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What Is and Isn’t Included in a Will?

Last update on: Dec 09 2020
By Katie Kao
estate planning

A will is a written document in which an individual, known as a testator, directs how his or her assets are to be divided and other matters are to be handled after his or her death. However, wills are not a do-it-all document. A testator should be aware of what should and shouldn’t be included in the will.

 

About 74% of Americans who lack a last will and testament reported that it is because they find wills and estate plans to be confusing topics. Therefore, it is important to clarify the terms of the will—what it includes and what it doesn’t.

 

Without a will, property will be distributed according to the state law, and its priorities could be very different from yours. Therefore, it is important to have a will and ensure that you make the important decisions about how your assets are to be distributed to benefit among your loved ones and any other interests. 

 

The will is a critical part of an estate plan. It guides the distribution of assets and provides for beneficiaries upon one’s death.

 

Things to Include in a Will

There are certain assets and instructions that a testator should make sure to include in a will.

If these items aren’t covered in the will, it won’t be clear how they will be handled. State law might determine the outcome, or family members might dispute the treatment and have to ask a court to decide. Subject to be sure are addressed in the will are:

  • Real property, such as land or buildings. This includes your personal residence plus any additional real estate you own. 
  • Cash, including money placed in checking or savings accounts.
  • Intangible assets, such as stocks and bonds, business ownership, patents and copyrights.
  • Other physical assets, including cars, jewelry, artwork, clothing, furniture, personal effects, etc.
  • Digital assets, such as online access to financial accounts, subscriptions, social media accounts, email, and others. The law is evolving in this area. The best advice now is to authorize the executor to have online access to financial accounts while perhaps authorizing someone else to have access to more personal assets, such as email and social media accounts. The will should clearly authorize access. You can provide a separate list of the passwords and other information needed to gain access. 
  • The estate must pay any federal, state, and local estate taxes and perhaps inheritance taxes. Your will might need to direct whether the payments should be paid from each bequest left to individuals or from what’s left of the estate after specific bequests of property to individuals. 
  • Who you wish to be named guardians of any minor children or special needs individuals.
  • Assets and directions for the care of a special needs child or person.
  • Appointment of one or more individuals to serve as executor of the estate.
  • Appointment of one or more trustees of any trusts created by the will.
  • Charitable gifts or donations.

Things to Not Include in a Will

There are subjects that don’t belong in a will. The law provides other means by which these assets and issues are addressed, so any instructions in the will have no legal effect. For example, retirement accounts are inherited by whoever is named in the beneficiary designation form. Nothing written in the will affects who inherits those accounts.  

  • Jointly held property, as ownership automatically transfers to the other co-owner(s) upon the death of one co-owner.
  • Accounts with transfer on death designation. The designation controls who inherits. 
  • Property previously transferred to a trust or living trust.
  • Life insurance, since the benefits are automatically paid to the beneficiary or beneficiaries named in the policy.
  • Retirement plans and accounts, such as pensions, IRAs, 401(k) plans, etc.
  • Illegal bequests or directions.

 

Some other issues are in gray areas. You should ask an estate planner if the instructions in a will on these issues are controlling under the law of your state. Assets and instructions on the care of a pet are one subject. Some states allow these to be addressed in a will, while others say such instructions aren’t legally enforceable. 

Funeral and burial instructions are another topic. Some states say such instructions in a will are legally binding, while others treat them as suggestions and recommendations. As a practical matter, a will is often read days or weeks after the testator’s death. It might not be reviewed before the final arrangements are made.

 

Keep in mind that a will is a public document. It must be filed with the probate court or other appropriate court in your locality. It will go through the probate process and is available for public inspection. 

The probate process is crucial to how a will takes effect after the testator’s death. Probate is the legal process that ensures your debts are paid and the legal title of your assets is transferred to the appropriate heirs and beneficiaries. If you have a will, the probate process will determine whether the will is authentic and valid.

 

Therefore, having a clear understanding of the contents that are allowed and that belong in the will makes the probate process and process distributing assets run more smoothly.

 

Key Takeaways of Making a Will

  • A will usually includes instructions for the distribution of assets such as real property, cash, and intangible assets (including financial accounts). It also includes instructions for guardianship of minor children and any charitable gifts.
  • A will should not include instructions regarding jointly held property, property previously transferred to a trust, property that already designates a beneficiary, and illegal requests.
  • Some topics are enforceable when included in a will in some states but not in others, such as burial instructions and care for pets.

 

Valuable contributions to this summary of “What Is and Isn’t Included in a Will?” were made by Bob Carlson, editor of the Retirement Watch financial advisory service and chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets.

Katie Kao is an editorial intern with Eagle Financial Publications.

February 2021:

Congress Comes for your Retirement Money

A devastating new law has just been enacted, with serious consequences for anyone holding an IRA, pension, or 401(k). Fortunately, there are still steps you can take to sidestep Congress, starting with this ONE SIMPLE MOVE.
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