Online legal document services have become very popular over the last couple decades. People are using these template services to generate their written will, durable power of attorney, living will, healthcare directive, and more. While these services can be helpful for simple wills, many times they are my best referral sources. That’s mainly due to some common will drafting mistakes..
We also see a lot of mistakes with handwritten wills. Commonly called “holographic wills,” these are more prevalent than you would think. But even though they’re handwritten, they still must comply with state rules. They must be executed in a specific way with a certain number of witnesses. They have to be notarized just like a typed will. Regardless of how you generate your written will, there are some things that don’t need to be in there!
Things That Shouldn’t Be in Your Written Will
1. Funeral Arrangements
It’s never good idea to put your funeral arrangements in your written will, but we see this scenario happen all the time. A family member passes and they’re buried. The family then gets the safety-deposit box opened and finds the written will inside. The will may contain burial wishes, but it’s too late.
The best solution here is to prepay your funeral arrangements and make your wishes known to family. Once you’ve prepaid and made your wishes known, everyone is aware of the plan. I’m a big fan of prepaying funeral expenses because it takes a significant burden off your family during a trying time.
2. Organ Donation
I’m a big proponent of organ donation because it saves lives. But your desire to donate organs shouldn’t be in your written will for the same reason your funeral arrangements shouldn’t be in your written will. Once you’ve passed, you may be buried before your will is found and read. Then it would be too late for your organs to be donated or your body to be used for science.
The best solution here is to register as an organ donor through the Office of Motor Vehicles in your state. In most states they’ll put your organ donor status on your drivers license. I also like to put that information in the Advanced Directive for Healthcare. Either way, make your organ donor wishes known to your family and healthcare providers. Communication is very important here.
3. Retirement Plan Beneficiary Designations
Beneficiary designations for your 401k or IRA are on file with the plan administrator. Those designations shouldn’t be in your written will. The beneficiary designation should be in a contract with the plan administrator, and your will can’t override that designation. If you don’t have any listed beneficiaries under your 401k or IRA plan, then the default rules of the plan itself will apply.
Never name your estate as the beneficiary of your retirement plan. This will cause your heirs to pay a significant amount of income taxes, and nobody wants that. If you have been divorced, make sure the beneficiary on file is your current spouse and not an ex-spouse. If your ex-spouse is listed as the beneficiary, that’s who will get those funds.
4. End of Life Decisions
Instead of putting end of life decisions in your written will, put them in your Advanced Directive for Healthcare. This is for the same reason you don’t want your funeral arrangements or organ donor status in your will. If you’re in a hospital and being kept alive by artificial means, your family needs to know about your wishes right then. If it’s in your written will, they may not know about those wishes.
5. A Trust to Avoid Probate
To avoid probate, a trust needs to be funded during your lifetime. That’s the number one reason we see that revocable trusts don’t work. You have to fund them during your lifetime! If you don’t, your family will still have to go through the probate process.
Make sure your checking and savings accounts are in your trust. Also check any brokerage accounts to make sure they’re in the trust. Do not put your IRA or 401k in a trust. But you do need to make sure any real estate you own is in the trust.
I have clients in Florida that have two houses in different states. We recently discovered — after amending their trust from another attorney — that neither one of their parcels of real estate are in their trust. Now we’re having to do some deeds to transfer the property in there so the trust can work for them.
6. Designation of Properties Held by a Company
Maybe you have an LLC or partnership where rental properties are held. If those properties are held by the partnership or LLC, you can’t designate heirs for those properties in your written will. They are separate entities because they belong to the LLC or partnership.
The LLC operating agreement or partnership agreement will control the disposition of those properties upon your death. There needs to be some kind of mechanism for the LLC or partnership to distribute those properties to your estate or trust. Then you can have your trust or estate distribute the assets to your heirs.
7. Specific Reasons for Bequest
Don’t include reasons for leaving certain items or property to your heirs. Those reasons don’t need to be stated and often times just cause pain and confusion. Your heirs will be in an emotional state after you pass. Don’t make it worse by adding reasons in there.
8. Life Insurance Policies or Annuities
Just like beneficiary designations for an IRA or 401k, life insurance or annuity designations don’t need to be in your written will. Those designations are held with the company that has the policy or the annuity. You don’t want your life insurance payout or annuity paid to your estate because that creates income tax problems. Much like we discussed with retirement plans, make sure your beneficiary designations for life insurance are updated. If you’ve been married multiple times, make sure your current spouse is the beneficiary.
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