There are many types of property that should not be included in your will, property that you may not realize is, or should automatically be earmarked for distribution upon your death.
- Jointly held property: A house or a bank account that is in joint names with another person will pass to the survivor automatically upon your death. Such joint property has what is called a right of survivorship, that is, it passes to the survivor. Nothing you say in your will can change that.
- Property held in a living trust: A living trust is specifically set up to facilitate the transfer of property upon the grantor’s death and to avoid probate. Therefore, the beneficiaries of a living trust automatically receive the property held by the trust upon the grantor’s death. You can always change the terms of a revocable trust during your lifetime by amending the trust documents, but you cannot do so through a will.
- Life Insurance: You should always name a specific beneficiary for your life insurance who will receive the proceeds upon your death. There is no need to mention it in your will, because life insurance is a private contract with the life insurance carrier, and the carrier will pay out the death benefit to your named beneficiary regardless of what your will says. If you fail to name a beneficiary of your life insurance, or name your estate as your beneficiary, then the death benefit will be tied up with the probate of your will, rather than be paid quickly to your beneficiary.
- Proceeds from IRA, 401k or other retirement plans: As with life insurance, you should always name a specific beneficiary for your retirement accounts, again so there is no need to mention it in your will, or tie up those accounts in probate.
- Pay on Death (POD) or Transfer on Death (TOD) accounts: POD or TOD accounts or investments are paid or transferred automatically to the named beneficiary.