Many of us know the importance of having a will as part of a comprehensive estate plan. After all, a will is a legally binding document that states who will receive your property after you pass away. Without one, the state gets to decide how to distribute your assets, which may go against your wishes. However, while a will is undoubtedly a crucial tool, it's also important to understand what it can't do. Let's dive in and explore the limitations of a will.

What a Will Can't Cover

Although a will is a primary way to transfer property upon death, there are several types of property and situations it doesn't cover:

• Property held in trust: If you have assets in a trust, those will be distributed to the named beneficiaries according to the trust terms, not your will.
  
  
• Pay on death (POD) accounts: With POD accounts, the assets automatically pass to the named beneficiary upon the owner's death.
  
  
• Life insurance policies: Life insurance benefits go directly to the named beneficiaries, regardless of what your will says.
  
  
• Jointly held property: If you co-own property with someone else as joint tenants, your ownership interest ceases to exist upon your death. The other joint tenant becomes the full owner.
  
  
• Retirement plans: Similar to life insurance, money in an IRA or 401(k) passes to the named beneficiaries. Keep in mind that a surviving spouse is usually the automatic beneficiary of a 401(k) under federal law, with some exceptions.
  
  
• Transfer on death investment accounts: Certain accounts holding stocks and bonds will transfer directly to the named beneficiaries upon death.

Probate Is Still Necessary

One thing a will can't help you avoid is probate. In order for your beneficiaries to inherit the property, your will must go through the probate process. This can take months and involves various expenses like attorney, executor, and court fees. Additionally, your will becomes part of the public record that anyone can access, along with details about your property and beneficiaries.

Providing for Pets and Children with Special Needs

If you want to ensure your pets are cared for after you're gone, you can't simply leave money or property to them in your will. Legally, animals can't inherit. Instead, you can leave money to a trusted person who agrees to take care of your pets. Alternatively, setting up a pet trust or protection agreement can provide for your pet's care.

Similarly, if you have a child with special needs or one who receives government benefits, it's best to create a special needs trust to provide for their care. This way, the trust can hold money for your child without affecting their eligibility for benefits.

Keep Funeral Instructions Separate

Avoid including funeral instructions in your will. Often, the funeral may take place before anyone finds and reads your will, which can take days or even weeks. If you have specific wishes for your funeral or memorial service, it's best to pre-plan with a funeral home and leave written instructions with your family.

The Bottom Line

While a will is a vital part of your estate plan, it's important to understand its limitations. By setting up trusts, pay-on-death accounts, and naming beneficiaries on accounts that allow it, you can address some of these limitations. Your will is a crucial piece of the puzzle, but it can't do everything.

If you have questions about the pros and cons of having a will or want to explore other estate planning options, contact Rochester Elder Law to schedule a consultation with one of our experienced estate planning attorneys. We can help you create a comprehensive plan that ensures your wishes are carried out and your loved ones are taken care of.