A will is a crucial estate planning tool that speaks for you when you are no longer around. It outlines your wishes with respect to how you want your assets to be distributed when you pass on. If you die intestate, the state law will determine what happens to your estate.
However, not all assets belong in the will. To ensure that your will is valid, it is important to know the assets you should include in it as well as those that you should omit.
Here are three assets that you may not include in your will:
Assets with survivorship rights
Community or jointly held property or tenancy cannot be included in the will. This is because the ownership of such property automatically passes on to the co-owner upon your death. Thus, mentioning them in your will cannot change anything unless all the co-owners die at the same time, such as in an accident.
Assets that are held in living trusts
A living trust is specifically put in place to ensure asset transfer upon the grantor’s demise. The goal is to bypass the long and costly probate process. As such, beneficiaries of the living trust are automatically entitled to the assets in the trust upon the grantor’s demise.
Assets that have named beneficiaries on them
Certain assets are usually directly transferable to the designated beneficiaries upon death. This makes including such assets in the will unnecessary. However, you can accompany these assets with letters of instruction. Assets that you can directly designate to beneficiaries include:
- Investment or brokerage accounts
- Bank accounts
- Life insurance policies
- Retirement accounts
Assets you do not own
For obvious reasons, you cannot include assets like hired vehicles, rented properties and hire purchase items in your will.
The importance of having a will in your estate plan cannot be overstated. However, it is important to be sure that you include the right assets in your will.