HelloStampedOfficialU.S. Securities and Exchange Commission - Transferring assets · Last verified
What a will does, and the four things it never touches
Most of what an immigrant family owns in America does not pass under a will. Knowing which parts do is the difference between a plan and a document.
A will governs less than people think
Four separate mechanisms decide where things go, and a will is in charge of one of them. Accounts with somebody named on them - a 401(k), an IRA, life insurance - pass to that person directly. Property owned jointly passes by how it is titled. Property in another country is governed by that country's law. What is left, owned in your name alone with nobody named on it, is what the will actually directs.
Source: U.S. Securities and Exchange Commission - Transferring assets
The beneficiary form beats the will
Whatever a will says, a retirement account or a policy goes to whoever is named on its own form. Federal law goes further for a married person in a workplace plan: an election naming somebody other than the spouse does not take effect unless the spouse consents in writing, the consent acknowledges its effect, and it is witnessed by a plan representative or a notary public. Most people last opened that form on their first day at a job, often before a marriage.
Signing it is a state matter, and the rules differ
How many witnesses a will needs, whether they may inherit under it, and whether a notary is involved are set by each state separately. California requires at least two witnesses present at the same time who witnessed the signing or the testator's acknowledgment. That is California's rule and nobody else's, and a document signed to the wrong state's rule can fail entirely. Confirming the rule where you live is what the service or the attorney you use is for.
A trust is not a shortcut around tax
A revocable living trust can keep property out of probate. It does not take property out of the taxable estate - the IRS lists trusts among the things a gross estate may consist of, alongside cash and securities, real estate, insurance, annuities and business interests. Those two facts are routinely blurred together by people selling trusts, and the California Attorney General publishes a warning about that sales pattern.
A trust only governs what was put into it
Paying for a trust document and never transferring anything into it is the most common expensive mistake in this subject. The Attorney General's advice for spotting the sales version of it is specific and worth remembering: watch out for companies that sell trusts and also try to sell you annuities or other investments. The second product is the tell, not the first.
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Frequently asked questions
- Does my will cover my 401(k)?
- No. It goes to whoever is named on the plan's own beneficiary form. If you are married and named somebody else, federal law requires your spouse's written, witnessed consent for that election to take effect at all.
- Can I write a will myself?
- Making a will is state law, and every state's capacity test is about age and sound mind - citizenship and immigration status do not appear in it. What decides whether a document works is whether it was signed the way your state requires, which is the part worth getting confirmed.
- Do I need a lawyer, or is an online service enough?
- That turns on things this guide cannot see, and there is a third option people miss: many large US employers offer a legal plan as a payroll deduction covering a will, a healthcare directive and a power of attorney. Check your own benefits portal before paying for anything.
- What happens if I die without a will?
- Your state applies a formula. It is rarely what people assume - in California a surviving spouse takes one-third of the deceased's separate property where there is more than one child, not all of it.