When it comes to estate planning, deciding which assets to keep out of your will can be just as important as determining what to include. Certain assets are better suited for alternative methods of transfer, which can help streamline the probate process and potentially reduce taxes and fees.
Here are some assets you may consider keeping out of your will:
Retirement accounts
Retirement accounts such as IRAs or 401(k)s should generally have designated beneficiaries. These accounts pass directly to the named beneficiaries outside of probate, allowing for a smoother transfer and potential tax advantages.
Life insurance policies
Like retirement accounts, life insurance policies have a designated beneficiary. By keeping your life insurance policy out of your will, the policy can bypass probate, and the money can reach the intended recipient more quickly.
Jointly owned property
If you own property such as a house or bank account jointly with someone who has right of survivorship, it automatically passes to the surviving co-owner(s) upon your death. Therefore, including it in your will is unnecessary.
Payable-on-death (POD) and transfer-on-death (TOD) accounts
With this type of account, you can name specific beneficiaries who will inherit the assets upon death. They are typically used for bank accounts, investments and brokerage accounts.
Living trust assets
Assets placed in a revocable living trust avoid probate, since the trust becomes the legal owner upon death. By transferring assets like real estate, stocks or business interests into a trust, you can provide for their distribution outside of the will.
Specific gifts
Instead of including all personal property in your will, consider gifting loved ones with sentimental items, valuable collections or family heirlooms while you’re still alive. This allows for a more targeted distribution and can help avoid disputes among family members.
Remember, estate planning can be complex, and it’s essential to have experienced legal guidance. This can help you assess your situation, outline the most appropriate strategies and help ensure that your wishes are accurately documented. Knowing your legal rights and options will help you in this situation.
