By including specific assets in a Will and naming beneficiaries (the people who will inherit those assets) you can make sure that your property is passed along exactly how you want, and you can help your family avoid disagreements over the distribution of your assets.
Reasons To Include Property In A Will
By including specific property in your Will, you can make sure that your property is given to the people you want in the way you want. Including property in your Will can also help your family avoid disagreements and stress over deciding who should get what, since you will have decided this for them.
Types Of Property And Assets To Include In A Will
• Real property, such as real estate, land, and buildings
• Cash, including money in checking accounts, savings accounts, and money market accounts, etc.
• Intangible personal property, such as stocks, bonds, and other forms of business ownership, as well as intellectual property, royalties, patents, and copyrights, etc.
• Unproductive property, such as valuable objects like cars, artwork, jewelry, and furniture, etc.
You may also include your residuary estate in a Will, which refers to any assets that are not specifically left to anyone. You can designate a residuary beneficiary who will inherit the remaining assets that are not left to other named beneficiaries.
Taking Inventory Of Your Assets
Making a list of all valuable assets helps you ensure that you’re not accidentally leaving any significant property out of your Will. If you have significant property or assets, or particularly elaborate investments or financial arrangements, determining the best way to distribute those assets may be complicated. An attorney can review your assets with you to determine the most tax-efficient way to distribute your assets, which many include establishing testamentary trusts or using other financial tools. If you do not have significant or complex assets that require legal counsel, you will simply need to decide who will receive your assets and how they will be distributed. Writing a will isn’t the most pleasant of tasks. After all, by doing so you’re not only acknowledging your own inevitable demise but actively planning for it. That might explain why so many adults avoid this cornerstone of estate planning. But creating a will is one of the most critical things you can do for your loved ones. Putting your wishes on paper helps your heirs avoid unnecessary hassles, and you gain the peace of mind knowing that a life’s worth of possessions will end up in the right hands. The laws governing wills vary from state to state. If you aren’t familiar with them, consider consulting a knowledgeable lawyer or estate planner in your area.
A will is simply a legal document in which you, the testator, declare who will manage your estate after you die. Your estate can consist of big, expensive things such as a vacation home but also small items that might hold sentimental value such as photographs. The person named in the will to manage your estate is called the executor because he or she executes your stated wishes. A will can also serve to declare who you wish to become the guardian for any minor children or dependents, and who you want to receive specific items that you own. Someone designated to receive any of your property is called a beneficiary. Some types of property, including certain insurance policies and retirement accounts, generally aren’t covered by wills. You should’ve listed beneficiaries when you took out the policies or opened the accounts. Check if you can’t remember, and make sure you keep beneficiaries up to date, since what you have on file when you die should dictate who receives those assets. If you die without a valid will, you’ll become what’s called intestate. That usually means your estate will be settled based on the laws of your state that outline who inherits what. Probate is the legal process of transferring the property of a deceased person to the rightful heirs. Since no executor was named, a judge appoints an administrator to serve in that capacity. An administrator also will be named if a will is deemed to be invalid. All wills must meet certain standards such as being witnessed to be legally valid. Again, requirements vary from state to state. An administrator will most likely be a stranger to you and your family, and he or she will be bound by the letter of the probate laws of your state. As such, an administrator may make decisions that wouldn’t necessarily agree with your wishes or those of your heirs.
Expedient Things To Include In Your Will
• Name a personal representative or executor: In an individual will, your parent can name a person or institution to act as personal representative, called an executor in some states, who will be responsible for making sure that the will is carried out as written and that the property is divvied up and distributed as directed. It’s also wise to name an alternate in case the first choice is unable or unwilling to act.
• Name beneficiaries to get specific property: Your parent’s will can specify separate gifts of property called specific bequests including cash, personal property, or real estate. Likely beneficiaries for such bequests are children and other relatives, but they may also include friends, business associates, charities, or other organizations.
• Specify alternate beneficiaries: In fashioning their wills, most people assume that the beneficiaries they name will survive to take the property they’ve specified for them. The most thoughtful wills provide for what should happen if those beneficiaries don’t survive either by naming a backup recipient or indicating that the person’s spouse or children should take the property instead.
• Name someone to take all remaining property: If your parent has opted to make specific bequests of property, a will is also the place to name people or organizations to take whatever property is left over. This property is usually called a residuary estate.
• Give directions on dividing personal assets: If your parent wants assets divided among children, charities, or other beneficiaries, the will should note precisely what property is included in that pool. It should also specify whether assets are to go directly to beneficiaries or whether they’re to be sold and the value divided among the beneficiaries, either equally or according to stated percentages.
• Give directions for allocating business assets: Business assets are often separate from personal assets and most business owners have very specific ideas about what should be done with them after their deaths. If your parents don’t have a written plan covering the windup of their business, encourage them to see an experienced estate planning attorney to ensure that their wishes are clearly indicated in each of their wills.
• Specify how debts, expenses, and taxes should be paid: The will should spell out your parent’s wishes regarding how to settle debts and final expenses, such as funeral and probate costs, as well as any estate and inheritance taxes. Usually a specific source, such as a bank account, will be tagged to cover these costs.
• Cancel debts others owe: A nice added touch is that people making wills can use the documents to relieve those who owed them money from the responsibility of paying that debt along with any interest that accumulated on it to them or their survivors.
• Provide a caretaker for pets: Since the law considers pets to be property, the best way for your parents to assure a good home for theirs is to leave the animal to someone named in each will who has agreed to give it a good home. Many people also leave that person an amount of money to help cover the caretaking expenses.
What Not To Include When Making a Will
Making a last will and testament is a very wise decision. It tells your surviving loved ones exactly what your wishes are regarding your property and assets. However, there are some things that you can’t or shouldn’t include in your will.
Types of property you can’t 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, mostly because the nature of these types of properties is to name a beneficiary or avoid probate.
• Joint tenancy property: This type of property 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.
• 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, willing property to someone in your will when that property is already delegated to someone by a living trust is inconsistent. The property in the living trust automatically goes to the beneficiaries and is managed by the trustee. If you want to change this arrangement, you must do it through the trust forms and documents and not through your will.
• Life insurance proceeds that have a beneficiary: In this case, like with the trust, the proceeds automatically go to the beneficiary.
• Retirement plan proceeds, including money from a pension, IRA, or 401(k). The forms for these plans 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.
• Proceeds from a payable-on-death bank account: The form for this account asks you to name your beneficiary. To change the beneficiary, you just fill out another form with your bank.
• Avoid leaving funeral instructions when making a will: 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, people 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 or executrix of your estate.
• Avoid using a will to escape estate taxes: A will is still subject to estate taxes. Instead of trying to use a will to avoid the often heavy estate taxes, explore different types of trusts that may work for your situation. Trusts escape a lot of tax subjection, because the property is not passing directly to the beneficiary, rather to the trust account, over which the beneficiary does not have complete control.
Wills Do Not Escape Probate
A common misconception is that wills do not have to go through probate proceedings. This is not true. Wills are still subject to probate proceedings. Probate proceedings can take months. However, having a will does help to speed up the probate process, because 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 it should be divided, and the court will follow your wishes. There are other ways you can avoid probate. One common way is leaving the property to a trust fund, with the desired recipient a beneficiary, instead of granting the property directly to that person. 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. You can put certain other types of conditions on gifts. Usually, these types of conditions are to encourage someone to do or not do something.
Avoid leaving gifts or money for illegal purposes
Although this is uncommon, some people will try and sneak in some sort of illegal condition or purpose for the gift. This would not make your will a legal will.
Do not arrange care for a special needs person when making a will
Although it is very possible to arrange such special needs for a disabled person, a will is not the place in which to do it. There are certain types of trusts, such as a special needs trust that specifically addresses the management of the specific special needs of a disabled person.
Avoid leaving gifts to pets in a will
A Pet Trust is Best for This. Animals do not have the legal capacity to own property. What many people do instead is they leave the pet with someone who they know will provide it with good care. You can also leave that person any property or money to help out with the care of the pet. Certain states do allow for trusts with an animal as the beneficiary. If this makes you more comfortable, check to see what your state’s laws are. However, as long as you believe in the person you are leaving your pet with, you probably do not need a pet trust fund.
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