If you think your last will and testament is the one and only document you need to specify what happens to your assets when you die, you may be in for a surprise. Yes, this is an important legal document, but it could be preempted by other legal documents and laws. If you want to control where your money and belongings end up, there are some exceptions you should be aware of. Here are five major assets that fall outside a will’s purview, and some tips for getting those assets where you want them to go. This post is Part 2 of a 2-part series. Part 1 covered what a will can do; part 2 lists the things it can’t do.
A will may not cover …
- … Retirement Accounts-When it comes to 401(k)s, IRAs, and pensions, whomever you have listed as beneficiaries may end up receiving those assets anyway because you have already told your plan administrator or investment firm how you want your assets handled after your death.
- … Life Insurance Policies, like retirement accounts, beneficiaries are the people listed on your policy, not in your will. If you are divorced, it pays to update your insurance policies and other investments to be sure you don’t get tangled up in state or federal laws.
- … Bank Accounts-If your bank account is titled transfer on death (TOD), payable on death (POD), or joint tenancy with ur account’s signature card would indicate if any of these designations apply.
- … Real Estate-If two spouses own a house or other real estate jointly with right of survivorship in the event of death of one spouse, the property automatically passes to the remaining spouse. In certain states, real estate can also be transferred outside a will.
- … Trusts-If your assets are in a trust, they are not covered by your will. After you set up your trust, be sure to retitle account, change beneficiaries, or take whatever measures are necessary to be sure that each asset you want in your trust will be there.
Tips for naming beneficiaries:
- Fill out forms completely and accurately.
- Be precise in your use of words and terminology.
- Review your paperwork regularly, and keep it up to date.
- Be sure you name people or your trust (and not your estate) as beneficiaries.
- When in doubt, get help from a financial professional.
(For more information about wills, beneficiaries, investments, and leaving your assets to family and friends, see AARP BULLETIN, September 2021 edition.)