Having a legally-completed will allows you to say where and how you wish to distribute your assets.
To make sure it’s useful, you’ll not only need to know how to make a will, but also know what assets put in it.
Jump ahead to these sections:
- Money That Should be Used to Pay Outstanding Debts
- Real Estate, Including Your Primary House
- Stocks, Bonds, and Mutual Funds
- Business Ownership and Assets
- Other Physical Possessions
- Guardianship of Pets and Children
- What Not to Put in a Will
If you already have a will, remember that you should update it when your beneficiaries change, like when your child turns 18, you get divorced, or you get remarried.
Here are some examples of assets that you should include in your will, along with who you may consider leaving them to.
1. Money That Should be Used to Pay Outstanding Debts
his first item is perhaps one of the most important. Make it clear where the money to pay for funeral expenses, probate costs, and medical expenses comes from.
If there is not enough money in your estate, the beneficiary of your retirement accounts may choose to pay for your funeral with the money from your individual retirement account (IRA), Roth IRA, or 401(k).
You may have other outstanding debts from your life. Secured loans, for instance, may pass to the person who inherits the security. If your assets may not equal the total of your various debts, talk with a lawyer about how to make sure your descendants aren’t burdened with debt upon the closing of your estate.
2. Real Estate, Including Your Primary House
If you own a home or any kind of real estate, it should be clear who this property goes to when you die.
This is especially true if you share your primary residence with a spouse, children, or roommates. You can also specify how the people who live in that home can divide up the ownership, if that’s your wish.
If you’re still paying a mortgage on any of your property, consider how you want the asset and the mortgage to be managed. You’ll want to ask yourself this:
- Will you have enough life insurance to pay off the mortgage or pay the monthly payments for a certain amount of time?
- Is it an affordable situation given your spouse’s income?
If your answers are “no” or “not sure”, give clear solutions in your will. This can help alleviate any anxiety, debt, and confusion for your loved ones down the road.
If you own your property as joint tenants with rights of survivorship with your spouse or another person, the property automatically passes to that person on your death. In that case, you do not need to include it in your will.
3. Stocks, Bonds, and Mutual Funds
You might own stocks, bonds, or mutual funds outside the protection of a 401(k), IRA, or another retirement account. These can be individually allocated or pooled and divided among your beneficiaries.
4. Business Ownership and Assets
If you own part or all of a company, even if it’s a fairly small business or one without a large number of assets, it should be addressed to your will. Remember that companies have value and often have assets of their own.
You’ll want to designate who will receive your interest in the business. This will avoid confusion and allow for a smoother transition in ownership..
If you know a certain family member is interested in continuing your business after your death, consider bequeathing your business interest to that person. If you don’t want your business to continue after your death, you could indicate that the business should be dissolved, the assets liquidated, and the proceeds distributed to your heirs equally.
Before including your business interests in your will, check the formation documents of your business to see if they have instructions for what happens on your death. Sometimes these documents may specify that the business will be dissolved on your death, or that your interest passes to your partner or a specific person.
You may only think of physical cash in this category. Cash also includes checking accounts, money market accounts, and regular savings accounts, as long as none of them contain a Payable on Death (POD) designee. A POD account doesn’t pass by will.
If you believe you will have assets without a designee, mention them in your will. This can help your family tremendously. Cash assets can be some of the best candidates for paying funeral expenses or other debts, since they are readily accessible.
6. Other Physical Possessions
You might not want to leave all of your worldly possessions to a single person.
Evaluate which items you want to give to each person. You may think that some things are too small or not monetarily valuable, but that’s not always the case.
Remember that’s it not always about what you think is valuable — think about what other people in your life may love or want. Let’s say two of your daughters loved your antique vases, but you didn’t care for them. You might want to write down that they each get a vase to take home.
You’ll also want to remember to use both sentimental and monetary value when you consider what to put in your will.
7. Guardianship of Pets and Children
Consider who should receive guardianship of your pets and minor children. As you already know, pets and children are wildly different responsibilities, so you'll need to think about both carefully.
Make the people you choose are aware of all of this, too. Have a conversation before, during, and after you list them in your will.
And, don’t be afraid to make this conversation an ongoing one. If your sister-in-law’s financial situation changes down the road, she should be comfortable in telling you that she feels like she could no longer care for your pets, and you should be ready to update your will accordingly.
What Doesn’t Go in Your Will
It may seem like you should put anything and everything in your will just to be safe. But that’s not always the case. Some of your properties and assets may already have a default heir.
Here’s a list of things that you can leave out of your will:
Joint tenancy property. This is anything that’s owned by you and another person. This property, as well as other items with “right of survivorship,” has an automatic path to possession by the joint owner upon your death. The same is true of joint accounts, like savings or checking accounts, as long as they include the “right of survivorship” or “JTROS” designation.
Any property in a living trust. This shouldn’t be in your will because these will go straight to the beneficiary and skip probate. Willing them can create snags in the system, especially if you mention different beneficiaries in each document.
Life insurance. This pays to a particular person through a pre-arranged beneficiary. So instead of listing beneficiaries your will, you can log on to your life insurance company’s website to update your preferences.
401(k)s, 403(b)s, pensions, and IRAs. These already have set beneficiaries and don’t need to be mentioned in the will. Just make sure you update your beneficiaries as often as you update your will.
Following the typical rules of wills allows your probate process to go faster and saves your friends and family time… and lots of headaches.
Make Your Will Count
Even if you get everything right in your will, you’ll still need to make sure you complete all the final steps to make your will legal: ensure it's witnessed and contains the appropriate language to make it binding. You can even use an online will tool before you present it to an attorney.
Have a professional, such as an estate-planning attorney, look at your will and verify that it’ll hold up during the probate process. This person can also give you information on what to include in a Will and Testament based on your specific circumstances.
Disclaimer: The information posted on this site is provided solely for informational and educational purposes and is not legal advice or tax advice. Contact an appropriate professional licensed in your jurisdiction for advice specific to your legal or tax situation.