Photo of old files that you would need to search for estate plan detailsOver the weekend, I had some discussions with friends about estate planning (I know, it doesn't seem like something that people like to discuss unless they are meeting with an attorney, but it does occasionally come up in social settings, especially when others know what I do for a living). Once we got past some of the initial questions they had, they brought up a common misconception about estate planning:

My will needs to list out all of my assets.

It's a common misconception from new clients who have never had a will prepared before. They come to my office with a large stack of documents, sometimes in an overflowing folder, and they think that we need to list all of their assets in their will as part of the process. Many are very relieved to find out that they don't actually need that level of detail in their will, although if they are creating a trust as well, more detail may be needed than what is in your will.

How Much Detail Is Needed In My Will?

There are basic requirements that are needed for your will, but listing out all of your assets is not one of them. When you are first meeting with your attorney, it's a good idea to have rounded up a list of all of your assets so that you and your attorney are on the same page about what assets need to be planned for in your estate plan. Depending on those assets, and what state you are in, your attorney will help you decide between a will or a will and a trust for your estate plan.

Assuming you are not doing a trust and are only doing a will, the question was asked, "Why don't I need to list all of my assets?" The simple answer is that to do so would require you to change your will each time you sold an asset that was in your will. While it's easy to update your will, and your attorney will be happy for all of the repeat business, it's not often necessary to create a will with such specificity that it needs to be constantly updated.

The other thing to remember is that not all of your assets are going to be distributed under your will. Assets that are distributed under your will are called probate assets, and many clients start estate planning with the goal of making their family home a non-probate asset. However, if your assets have beneficiary designations on them, they are not probate assets and are transferred outside of your will. So if many of your financial assets are made up of accounts or other assets with beneficiary designations, these types of assets do not need to be listed in your will anyway. Doing so will only create confusion (and it's a common mistake that I see when people use an online will site that just mail-merges their information into a form and they list all kinds of non-probate assets in their documents).

So when you get to the bottom of it, you often do not need a lot of financial detail in your will when you are preparing it.

When Is Detail Needed?

Of course, right after I finish telling you that you don't need a lot of detail in your will, there are going to be instances where detail is needed. There are two primary situations in your estate plan when more detail is needed:

If you are leaving specific distributions, called bequests, which leave certain property to certain people, then you need to specifically list them in your will. For example, if you want to leave your cabin to your son and your collection of automobiles to your daughter, those will both likely be specifically listed out in your will. These are specific assets that we want to identify and make sure they go to the right person. This is less commonly used for bank accounts, although in some cases you could choose to do it that way. So when you are using a specific bequest, you want to make sure you've got the right amount of detail in your document.

The other scenario when you will likely need to have detail in your documents is you are creating a trust. While you don't necessarily need to list all of your assets in detail in your trust, the detail will be needed for the drafting of the trust because after the trust is created, you'll need to move the title to the assets into the trust. To do this, you'll need to do deeds for your real estate and you'll likely have to do other documents for financial accounts and assets. All of the retitling that is needed for these assets will require you to gather the detail for each asset so that your trust can be properly funded.

So before you spend all that time gathering up all of your assets and creating other psychological barriers to your first meeting with an attorney about an estate plan, reach out to the attorney first and figure out how much detail is truly needed. There's no reason to put off your estate plan so you can locate some 401K statements from 20 years ago (that likely has a beneficiary designation on it anyway)...

Next Steps

If you're ready to get started, let's set up a Legal Strategy Session to discuss the next steps for you and your legacy. Before you run yourself ragged trying to find those old bank statements, let's craft a plan first to make sure we know what we really need to look for.

Andrew Ayers
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I work with business and estate planning clients to craft legal solutions to protect their legacies.
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