Crafting a comprehensive estate plan often involves more than just drafting a will. Various tools, including trusts and payable-on-death arrangements, can help you manage your assets effectively. It’s essential to understand that these assets should generally be excluded from your will.
A will is a legally-binding document that outlines how you want your assets to be distributed after your death. However, the reach of a will is not unlimited, so certain types of assets fall outside its scope. Assets held in trusts and those that have a designated payable-on-death beneficiary are among those that bypass the probate process and aren’t controlled by a will.
Property in living trusts
Trusts, such as revocable living trusts, are popular estate planning tools because they offer a way to pass assets to beneficiaries without going through the probate process. When you place an asset in a trust, you technically no longer own that asset – the trust does. Consequently, the trust’s terms govern the disposition of those assets.
Payable on death assets
Similarly, payable-on-death assets, which may include bank accounts, retirement accounts and life insurance policies have designated beneficiaries. Upon your death, these assets are transferred directly to the beneficiaries you’ve named, bypassing the probate process and the terms of your will.
The importance of integrated estate planning
One of the key points to remember is that a well-crafted estate plan is more than a single document or strategy. It’s a collection of carefully coordinated tools designed to accomplish your goals. Each tool serves a unique purpose, and it’s essential to understand how they interact. Working with someone familiar with your wishes and the options at your disposal can help you craft a plan that meets your needs.