A will is one of the most basic estate planning tools. It’s used to decide how you want your assets distributed to your surviving loved ones after you pass. If you die without a will, the state law will take over distributing your assets, which may or may not line up with your final wishes. That said, not all assets can be included in a will.
Clients often try to add certain types of assets to their final will and testament that cannot be passed down in such a document. Many are not corrected by their estate planning attorneys or try to add them through a handwritten will.
We at Pike Law want our clients to be as informed as possible, so we’re here to break down what can and can’t be put into a will. Certain types of assets have to be handled differently. We’re available for consultation to answer your questions and help you with your estate planning.
What is an Asset?
Before we dive into the specific types of assets that cannot be passed down through a will, it’s important to have a basic understanding of estate planning assets.
Estate planning assets are any type of property or financial account that you own at the time of your death. These can include:
- Real estate
- Bank accounts
- Investments
- Retirement plans
- Life insurance policies
- Personal possessions such as jewelry and artwork
An important thing to know is that if you are married, and your spouse survives you and lives to hear your will read, most assets you own will go to them regardless of what your will says. Your will, therefore, becomes a suggestion to your spouse since, legally speaking, you share nearly everything. The only exceptions are assets you co-owned with someone besides your spouse, or if your spouse agreed to something else in a prenuptial or postnuptial agreement.
If you do not have a will and you are not survived by a spouse, Pennsylvania has a process for separating your estate planning assets. The odds are that they will not split your assets how you want them to. They are also liable to subject the assets to more taxes, so it’s better to have an official will with all of your wishes recorded. If you want to pass assets down to someone other than your spouse, you should consider a trust.
Types of Assets That Cannot Be Passed Down Through a Will
While many types of estate planning assets can be distributed through a will, certain assets cannot be passed down in this way. These include:
- Jointly owned property: If you own property with someone other than your spouse – as joint tenants or tenants by the entirety – your ownership automatically passes to the surviving owner upon your death. It cannot be included in your will.
- Assets held in a trust: A trust is a legal entity that holds assets on behalf of a beneficiary. They act as another person or group that you have given your assets to, allowing you to pass down assets that would not pass to your preferred beneficiaries with only a will. Trusts can also be used for beneficiaries to utilize while you’re alive if you choose. If you have a revocable living trust, the assets held within it will pass directly to your designated beneficiaries without going through the probate process. Probate is the court-supervised process of distributing assets after someone passes away.
- Retirement accounts: Retirement accounts such as 401(k)s and IRAs cannot be passed down through a will. Instead, you must name a beneficiary for these accounts and the assets will be passed to them upon your death. Whether or not you can move assets in your retirement accounts to a trust or personal account and into a will depends on the type of retirement accounts you have.
- Life insurance policies: Similar to retirement accounts, life insurance policies require you to designate a beneficiary. They cannot be included in your will.
- Funeral and burial arrangements: While you can express your wishes for your funeral and burial in your will, these instructions are not legally binding. You can create trusts that are only distributed to beneficiaries if they adhere to your preferred funeral arrangements. Regardless, it is important to discuss these arrangements with loved ones and our estate planning lawyer and have them included in a separate document.
Added Note About Pets
Pets may be living things, but they are still property. While you cannot leave them anything in your will, you can add them as an asset to your will. This is a common thing that people think they can’t put in their will when they can.
You can make arrangements for their care and custody in a separate trust, but ultimately, they must become someone else’s property.
For example, you can list your sister as a beneficiary in your will and name your pet as what they will receive. It helps to be incredibly specific in this regard, so you might want to mention your pet’s name and breed and use your sister’s full legal name.
How to Handle Assets That Cannot Be Passed Down Through a Will
If you have assets that cannot be passed down through a will, it’s important to have alternative plans in place. This may include creating a trust, naming beneficiaries for retirement accounts and life insurance policies, and having separate documents for funeral and burial arrangements, digital assets, and pets. It’s also important to work with our estate planning attorney and regularly review/update these plans as your life circumstances change.
Contact Estate Planning Attorney John B. Pike For Help
It’s crucial to have a thorough understanding of the types of assets that cannot be passed down through a will and to properly plan for their distribution after your passing. As always, we recommend consulting with our estate planning lawyer, John B. Pike, to ensure all of your assets are taken care of according to your wishes. Contact us today to schedule a consultation.
