A last will and testament is the most venerated of all estate planning documents. Whenever one thinks about estate planning, they invariably think about a will. And a lot of people assume (wrongly) that a will is all they need. While a will answers that lingering question, "Who gets what?", there are many things a will does not do.
1. A will does not keep your family out of the probate court. Many people mistakenly believe that having a will in place prevents probate. This is the biggest myth about estate planning. In fact, having a will guarantees probate. The will is the document central to probate proceedings in court.
2. A will does not prevent a conservatorship. If you are incapacitated or disabled, a will does not help your family manage your assets at all; only a power of attorney can do this. Without a power of attorney, your family will have to go to court for someone to be appointed conservator of your assets, which opens the door for family feuds. If you have minor children, a simple will giving your assets to your children will subject them to an ongoing conservatorship until they turn 18 years old. Their conservator will have to report at least annually to the probate court, and at 18, your children are entitled to full and sole control over the assets without any more oversight from the probate court or the conservator.
3. A will cannot save estate tax. A will does not save your family estate tax—only more complex estate planning documents can help save estate tax, such as a special trust for life insurance or other specially designed trusts.
4. A will does not provide for long-term care. If you want to provide for someone with special needs or a person with long-term care concerns, a will is not the right document to meet your goals. Instead, you should to establish a supplementary needs trust for their benefit and make sure sufficient assets are funneled into the trust to support their living needs. Giving assets directly to disabled beneficiaries can have the unintended consequence of disqualifying them from needed governmental benefits, or can result in a conservatorship proceeding for the disabled beneficiary regardless of their age.
5. A will cannot distribute some types of property. Any assets for which a beneficiary is named is not controlled by your will. Instead, the beneficiary who is named becomes the owner—without probate—upon your passing. Examples of common assets with beneficiaries include life insurance policies and retirement accounts. In other words, beneficiary designation forms supersede instructions in a will. In addition, if you own property as a joint tenant, your will does not apply; instead, the surviving joint owner becomes the sole owner on your passing regardless of what your will says.
6. A will cannot provide for pets. Since pets cannot legally own property, you cannot leave a specific cash gift directly to your pet to provide for their comfort and care. Instead, you need a special trust provision that specifies who receives your pet and how much you leave behind for them to care for your pet.