust, not according to your will.
• Pay on Death accounts. With a Pay on Death account, the account owner names a beneficiary (or beneficiaries) to whom the account assets pass to automatically when the owner dies.
• Life insurance. Life insurance passes to the beneficiary you name in the life insurance policy and is not affected by your will.
• Retirement plan. Similar to life insurance, money in a retirement account (e.g., an IRA or 401(k)) passes to the named beneficiary. Under federal law, a surviving spouse is usually the automatic beneficiary of a 401(k), although there are some exceptions. With an IRA, you can name your preferred beneficiary.
• Investments in Transfer on Death accounts. Some stocks and bonds are held in accounts that transfer on death to a named beneficiary. These accounts will bypass probate and go directly to the beneficiary.

In addition to being unable to transfer certain types of property with a will, there are other provisions that you cannot use a will to accomplish. The following are examples of items that should not be included in a will:

• Funeral instructions. A will is not the best place to put your funeral instructions. In many situations, wills are often not found until days or weeks after death. It may be better to leave a separate letter of instruction, such as a Memorial Instructions document, that is located in an easily accessible location. Another great option would be to pre-plan and pre-pay for your funeral so your grieving loved ones will have one less responsibility to worry about and you can lock in your funeral costs so it will not be impacted by future price increases.
• A provision for a child with disabilities. If you are leaving money to a child with disabilities, a will is not the best instrument. Receiving an inheritance directly can make the child ineligible for government benefits. It is usually better to set up a special needs trust to provide for the child.
• A provision for a pet. If you would like to leave money to your furry friend or leave instructions for their care, you will need to establish a pet trust. You cannot leave money directly to a pet in a will; you can name a caregiver and provide money to care for the pet, but the caregiver will not be legally obligated to use the money on the pet.
• Certain conditions on gifts. You may be tempted to make gifts conditional on the recipient’s behavior or actions. For example, you may want your loved one to finish college before receiving their inheritance, or you may want a loved one with a substance abuse issue to be sober for a period of time before they can receive their inheritance. If you would like your gifts to be conditional, a trust may be the better tool to use. It is also important to keep in mind that some conditions are not allowed, such as conditions that involve illegal activities and conditions that are contingent on the marriage, divorce, or change of religion of the heir.

A will is not the only component of your estate plan. It is crucial to meet with an experienced estate planning and elder law attorney to discuss your goals and discover which estate planning options can accomplish them. In many of the cases mentioned here, a trust may be the best option.

To learn more about how your estate planning needs can be accomplished, speak to a member of our team by calling our office at (281) 218-0880 or schedule a strategy session here.