A will is a cornerstone of estate planning – it not only distributes your assets to named beneficiaries, but it also names an Executor to your estate and names a Guardian for minor children. But there are several items that do not transfer by will, and these include:
1. Joint Tenancy Property: Any property, such as real estate, that is co-owned in joint tenancy with rights of surviviorship is not transferred to a beneficiary within a will. Married couples often own their homes in joint tenancy, which means when one spouse dies, the surviving spouse automatically owns the residence. While it may be necessary to change the deed on a home to reflect the death of one of the joint tenants, this is not done by will.
2. Investments: Investments such as stocks, bonds and retirement plans that have named beneficiary forms attached to the property will transfer to the named beneficiary upon the owner’s passing. If you wish to change a named beneficiary, the form is normally completed to update beneficiary forms, and a will is not involved in any of these transfers.
3. Pay on Death Accounts: Funds from a bank account that are termed “payable upon death” do not transfer with a will. Beneficiaries can be changed by filling out a form at the bank, but not through a will. In fact, nearly all accounts with a beneficiary form are not normally addressed within a will.
4. Living Trust Property: The transfer of trust property is addressed within trust documents.
5. Proceeds of a Life Insurance Policy: A life insurance policy names a beneficiary, and unless the beneficiary is your estate, the will does not transfer the proceeds of life insurance policies.
Estate planning is taking a holistic approach to individual components, such as life insurance, retirement plans, wills and trusts, to ensure they work together to meet the needs and goals of your family while easing the burden of your passing on your loved ones.
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