Cortes Law Firm, Estate Planning, Probate, Trust Administration
Do not put these SEVEN things in your last will and testament for Probate
Seven things not to put into your last will and testament the number. One thing not to put in your last will and testament is any language that distributes trust assets so that means you have a revocable living trust centered estate plan.
You have a revocable trust and you also have assets that are in the name of that trust. Let's say dad several years ago went to his estate planning attorney and created a revocable living trust and as part of the package his estate planning attorney put his house that he's living in into the name of his trust which is exactly the way it should work guys.
Then in his trust he names his son Enrique as receiving that house as a distribution from the trust
Now several years later the dad for whatever reason redoes his last will and testament without talking to his estate planning attorney or tax professional or financial advisor and in the last will and testament he gives that same house to his daughter Sally.
Do you see the problem here? The first thing is that you probably notice is he did a revocable trust, second he transferred by deed that house from his name to the name of his trust so that particular house is owned by the trust.
It doesn't matter what the last will and testament says because that property is owned by the trust and the last will and testament can only distribute property that is part of the probate estate.
Because that house is then in the name of the trust it is not part of the probate estate. It's part of the trust estate and it gets distributed under the terms of the trust
Don't do that! Don't distribute trust assets by a last will and testament because you can't do that.
Now, if the dad really wanted that house to go to his daughter Sally instead of Enrique he could have done two things.
First is amend his revocable living trust and amend the language that says that that house goes to Sally and not Enrique. Second, he could do another deed a trustee's deed transferring the property out of the trust back into his personal name and then that way when the last will and testament gets probated that would become a probate asset.
Bottom line don't distribute trust assets in your last will and testament because you can't do it.
The number two thing not to put into your last will and testament is distributing llc assets by your last will and testament. That's simply because the assets that are in your llc are owned by the llc. You might own the llc but what you actually only own is the membership interest in the llc
The llc technically owns the assets. This is very similar to number one that we just talked about so let me just give you a quick example.
Let's say that your llc owns two houses. And, let's say they're rental houses and you put them in the llc because you want the protection that you get from an llc.
Technically that llc owns the houses what you own. As the owner of the llc is just the membership interest so you personally cannot give away those two houses because they are owned by the llc
A last will and testament can distribute your membership in the llc but it cannot and I repeat cannot distribute the assets that are within the llc very important distinction.
The number three thing not to put in your last will and testament is your funeral arrangements first. Let me say most families have no idea whether or not their loved one has a last will and testament at all. If they do, then they have no idea where that last will and testament actually is.
The problem then becomes if you have wishes in your last will and testament regarding your funeral those wishes might not be known for days weeks maybe even months until somebody actually finds your last will and testament.
If you wanted to be cremated and they buried you, then we have a problem don't we? What if you wanted to be buried in a particular cemetery or you wanted your ashes spread over a certain spot?
Family didn't have the last will and testament or access to it then they would not have known those wishes and they may have already done the opposite of what you actually wanted
I've told you in another video about a safe deposit box that was part of a probate. The family thought that their loved one's last will and testament was in that bank deposit box. It took over nine months and a court order to get access to that safe deposit box at the bank.
When we opened it up guess what? There was no will and the family had wasted nine months remember.
In most states a last will and testament has no power until it actually goes to the probate process. Even then most anything that happens in a probate has to happen by court order.
Bottom line don't put your funeral arrangements in your last will and testament
Number four - organ donation. Just like the previous if your family doesn't know where your last will and testament is then they're not going to have any idea whether or not you wanted to donate your organs or transplant or for research purposes.
If they don't have access to your last one testament for weeks months or maybe even years they will have never been able to fulfill your wishes because you put that language organ donation language in your last will and testament.
Don't do that! When it comes to organ donation and you're in the hospital your family is probably more worried about whether or not you're going to get better than about whether or not you have a last one testament.
That is really not something that's even registering on their mind. If you put organ donation language in your last will and testament, then it is probably not going to get honored.
You should just not do it in the first place!
Number five don't put living will instructions in your last will and testament. First those are two separate documents.
A last will and testament is a document that distributes your assets according to your wishes. A living will states what you want to happen if medical personnel doctors have determined that you are in a persistent vegetative state with no way of coming out of it. In other words your brain dead.
Very important distinction between a last will and a living will, so don't make that mistake. If doctors do determine that you are in a persistent vegetative state and you've specifically stated or wanted only to receive pain medication, then do not put that in your last will and testament.
That goes into your living will. That's a document that needs to go with you to the hospital or wherever you're going anytime you receive medical treatment.
Very important to have that and not to put that language in your last will and testament. In order to properly memorialize your organ donation and your living will wishes and instructions make sure you go to an estate planning attorney and have those particular documents drafted separately from your last will and testament
The number six thing not to put in your last will and testament is ira designations. We actually just talked about that in a recent video so you can go back and watch that one if you want.
In that video we discussed a mom who had told her three children for several years that they were all going to be the beneficiaries of her ira. They were each going to get a third of her ira.
However the problem was that when the mom first started that ira when she got her first job 30, 35 or 40 years ago she was required to list a beneficiary.
On that form, she listed her daughter Sally because at the time that was the only child she had. Fast forward all these years and the mother never changed that beneficiary designation.
It doesn't matter what she told her children was going to happen to that ira. It doesn't matter that she put language in her last will and testament that the ira was to be distributed a third a third a third.
All the ira people cared about was that beneficiary designation which listed one child. Don't put ira beneficiary designations in your last will and testament because if you've already filled out the ira beneficiary form with your provider financial provider that is what's going to trump anything that is in your last will and testament.
The number seven thing not to put in your last will and testament is who gets your insurance money and this is the exact same situation as the ira. The insurance policies beneficiary designation trumps anything that is in your last will and testament.
If you list an insurance policy in your last will and testament and state that it's supposed to go to your three children but the actual policy only has one beneficiary, then guess who the insurance company is going to pay out to?
That one beneficiary and your other two children are out in the cold and will get nothing. Now you can list your revocable living trust as the beneficiary of an ira or a life insurance policy but you really really need to check with your estate planning attorney and your cpa or your financial advisor before you make any changes like that.
They recently changed the ira required minimum distributions to be distributed at a much quicker rate than they were before so don't make any changes until you speak with your financial advisor.
You've heard me say a gazillion million times that you need to have an estate plan in place and if possible have a revocable living trust centered estate plan.
However we still see a lot of last wind testaments either hand-written or downloaded from the internet that leave a lot to be desired bottom line.
Do not put any of these seven things in your last will and testament and make sure you speak with your estate planning attorney cpa or financial advisor before you do any of this.
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