What Property to Give

April 13, 2006

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A will gives you the power to direct what property to give to which persons or organizations that you choose. If you don't have a will, each person who falls within the state law classification that applies to intestate distributions has equal rights to receive your property.

This works out OK with money and other easily divisible property, but, as a practical matter, some items (such as furniture or jewelry) can't be split up. If this is the case, your heirs can agree to who gets what, and the probate court will probably go along with their wishes. If no agreement can be reached, however, the administrator of the estate will probably decide that there is no alternative other than to seek the probate court's blessing to sell the property and distribute the proceeds to the heirs. This "solution" will usually be to everyone's disadvantage, since such tangible personal items may be hard to sell at a price that reflects their value to family members.

You can avoid these problems by having a will that specifies "who gets what." Generally, what you say goes: only in a relatively few situations will your direction not be honored by the probate court. Some of these situations might include:

Marital and community property: As an additional protection for spouses, some states limit your ability to transfer property that was acquired during the marriage. Depending on state law, you may be able to transfer only a one-half interest in such property, even if only your name appears on the documents of title. Besides this protection with respect to specific properties, your spouse may elect to claim a forced share of your estate if this amount is more that what is provided in your will.
Jointly owned property: You can transfer your interest in a tenancy in common, but can't transfer the property subject to the tenancy, since the other tenants in common also have ownership rights in the property. However, because joint tenancies and tenancies by the entirety have survivorship features (that is, the surviving joint tenant or tenant by the entirety gets ownership rights to the whole property), your will cannot effectively transfer these interests: they are said to "pass outside of the will."
Life insurance proceeds: The proceeds of insurance policies on your life will be paid at your death to whomever you named as beneficiaries of the policies. Unless you have specified your estate as the beneficiary — and this usually is not a good idea, since it subjects the proceeds to probate costs and delays — your will does not control the pay-out of the life insurance proceeds.
Charitable transfers: Many states limit the amounts that may be transferred to charity at the expense of close family relatives.
Trusts: If you have a trust that is set up to continue operation after your death, property placed in the trust before your death will be governed by the trust document, rather than your will.
Transfers against public policy: Regardless of the type of property that you are giving away at death, a probate court will not enforce a condition that is against public policy. If you include such a provision in your will ("I give John the right to live in my mansion provided that each Valentine's day, he throws a rock through Mary's window") the probate court will either void the transfer altogether, or transfer the property without enforcing the condition.