Does a Will Cover Everything I Own
No. Generally speaking, your will affects only those assets which are in your name alone at your death. Some assets which are not affected by your will include:
LIFE INSURANCE:
The cash proceeds from an insurance policy on your life are paid to whomever you have designated as beneficiary of the policy in a form filed with the insurance company -- no matter who the beneficiaries under your will may be.
RETIREMENT PLANS:
Assets held in retirement plans, such as a 401 (k) or an IRA, are transferred to whomever you have named as beneficiary in the plan documents.
ASSETS OWNED AS A JOINT TENANT:
Assets such as real estate, automobiles, bank accounts and other property held in joint tenancy will pass to the surviving joint tenant upon your death, not in accordance with any directions in your will.
"TRANSFER ON DEATH" OR "PAY ON DEATH":
Some bank accounts and security accounts may be held with a beneficiary designation such as "transfer on death" ("TOD"). Other assets, such as U.S. savings bonds, may be held in a form directing those assets to be "paid on death" ("POD") to a named beneficiary. These assets will pass pursuant to those directions, and not pursuant to your will.
LIVING TRUSTS:
Assets held in a revocable living trust at your death are distributed pursuant to the provisions of that trust document. A living trust allows for the management of your assets during your lifetime and the transfer of those assets pursuant to the terms of the trust without a court-supervised probate proceeding. The State Bar has published a pamphlet entitled "Do I Need a Living Trust?" which provides more detailed information about living trusts. You may obtain a free copy of the pamphlet by sending a stamped, self-addressed envelope with your request to the address listed below.
YOUR SPOUSE'S HALF OF COMMUNITY PROPERTY:
In California, any assets acquired by you and your spouse from earnings during your marriage are community property. You and your spouse own equal shares of those assets. Your will, therefore, affects only your half of the community property, not your spouse's. Assets that either spouse owned at the date of the marriage, together with gifts and inheritances given to just one spouse during the marriage, are that spouse's separate property. Your will affects all of your separate property held in your name alone.
Even if your entire estate consists of property held in joint tenancy, a life insurance policy and a retirement plan, you should still consider making a will. If the other joint tenant dies before you do, then the property held in joint tenancy will be in your name alone and subject to your will. If named beneficiaries die before you do, the assets subject to a beneficiary designation may be payable to your estate. You may unexpectedly be entitled to a bonus, a prize, a refund, or may receive an unexpected inheritance which would then be subject to your will as well. If you have minor children, the nomination of a guardian of their person and estate is a very important reason for making a will
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New Mexico Wills & Trusts Lawyer Now!
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