A will can give peace of mind by determining how your assets will be distributed after you die. However, there are limits on what property a will can cover. Assets that cannot be subject to a will include:
Property held in joint tenancy with right of survivorship. This generally affects married couples, but anyone can acquire and own property jointly. A right of survivorship means that if one co-owner dies, the other automatically takes over the other's share.
Pensions, retirement, life insurance, and other accounts that have right of survivorship and/or named beneficiaries. These accounts already have beneficiary provisions that a will cannot override. Transfer of ownership would be effective immediately at death and before a will goes through probate.
Assets held in trust. While a will can set aside assets to create a trust, it cannot affect property already held in trust for a named beneficiary.
The common thread in these instruments is the named beneficiary. In short, a will only can dispose of assets whose ownership would be in question upon death of the testator. Any will provision that tries to change named beneficiaries for established trusts or payable-on-death accounts is automatically invalid. Furthermore, payable-on-death and right-of-survivorship assets are not subject to estate taxes.
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