7 things a Will won’t do.
A Will isn’t the place to handle every kind of property or issue.
Wills are great ways to address a lot of your estate planning needs. That being said, they do not cover everything. Here are a few things that you shouldn’t expect your Will to accomplish:
1. Leave Certain Kinds of Property
You can’t use your Will to leave:
- Property you hold in joint tenancy with someone else; or in “tenancy by the entirety” or “community property with right of survivorship ” with your spouse. At your death, your share Will automatically belong to the surviving co-owner. A Will provision leaving your share would have no effect unless all co-owners died simultaneously.
- Property you’ve transferred to a living Trust.
- Proceeds of a life insurance policy for which you’ve named a beneficiary.
- Money in a pension plan, individual retirement account (IRA), 401(k) plan, or other retirement plan for which you’ve named a beneficiary on forms provided by the account administrator.
- Stocks or bonds held in beneficiary (transfer-on-death or TOD) form. If you want to change the beneficiary, contact the brokerage company.
- Money in a payable-on-death bank account. If you want to name a different beneficiary, just fill out a simple form at the bank.
2. Leave Funeral Instructions
Wills are typically not read until days or weeks after a death. That’s too late to help the people who will make the decisions about the arrangements for the body and funeral or memorial services. Make a separate document spelling out your wishes and make sure the right people know where to find it when the time comes.
3. Reduce Estate Taxes
If you expect your estate to owe federal estate taxes, you should take steps now to deal with the tax liability. A Will won’t help you with the taxes. Many kinds of Trusts can reduce or postpone the tax bill.
4. Avoid Probate
Property left through a Will usually spends months or a year tied up in probate court before it is distributed to the people who inherit it.
5. Put Certain Conditions on Gifts
There are also a few legal limitations on what you can do in a Will. For example, you cannot leave a gift that depends on the marriage, divorce, or change of religion of a recipient. You can however try to influence lesser matters. For example, you could leave money “to Jeremy, if and when he goes to college.” Be warned though, through my experiences making such conditional gifts can open a can of worms. Also consider who will enforce the Will’s conditions, and for how long.
6. Arrange to Care for a Beneficiary With Special Needs
If you want to provide long-term care for someone, a Will isn’t the place. It is far better to set up a Trust that’s tailored to their needs. A special needs Trust can provide extra income for a loved one with disabilities without jeopardizing government benefits.
7. Leave Money to Pets
I know this is shocking but pets can’t own property. If you are concerned about the care of your pets, leave them to someone who has agreed to provide a good home AND leave that person some money to help out with related expenses.