Many people make the mistake of assuming that they have a complete estate plan because they have a Will. While a Will is often an essential part of an estate plan, it should not be the only estate planning tool that you use. Wills cannot address certain types of assets and may not be able to leave assets to your loved ones in the way that you would like. Instead, other estate planning tools may be necessary or just might work better to accomplish your goals.
Below are just a few things that Wills cannot do that you should know as you work through creating an estate plan that is uniquely tailored to you.
- Gift life insurance proceeds or retirement plan proceeds
If you have a life insurance policy (and you generally should!), you must designate who you would like to benefit from the policy through the insurance company. If you set out that a different person should get your life insurance proceeds in your Will, it will likely be ignored. You must take steps to change the beneficiary with the policyholder if you want the proceeds to go to someone other than who you have designated.
The same rule applies to retirement plans like 401(k)s, IRA, or pension plans. You designate a beneficiary with the plan holder. Your Will cannot affect that designation.
- Set out funeral or burial instructions
Your Will is not the place to describe how you would like to be treated after you pass. You should leave instructions to your loved ones about this issue through another means. Your Will is often not read until after the funeral, which means that your loved ones may only learn of your wishes after your burial if you only include those instructions in your Will.
- Gift jointly titled assets
A Will can only convey property that you own. That means that if the property is held with someone else, you can gift just your share. However, if you own a property jointly with the right of survivorship, that property will automatically go to the other person that owns it with you.
The most common example of this is when spouses own a home together. When one spouse dies, the house will often automatically go to the other spouse without reference to the Will because they own the property jointly with the right of survivorship. There is no need to include this property in your Will, and if you try to give it to someone else, that gift will be invalidated or disregarded.
- Provide access to specific bank accounts or funds
You cannot simply leave someone a bank account or another investment fund. You can leave the beneficiary the money in that fund, but the fund itself generally cannot pass through a Will. Instead, the executor that you name will take steps to liquidate the account and provide the value of the account to your designated beneficiary.
However, if you designate the account as “payable on death” to another person, then the value of the account can pass to someone else without ever having to note anything in your Will. Nonetheless, the account itself does not pass—just the value of the assets in the account.
A Will is a valuable estate planning tool that you most people should use. However, it is just one piece of a larger package that makes up your estate plan. Learn more by contacting our team at Elder Care Law Firm. We can help you create an estate planning package that fully addresses all of your unique needs.
