A Last Will and Testament is supposed to make things easier after you die. Unfortunately, people sometimes treat a Will as though it should contain every piece of information anyone might ever need about their estate. They list accounts, describe property, explain family disputes, include confidential information, and sometimes even try to control assets the Will doesn’t legally control.
That can create exactly the opposite result. Instead of making the estate easier to administer, those extra details can make the Will outdated, expose private information, create unnecessary disputes, or give disappointed family members additional ammunition to challenge the estate plan. A good Will needs to contain the information necessary to carry out your wishes, but that doesn’t mean everything you know about your assets and your family belongs in it.
The Five Important Items
Here are five things that generally should not be included in your Last Will and Testament.
1. Passwords, Account Numbers, PINs, and Other Confidential Information
Your Will isn’t the place to create a master list of your financial and digital life. I have seen people who want to put bank account numbers, passwords, PIN numbers, Social Security numbers, online login information, and other confidential information directly into their estate planning documents because they think they are making things easier for the person handling their estate.
The problem is that a Will may eventually become part of a public probate file. Even putting the public-record issue aside, passwords and account information change. You may change banks, replace a credit card, change an online password, open a new investment account, or close an old account. You should not have to amend your Will every time you change a password or open a new checking account.
Your estate plan can give the appropriate person the legal authority to handle your financial accounts and digital assets without turning the Will itself into an instruction manual containing sensitive information. A separate, secure system for maintaining passwords, account information, and other confidential details is generally much more practical because you can update that information whenever necessary without changing the estate plan itself.
2. A Detailed List of Your Real Estate, Financial Accounts, and Personal Possessions
Another mistake is treating the Will like an inventory of everything you own. Someone might carefully list the house on Oak Street, the vacation property at the beach, the checking account at one bank, the investment account at another institution, the Ford Explorer, the Rolex watch, the dining room furniture, and everything else they own at the time the Will is signed.
That sounds thorough, but it creates a maintenance nightmare. What happens when you sell the house and buy another one? What happens when you move your investment account from one financial institution to another? What happens when you sell the Ford, buy a Toyota, replace the Rolex, or give the dining room furniture to your daughter while you are still alive? The more specifically you describe everything you own, the more quickly the Will becomes outdated.
In many estate plans, it makes far more sense to distribute the estate by percentages or shares. For example, instead of attempting to identify every asset you currently own, the Will might provide that the estate passes equally among three children. Whether you own one bank account or five, whether you still own the same house, and whether your investment account has moved from one company to another may make absolutely no difference to those percentages.
There are certainly situations where a specific gift makes sense. You might have a family business, a particular piece of real estate, an heirloom, or another asset that you specifically want one person to receive. But turning the entire Will into a detailed inventory means the estate plan can become obsolete every time your financial life changes.
3. Instructions for Assets the Will Doesn’t Control
One of the biggest misconceptions about Wills is the belief that whatever the Will says automatically controls everything you own. It doesn’t.
Suppose your Will says, “I leave everything equally to my three children.” You may assume that means each child receives one-third of everything you own. But if your $500,000 IRA names only your oldest child as beneficiary, that IRA normally passes according to the beneficiary designation, not according to the Will.
The same basic problem can arise with life insurance, retirement accounts, payable-on-death accounts, transfer-on-death arrangements, and property owned with survivorship rights.
That means putting instructions into the Will concerning those assets may accomplish absolutely nothing. Even worse, those instructions can create confusion because your family sees one set of instructions in the Will while the financial institution is legally required to follow something completely different.
This is why estate planning cannot simply consist of signing a Will and putting it in a drawer. Your Will, Trust, beneficiary designations, account ownership, and property titles all need to work together. If those pieces contradict each other, the document you spent time carefully drafting may not control the asset you thought it controlled.
4. Outright Gifts to People Who Should Not Receive an Inheritance Outright
Sometimes the problem isn’t what you are leaving someone. The problem is how you are leaving it to them.
Imagine leaving $250,000 outright to an eighteen-year-old grandchild. Legally, that eighteen-year-old may be an adult, but that doesn’t mean handing that person a quarter of a million dollars is necessarily a brilliant financial strategy. The same concern can arise when a beneficiary has significant creditor problems, is in the middle of a divorce, struggles with addiction, has difficulty managing money, or receives government benefits that could be affected by receiving an inheritance outright.
In those circumstances, simply writing a beneficiary’s name into the Will and handing that person a check may create problems that could have been avoided.
A properly drafted trust can allow someone else to manage the inheritance, establish standards for distributions, protect the beneficiary from his or her own poor decisions, and sometimes provide important protection from outside problems as well.
This doesn’t mean every beneficiary needs a complicated lifetime trust. It means you should think beyond the question, “Who gets my money?” You should also ask, “How should they receive it?” The answer for a financially responsible fifty-year-old child may be very different from the answer for a nineteen-year-old grandchild or a beneficiary receiving means-tested government assistance.
5. Your Explanation for Why Someone Received More, Received Less, or Was Left Out
This is one of those things people often want to put into a Will because they believe they are preventing a future argument. In reality, they may be creating one.
Suppose you have three children and decide to leave 45 percent to one child, 45 percent to another, and 10 percent to the third. You may feel compelled to write several paragraphs explaining exactly why. Maybe that third child received substantial financial help during your lifetime. Maybe you have a strained relationship. Maybe you believe one child has been irresponsible with money. Maybe there was a family dispute twenty years ago that you believe justifies an unequal inheritance.
The danger is that once you put those reasons into the Will, you have potentially created something for the disappointed beneficiary to attack. Instead of the issue simply being whether this was your estate plan, the argument may become whether the explanation you gave was factually accurate. If you wrote that your son had not spoken to you in ten years, he may produce photographs, text messages, and witnesses showing that he visited you six months before you died. If you wrote that one daughter had already received substantial financial assistance, she may argue that the money was a loan, a gift for a particular purpose, or nowhere near the amount someone now claims.
You have taken what could have been a straightforward expression of your wishes and created a factual dispute.
In many circumstances, the better approach is considerably simpler.
The Will can make the distributions you want and clearly establish that those distributions reflect your intentional wishes. If someone receives a smaller percentage, that is the percentage you chose. If someone is excluded, that exclusion can be made clear enough that nobody can credibly argue you simply forgot the person.
There may be situations where additional documentation outside the Will is appropriate, particularly when an estate plan is likely to be challenged. But that is very different from turning the Will itself into a written prosecution of the family member you decided to treat differently. The purpose of the Will is to state what you want done with your estate, not necessarily to explain every personal, financial, and family reason that caused you to reach that decision.
A Will Should Give Instructions, Not Tell Your Life Story
The common thread running through all five of these mistakes is that people often put too much information into the Will. A good estate plan should be detailed where detail is necessary, but unnecessary detail can make an estate plan harder to maintain and harder to administer.
Passwords change. Accounts change. Houses get sold. Cars get replaced. Relationships change. Financial circumstances change. A well-designed estate plan anticipates that your life will continue changing after you sign the documents.
The goal isn’t to create a Will that perfectly describes everything you own and everything you believe on the day you sign it. The goal is to create an estate plan flexible enough to continue carrying out your wishes years later, even though your assets, financial institutions, possessions, and family circumstances may look very different by then.
That is the difference between simply having a Will and having an estate plan that actually works. If you want to learn more about estate planning, particularly how to accomplish your planning while avoiding probate, check out the free materials at www.FreeTrustCourse.com.