Estate Planning…What Do Wills NOT Do
As discussed in previous blogs, it’s important to have a will and estate plan in place. But though there are many advantages to creating a will, there are some things a will simply can’t do. A will is the perfect document for parents with minor children to use to designate a guardian for their children, minimizing court intervention and honoring their wishes. A will is also the right estate planning document to use to designate an executor for your estate. You can also, through a will, choose to provide for specific persons who would not otherwise be provided for under Virginia state intestacy laws, such as friends, godchildren or stepchildren. There is no doubt that you need a will, however you also need to understand the limitations of a will. For this reason, it is always advisable to meet and discuss your needs and wishes with a knowledgeable and experienced Virginia estate planning attorney who can help you determine which estate documents you need for your specific situation.
Here’s what a will cannot do:
- A will cannot help you avoid federal estate taxes, although some kinds of trusts can reduce or postpone tax liability.
- If you hold property with another person through joint tenancy, tenancy by the entirety or community property with right of survivorship, your will cannot change the beneficiaries of such properties.
- A will cannot help you avoid probate, although any property you have transferred to a living trust will not go through the probate process.
- If you have life insurance for which you have named a specific beneficiary, then you cannot designate a different beneficiary, or any beneficiary of that account, in your will.
- Any money you have saved in a retirement account, IRA, 401(k) plan for which you’ve named a beneficiary does not go through your will.
- Some stocks and bonds held with a transfer-upon-death designation will not go through your will.
- If you have a payable-upon-death bank account, it will not go directly to beneficiaries and not through your will.
- You cannot leave a gift in your will which is contingent on the marriage, divorce, or change of religion of a beneficiary.
- You cannot leave money in your will for an illegal purpose.
- You cannot provide long-term care for a loved one in your will. Trusts can provide long-term care for loved ones, in particular, special needs trusts can provide for loved ones suffering from incapacity or disability.
- You can’t leave money to your pets in your will. However, you can leave your pet to a person who has agreed to provide a good home for said pet, and leave that person money to assist in paying for any expenses related to the pet. Through use of a trust you can establish ongoing care for any of your pets.