A last will and testament is one of the most important documents to arrange. As a legal document it allows you to control how your estate will be distributed after you pass away. It also enables you to appoint a guardian for children, as well as provide instructions and set aside assets to help care for other things such as remaining bills and pet care. What assets should be included in a will?
A will and last testament forms the foundation of an estate plan and is the key instrument used to ensure that the estate is settled in the manner desired by the deceased. While there can be more to an estate plan than just a will, it is the presiding document the probate court uses to guide the process of settling an estate.
What Is a Last Will and Testament?
A last will and testament is a legal document that communicates a person's final wishes pertaining to assets and dependents. A person's last will and testament outlines what to do with possessions, whether the deceased will leave them to another person, a group or donate them to charity, and what happens to other things that they are responsible for, such as custody of dependents and management of accounts and financial interests.
Specifically, a will and last testament instructs the court in the disposition of all assets, including who is to receive them and in what amount. It establishes guardian arrangements for surviving dependents and accounts for any special circumstances, which may include the care of a special-needs child or an aging parent.
Requirements for a Last Will and Testament
A will allows you to direct how your belongings—such as bank balances, property, or prized possessions—should be distributed. If you have a business or investments, your will can specify who will receive those assets and when. A will also allows you to direct assets to a charity (or charities) of your choice. Similarly, if you wish to leave assets to an institution or an organization, a will can assure that your wishes are carried out. Thus, a will requires one to identify those assets and property that are to be bequeathed and to whom (known as named beneficiaries).
In addition, a will often designates an executor, a trusted individual whose main duty is to carry out the will's instructions to manage the affairs and wishes of the deceased person's estate. Parents of minor children can furthermore designate a legal guardian to care for them if death is untimely.
What Assets Should Be Included In A Will?
Making a will can seem like an intimidating process, especially when addressing what should be included in the document. What assets should be included in a will? If you already have a will, remember that you should update it when your beneficiaries change, like when your child turns 18, you get divorced, or you get remarried.
- Money That Should be Used to Pay Outstanding Debts
- Real Estate, Including Your Primary House
- Stocks, Bonds, and Mutual Funds
- Business Ownership and Assets
- Guardianship of Pets and Children
- What Not to Put in a Will
Money For Outstanding Debts
Likely the most important item when addressing what assets should be included in a will is monetary assets. Funeral expenses can be burdensome to families. To relieve some of this burden, money can be directed to cover these costs, along with probate costs, and any associated medical expenses.
If there is not enough money in your estate, the beneficiary of your retirement accounts may choose to pay for your funeral with the money from your individual retirement account (IRA), Roth IRA, or 401(k).
Additionally, you may have other outstanding debts from your life. Secured loans, for instance, may pass to the person who inherits the security. Discussing distribution of money can help you better understand what can be covered with the assets you currently have.
Real Estate Arrangements
What assets should be included in a will? Real estate should be a primary consideration for distribution of assets to be carried out as instructed in the will. If you own a home or any kind of real estate, it should be clear who this property goes to when you die. Without this in place, those who inherit property can often face disputes through probate court.
This is especially true if you share your primary residence with a spouse, children, or other family members. You can also specify how the people who live in that home can divide up the ownership, if that’s your wish. If you’re still paying a mortgage on any of your property, consider how you want the asset and the mortgage to be managed. A will can clarify these points without further dispute.
Stocks, Bonds, and Mutual Funds
If you own stocks, bonds, or mutual funds outside the protection of a 401(k), IRA, or another retirement account. These can be individually allocated or pooled and divided among your beneficiaries.
Business Ownership and Assets
If you own part or all of a company, even if it’s a fairly small business or one without a large number of assets, it should be addressed to your will. You’ll want to designate who will receive your interest in the business. This will avoid confusion and allow for a smoother transition in ownership.
If you don’t want your business to continue after your death, you could indicate that the business should be dissolved, the assets liquidated, and the proceeds distributed to your heirs equally. Alternatively, if you wish a family member or loved one to inherit the business, it’s important to outline how that will happen.
You may only think of physical cash in this category. Cash also includes checking accounts, money market accounts, and regular savings accounts, as long as none of them contain a Payable on Death (POD) designee. A POD account doesn’t pass by will.
If you believe you will have assets without a designee, mention them in your will. This can help your family tremendously. Cash assets can be some of the best candidates for paying funeral expenses or other debts, since they are readily accessible.
Guardianship of Pets and Children
Consider who should receive guardianship of your pets and minor children. As you already know, pets and children are wildly different responsibilities, so you'll need to think about both carefully.
Make the people you choose are aware of all of this, too. Have a conversation before, during, and after you list them in your will.
And, don’t be afraid to make this conversation an ongoing one. If your sister-in-law’s financial situation changes down the road, she should be comfortable in telling you that she feels like she could no longer care for your pets, and you should be ready to update your will accordingly.
What Doesn’t Go in Your Will
It may seem like you should put anything and everything in your will just to be safe. But that’s not always the case. Some of your properties and assets may already have a default heir.
Here’s a list of things that you can leave out of your will:
Joint tenancy property. This is anything that’s owned by you and another person. This property, as well as other items with “right of survivorship,” has an automatic path to possession by the joint owner upon your death. The same is true of joint accounts, like savings or checking accounts.
Any property in a living trust. This shouldn’t be in your will because these will go straight to the beneficiary and skip probate. Willing them can create snags in the system, especially if you mention different beneficiaries in each document.
Life insurance. This pays to a particular person through a pre-arranged beneficiary. So instead of listing beneficiaries of your will, you can log on to your life insurance company’s website to update your preferences. These already have set beneficiaries and don’t need to be mentioned in the will. Just make sure you update your beneficiaries as often as you update your will.
Creating Yours At Wills.com
Online services at Wills.com can help you easily and efficiently create your last will and testament. With this guide, you can more easily answer what assets should be included in a will. Through our online offerings, you can save time and money without uncertainty about what is covered in the will and whether or not your requests will be carried out appropriately.
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