Deciding to write a will is the first step in proper estate planning. You want to cover all your material possessions and intangible assets. While many people remember to designate recipients for their home or car, there are many more assets you need to consider.
However, depending on your local regulations, not all assets in your will may go to the individuals you intended unless you plan for it correctly. For example, if you name a specific beneficiary for a retirement fund but leave it to someone else in your will, the named beneficiary will supersede the will.
Knowing how to manage assets in your will can help eliminate any confusion or conflicts when it comes time to handle your estate after your passing.
Assets to Include in Your Will
The best approach when constructing your will is to determine which assets you should include. Here is a guideline for common assets that you need to list in your will.
- Designate outstanding debts
- Allocate real estate
- Assign investments, such as stocks, bonds, and mutual funds
- Distribute business ownership and assets
- Cash and liquid assets
- Physical property
- Minor children
- Pets
Designate Outstanding Debts
Outstanding debts will need attention before your executor distributes any assets among your living relatives, friends, or beneficiaries. These debts may include funeral costs, unsecured loans, probate fees, and other items requiring funds to close your estate.
Allocate Real Estate
If you own any property, including your primary residence, it should be in your will. The only consideration for real estate assets is that you would be the sole owner. However, it should be left out if it is joint property.
You can also distinguish how to distribute your real estate assets to beneficiaries. For example, someone with many children may state that all real estate must be sold and the revenue split evenly among the heirs. Another approach is assigning an entire piece of real estate to each individual if you own multiple properties.
Assign Investments, Such as Stocks, Bonds, and Mutual Funds
Investments, such as stocks, bonds, and mutual funds, are assets that require you to allocate to one or more beneficiaries in the will. Like real estate assets, you can specify how to distribute these items to your remaining relatives, friends, or beneficiaries.
One scenario may include that your investments are distributed evenly from a collection or divided into single assets for many beneficiaries.
Distribute Business Ownership and Assets
If you own a business or have part ownership of a business, you must include this in your will. Some heirs will want to continue operating a family business, while others may liquidate the company entirely. You should consider whether a beneficiary would prefer to take over your company or if the best route is dissolving the business and splitting the proceeds.
Cash and Liquid Assets
One of the more straightforward assets to manage in a will are cash and liquid assets. These items include any bank accounts you hold. However, if these accounts have an option for a beneficiary upon death, this individual will supersede anyone you designate in the will.
Physical Property
Your physical property may seem minor, but it can add up to substantial assets after your passing. Items include vehicles, furniture, artwork, and jewelry. Additionally, some of your loved ones may have sentimental feelings about some physical property that others do not. Therefore, it would be best to consider these aspects when allocating any items to beneficiaries.
Minor Children
While you may not consider minor children an asset, they are vital parts that should be in your will. If you have young children, you should specify a guardian for them after your death. This difficult decision may be up to the court system without you stating an individual for your kids.
Pets
Not everyone thinks about their pets when managing assets in their will. However, pets can be just as important as any other asset. These dependant animals will require care upon your death. For example, you may have a child who would prefer to take care of your cat or dog rather than go to a local animal shelter.
What Assets You Do Not Include in a Will
Alternatively, some assets do not belong in a will, even though they may be of significant value. If you choose to include these items, it can significantly delay your beneficiaries receiving these assets, especially if there is contradictory information.
If you own any of these assets, do not include them in your will.
- Joint property
- Assets in a living trust
- Life insurance
- Personal pensions (RSAs), occupational and public pensions
Joint Property
Naturally, in the event of your death, any joint property that you and another individual hold will automatically go to the remaining party. These items include common real estate, joint bank accounts, or other investments. This other person immediately receives your portion and is the sole owner of the property.
Assets in a Living Trust
Anything in a living trust will go straight to the listed beneficiaries and will not require probate beforehand. If you list assets within a living trust in your will, the additional paperwork will delay the process.
Life Insurance
If you hold a life insurance policy, it should already have a named beneficiary. Therefore, it is not necessary to include this asset in your will as it can create issues with the execution of your will, especially if you list different beneficiaries.
Personal Pensions (RSAs), Occupational and Public Pensions
Naturally, a portion of your pension will go to a beneficiary upon your death. Therefore, these pension accounts should have a beneficiary listed, so they do not need to be included in the will.
In Conclusion
Knowing how to manage assets in your will can save you time and hassle now and in the future when your executor is handling your estate. In addition, this critical part of your estate planning will help make the transition easier for anyone you leave behind after your passing
