It is important to live life with a present mindset. However, it is also important to be prepared for the future in case an unexpected event leads to sudden death. By creating a last will and testament, also called a living will, you will lift a great weight off of your shoulders knowing that your assets, health care, and property are taken care of. Hiring a power of attorney will ensure that your concerns are addressed in a professional and experienced manner. Nonetheless, it is best to come into the office with background knowledge of a will’s significance and what should not be included when drafting your will.
Types of Property You Can’t Include When Drafting a Will
Certain types of property follow rules that are independent of a will. This usually occurs when the property’s purpose is to name a beneficiary or avoid probate in court.
- Joint Tenancy Property: According to the law, the right of survivorship is granted to the person you shared any amount of property with, legally known as a joint tenant, upon death. Regardless of the indication in your will, your share of the property is instantly inherited by the surviving joint tenant without any necessary probation. Then, property specified in your will is distributed to those as listed.
- Property in a Living Trust: To avoid probate on a will, it is essential that you set up a living trust in advance. A probate is the legal process that ensures a will is valid. A court appoints an executor named in the will to carry out the probate. You cannot assign property to someone that is already listed in a living trust. The beneficiaries listed in the living trust will override those in the will and are managed by a trustee. However, if you wish to change the beneficiaries initially listed in the living trust, it is possible to do so with a trust form and the required documents (not including your will).
- Life Insurance Proceeds that have a Beneficiary: Similar to a living trust, the asset holder’s proceeds do not follow will specifications. Instead, the insurance proceeds are delegated to the beneficiary.
- Retirement plan proceeds, including money from a pension, IRA, or 401(k): These proceeds also follow their own guidelines. Each form will include a section for you to specify your claimed beneficiary.
- Stocks and bonds held in beneficiary: Once again, the assets held here are assigned to your listed beneficiary. A will does not assign these assets to a beneficiary. Rather, if you choose to delegate/change the named beneficiary, you should speak to your brokerage company.
- Proceeds from a payable-on-death bank account: Similar to retirement plan proceeds, the forms for this asset include a section in which you are asked to name a beneficiary. If you wish to change the listed beneficiary, you must fill out another form at your bank.
Do Not Leave Funeral Instructions
A funeral is the first matter that family members tend to after a death. During these sorrowful times, family members accidentally overlook or simply do not know that funeral wishes were stated in the deceased person’s will. Only after the funeral, when estate settlements and probate proceedings occur, do they sit down and look over the will to discover that funeral instructions were left. To avoid this possibility, it is best advised that you verbally communicate any specific funeral wishes to your loved ones. You may also write a separate document that communicates your wishes and give it to your executor.
Avoid Using a Will To Escape Taxes
A will falls under the estate tax category, so you cannot avoid them. Instead, you should research different trusts by reading their descriptions and choose the one that best suits your economic and social interests. Accordingly, trusts avoid many taxes because the property is delegated to a trust account, rather than your beneficiary.
Be Careful With The Conditions You Put on Gifts
To ensure that the conditions you list in your will are legal, avoid listing a requirement of marriage, divorce, or change of religion. A court will not enforce these provisions. Instead, you can list “softer” conditions that encourage someone to do something. For example, you can write “X amount to David when he graduates from law school.” Most importantly, when you list these conditions, you should always consider the complications they involve. You need to think about who will enforce these conditions and whether you are willing to pay the person that executes this condition.
Avoid Leaving Gifts or Money for Illegal Purposes
On the other hand, do not list conditions that involve illegal practices because it will then revoke the legality of your will. For example, do not write “ X amount to Catherine, as long as she uses it to buy 100 lottery tickets on her 17th birthday.”
Do Not Arrange Care for a Special Needs Person When Drafting a Will
Although you may be inclined to arrange care for a special needs person in your family, a will is not the appropriate document to assign to this commitment. Instead, a special needs trust addresses this concern.
Avoid Leaving Gifts to Pets in a Will
While you may have a loving attachment to your pets, your pets cannot own property. Therefore, you cannot assign them as beneficiaries in your will. Instead, New York has a Pet Trust Statute. Under this trust statute, you have the opportunity to specify an amount of money you wish to leave this person for your pet’s basic needs.
To ensure a smooth process free of errors, it is best to hire an attorney with experience in drafting wills. For further Estate Planning information, please contact the Law Office of Inna Fershteyn at (718) 333-2394 to best prepare for your future through will drafting, power of attorney, health care proxy, and living will documentation.