A typical last will contains two types of gifts: specific and general. Specific gifts, which leave a particular object or dollar amount to a particular person, are optional, but are generally the first items of property that are distributed from a last will. A specific gift might read: "I leave to my daughter, Cynthia, my engagement ring."
A general gift is a share of the property that remains after specific gifts are made. The people who receive these general gifts are known as "principal beneficiaries" because they usually receive the bulk of the estate after smaller gifts and valuables are disbursed. A principal beneficiary is often the last will maker's spouse or closest relative. Each last will must have at least one principal beneficiary. For example, the principal beneficiary clause might be framed as follows: "All the rest of my property I leave to my spouse, Sarah."
Who is the Executor?
The personal representative whom you nominate in your last will (known as the "executor") is responsible for dividing up the gifts and ensuring that your wishes are carried out.
Note that there are certain types of property and accounts that are typically not distributed through a last will. Instead, beneficiaries are named directly in their governing documents, and provisions in your last will that name different beneficiaries will have no effect. These include:
Life Insurance: The proceeds from a life insurance policy go directly to the beneficiary named in the policy.
Retirement Plans: Many people designate a beneficiary directly in their 401(k) and IRA accounts. On the death of the account holder, the funds go to the named beneficiary.
Pay-on-Death Bank Accounts: If your bank account has a designated beneficiary upon death, then that person will generally become the owner of the account after the passing of the depositor.
Real Estate Held in Joint Tenancy or Community Property with Right of Survivorship: If the deed to your real estate indicates that title is held in "joint tenancy" or as "community property with right of survivorship," it means that two co-owners hold identical interests in the property at the same time. Joint tenants and owners of community property, with right of survivorship, each have a "right of survivorship" to the other's share. This means that if one joint owner dies, his or her share automatically goes to the surviving joint owner.
If you have questions or would like to change beneficiaries for your life insurance, retirement plans, or bank accounts, please contact a representative from your insurance company, brokerage, or bank.