At this point, you likely have a pretty good understanding of why having an estate plan is so valuable. Maybe you even have a good idea of what the process of creating a Will looks like. However, you’ll likely run into some questions when you first start putting theory into practice.
One such question might be whether or not you should include all of your property in your Will. You might be astonished to find out that the answer is no, and that there are cases in which you should and shouldn’t include certain items. Keep reading and you might be surprised at what you find out.
What You Should Put in Your Will
Your Last Will and Testament is a useful tool that allows you to declare what should happen to your estate after you pass away. Most people use Wills to designate which of their possessions should go to whom, typically the loved ones in their family.
For example, let’s say that you own a grand piano, and you noticed that your niece has shown an interest in it. If you were to pass away, you’d like for her to have it. This is something that you can definitely include in your Will.
Here are the items that you absolutely can and should include in your Will:
Your basic personal information
Legal language that declares testamentary intent
Your appointed executor
Your appointed guardian for any pets or minor children
A list of your property and named beneficiaries (with certain exceptions)
If you’d like to spend more time educating yourself before moving on, we recommend checking out our Will preparation checklist. This is where you’ll find out how to prepare your will, and a helpful checklist with everything that should be included.
In the list above, we mentioned that you should include property in your Will, but that there are certain exceptions. This leads us to the next discussion: what you should never put in your Will.
What You Should Never Put in Your Will
Just like there are some items you always want to include in a Will, there are some things that you definitely shouldn’t include. Although you’ll want to make sure that every aspect of your legacy is accounted for, you also want to be careful to avoid creating any legal conflict within your estate plan.
Here are some items that you should never put in your Will:
Business interests
Personal wishes and desires
Coverage for a beneficiary with special needs
Anything you don't want going through probate
Certain types of property
Business interests
Although you can give away your business interests in your Will, there are compelling reasons not to. First, Wills must go through the probate process which eats up a lot of time. A smooth and uninterrupted transition is usually desired when it comes to business, and you certainly won’t want your succession to be up for contestation. To avoid a faulty start, consult with an attorney to find a better way to arrange for the succession of your business.
Personal wishes and desires
If you have any specific desires for your funeral or other type of final arrangement, some will argue that it’s best not to include it in your Will. This is because your Will goes through the probate and court settlement process, which often happens after when the funeral would take place. Although you can include these instructions in your Will, we strongly recommend providing your family members with a letter of instruction, which is an informal document that can be used to relay your personal wishes and desires before you pass away.
Coverage for a beneficiary with special needs
If you have a blended family or a child with special needs, a Will isn’t always the best option to make arrangements. For starters, bequeathing your estate to a beneficiary might jeopardize their qualification for government benefits. It’s strongly suggested that you set up a Special Needs Trust, through which you can make arrangements to support your loved one without jeopardizing their government aid.
Anything you don’t want going through probate
As we mentioned earlier, your Last Will and Testament will be subject to probate proceedings. Probate court can take months, but it is much better than not having a Will at all. The latter scenario is called “intestate,” which leaves it up to the courts to decide how to pay off debts and divide your assets. Leaving a Will with specific, lawful instructions helps speed things up. However, those who prefer to avoid probate altogether tend to transfer property into a trust fund. (Learn more about the difference between a Will and a Trust here.)
Certain types of property
Last but not least, there are specific types of property you’ll typically want to omit from your Will and include in your estate plan in other ways. Since this is a dynamic topic, we dive deeper in the next section.
Types of Property You Can't Include When Making a Will
When it comes to property, it’s easy to make the assumption that you should include anything and everything in your Will. After all, you’ve spent your whole life building a legacy and you likely want to make sure everything is accounted for and properly passed on to your loved ones.
However, there are certain cases in which leaving out property will actually benefit your loved ones even more. This isn’t to say that certain property should be left out of your estate plan entirely. You can make special arrangements to pass on property without including them in your Will. Here are specific examples the help explain this concept:
Property held within a Trust
Property with beneficiary designations
Jointly-owned property
Property you want to leave to a pet
Gifts with conditions and special instructions
Property held within a Trust
A Trust is a separate fiduciary agreement that is not subject to probate and can be used to distribute your assets. As we discussed before, a Will does not escape the probate process. However, a Trust does. Because of this, many individuals prefer to place almost all of their property into a Trust. To avoid creating any conflicts of interest, avoid listing any property already held in a Trust in your Will.
Property with beneficiary designations
There are several types of assets and accounts that are payable to a beneficiary upon death. This is called a beneficiary designation, and is often associated with bank accounts (a totten trust), investment accounts, and life insurance policies. This is another instance when there’s nothing stopping you from listing out these types of accounts in your Will, but it may be best not to. This is because the financial entity requires that you name a beneficiary on the account itself. When you pass away, that account will be paid out to the designated beneficiary associated with the account, regardless of what your estate plan says. If you accidentally bequeath the property to a different beneficiary in your Will, you could inadvertently create a lot of conflict. Instead, it’s best to include your beneficiary designation in your informal letter of instruction so that your family members are made aware of the accounts.
Jointly-owned property
Any property that you own jointly with another family member, such as a home with your spouse, or an investment with a sibling, can be left out of your Will. When you pass away, the property will pass directly to your co-owner. If you’re planning your estate, it will be helpful to find out whether or not you live in a community property state. In these states, property that you owned during marriage is split equally with your spouse. In the case of death, everything automatically goes to your surviving spouse. If this applies to you, you can leave out any community property out of your Will.
Property you want to leave to a pet
If you want to leave your pet some money and other belongings, you can certainly do so. However, pets do not have any legal claim to property. Instead of leaving a gift to Fido in your Will, it’s best to name a guardian. Then, you can arrange for property to go to the guardian in the case of your death so that they can care for your pet.
Gifts with conditions and special instructions
You are probably getting the idea by now that a Will is not always the most appropriate document for bequeathing everything in your estate. It’s a great tool for simple, one-time transactions. If you have any property you want to leave with conditions and special instructions, you are better off adding a Trust to your estate plan. You can also relay your personal sentiments in a letter of instruction to help inform your family of your wishes. Note that these letters are informal and not legally-binding. They should be used in tandem with your Trust and Will.
How to Leave Real Estate in a Will
After all is said and done, there may be cases in which you choose to leave property in a Will, namely real estate. By leaving real property in your Will, you can be sure to provide clarity for your family and help resolve any conflicts stemming from ambiguity.
Remember that any property included in a Will passes through probate. Although some individuals might prefer to avoid probate and place property in a trust instead, others might opt for probate. This is because setting up a Trust can sometimes be more complicated and expensive relative to a Will, and also requires retitling your home and home insurance.
If you choose to bequeath real estate in your will, here is the information you’ll need to include:
The full legal name of your beneficiary (your heir)
Your intent to bequeath your property to your heir
The full address of the property
Legal description of the property found on the deed
By allowing your house to go through probate, you can rest assured that it will be passed on to your heir legally per your Will instructions.
Create Your Will Today
The purpose of this article was not to challenge the efficacy of a Will. At Trust & Will, we have a vision in which absolutely everyone has at least a basic Will in place. With that being said, however, there is a time and a place in which a Will should be used. There are certain exceptions in which some items should be left out of the Will entirely. The most common scenarios are assets that already have a beneficiary designation outside of the Will, and property that are placed into a family Trust.
We know that your objective is to make sure all of your property and assets are accounted for, so that you can make sure to properly pass on your legacy to your loved ones. One strategy is making an exhaustive list of your property and assets. Then, go down the list and decide how you want each item distributed, and how. Make sure to add an asterisk for any assets that already have a beneficiary designation. In the final stage, you should have a clear vision for what should be included in your Will, and what should be placed in a Trust.
Last but not least, we highly recommend consulting a professional. At Trust & Will, we make the process of planning your estate easy! We will ask you a simple set of questions to help you understand what to include in your Will, and whether or not you should also set up a Trust. By using our services, you won’t be left with any doubts about how your assets will be distributed. Creating a will through our platform is easy!
Is there a question here we didn’t answer? Reach out to us today or Chat with a live member support representative!
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