Most people agree that it’s important to have a will, but not everyone understands that wills can’t do everything. Yes, they can address many estate planning issues, but certainly not all of them. If you are planning on drafting a will, just know that it has limits. There are certain things that you cannot accomplish with one, which we’ll explain below.
A Will Cannot Leave All Property
There are certain types of property that cannot be left behind in a will, including:
- Property that is owned jointly with someone else, such as “community property with right of survivorship” that is jointly owned with a spouse.
- Life insurance policies with beneficiary designations.
- Property that has been transferred to a living trust.
- Funds that are in a retirement account, such as an IRA or 401(k), or a pension with beneficiary designations.
- Stocks and bonds with transfer-on-death (TOD) beneficiaries.
- Money held in payable-on-death bank accounts.
Other Things Wills Cannot Do
Wills cannot leave funeral instructions. After all, they’re often not found until days or weeks after someone’s death. By then, it’s too late for loved ones who have to make quick decisions about memorial services and funerals. Our advice is to create a separate document that clearly explains your wishes and either give it to the executor, or tell him or her where to find it when the day does come.
Wills also cannot:
- Reduce taxes. If you wish to reduce federal estate taxes (only applies to very large estates), contact our firm to learn how to reduce your estate’s tax liability.
- Avoid probate. Wills have to be probated, so any property left behind in a will can be tied up for months before the beneficiaries will inherit it. If you wish to avoid probate, we can help you explore your options.
- Allow people to arrange long-term care for beneficiaries who have special needs. If you wish to do this, a will isn’t the place, but a Special Needs Trust is.
- Provide money for pets, but you can leave your pet to someone who will give your pet a good home, and you can leave that person money for pet-related expenses.
To learn more about wills and the other estate planning tools at your disposal, contact Nguyen Law Group to meet with a Rancho Cucamonga estate planning attorney.