In a typical will, there are two types of gifts: specific gifts and general gifts. Specific gifts leave a particular object to someone and are optional. They are also the first gifts to be distributed from a will. For example, a specific gift might read: "I leave to my daughter, Cynthia, my engagement ring." You can also choose to forgive a specific debt someone owes you.
General Gifts in a Will
A general gift leaves a percentage of all that remains after specific gifts are made. The people who receive general gifts are known as "principal heirs" because they usually receive the bulk of the estate after the smaller, specific gifts are distributed. Usually, the principal heir is the will maker's spouse or closest relative. Each will must list at least one principal heir. For example, the principal heir clause might read something like, "All the rest of my property I leave to my spouse, Sarah."
Who is the Executor?
The personal representative you appoint in your will (known as the "executor") is responsible for dividing up the gifts and making sure your wishes are carried out.
However, there are certain types of property and accounts that are typically not distributed through a will. 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. Upon the death of the account holder, the funds go directly to the named beneficiary.
Pay-on-death Bank Accounts: If your bank account has a designated beneficiary upon death, then generally speaking, that person will become the account owner when the depositor dies.
Real Estate held in Joint Tenancy or Community Property: If the deed to your real estate indicates that title is held in "joint tenancy" or "community property," it means that two co-owners hold identical interests in the property at the same time. Joint tenants and owners of community property each have a "right of survivorship" to the other's share. As a result, if one joint tenant dies before the other, the deceased person's share automatically goes to the surviving joint tenant.
Beneficiaries for these assets are named directly in their governing documents, and a contrary provision in your will naming a different beneficiary will have no effect.
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.
