What Are the Best Investments to Leave Beneficiaries in a Will?

Last wills are just one of many documents in a comprehensive end-of-life plan, but they do play an indispensable role in the end-of-life planning process. Without a last will, people can’t be sure their belongings will end up with their intended recipients. As a result, customers at your financial institution may assume they must include everything they own in their will—but that’s not actually the case.

For instance, some investments are structured in such a way that future recipients are already identified through legally binding processes. Others may be owned jointly or simply be inappropriate inclusions in a unilateral legal document such as a will. When these documents come into conflict, courts may end up making decisions that nobody intended.

If your bank can identify the best investments for a customer’s will and guide them about how to distribute the rest, you’ll be able to help them organize their resources without causing trouble for their loved ones. But the benefits don’t stop there—you can also set up will-friendly investments for customers, provide valuable advice and services for their beneficiaries, and increase business at your financial institution.

Investments to Include in Wills

Before discussing what to omit, let’s cover the assets that should definitely be included in any will. These are:

Cash Accounts and Cash Equivalents

Though it isn’t technically an investment, cash is still one of the best assets for your clients to transfer to their family members after they die. Cash is highly liquid and can be divided with ease, lowering the odds that your customer’s loved ones will get into arguments or have trouble putting their gifts to use.

Your customers might also want to look into cash equivalents. These are “official” investments that combine a high level of liquidity with unique advantages of their own. For example, certificates of deposit (CDs) can earn higher rates of return than the average savings account.

When a customer works with your bank to create a will, you can walk them through how to make the most of their liquid assets through smart investments that support bigger goals for their family and loved ones. You might even be able to bring beneficiaries into the conversation to create a savings account, checking account, or CD—directly boosting business at your bank in the process.

Stocks and Bonds

Stocks and bonds are another fantastic investment for your clients to leave in their wills. These are usually liquid assets, so it won’t be hard for a person’s heirs to sell them and convert them into cash. Along with that, finding the value of stocks and bonds is as easy as checking the daily market price.

Perhaps the biggest perk associated with including stocks in wills is a tax provision known as “step-up in basis.” When a person buys a stock, the amount they pay for it is called its “cost basis.” Later, they’ll sell that stock at either a capital gain or a loss (depending on how the sale price compares to the cost basis). If they earn money in this sale, that gain may be a form of taxable income.

But if a person dies without selling their stock, the cost basis for their shares will change to their market value on the day of their death. That means the people who ultimately receive these stocks can convert them to cash while keeping their capital gains tax obligations to a bare minimum.

Real Estate

Does one of your clients own a home, land, property, or any other type of real estate? If so, these assets should appear in their will—omitting them will only make it harder to figure out who should get what.

Of course, a person’s will shouldn’t just include the names of various properties. Instead, your customers can make things easier for their beneficiaries by explaining where they can find deeds, titles, and other crucial paperwork about their new real estate.

Digital Assets

Up to this point, every asset listed in this article has been a part of end-of-life planning for countless years. But that doesn’t mean new investment opportunities aren’t on the rise—and your clients may be interested in sharing these investments with their loved ones after they die. As a result, you may need to include digital assets in customers’ wills.

While cryptocurrency, NFTs, and other digital assets can be valuable, they can also complicate the end-of-life planning process. If a person lists these assets in their will without sharing login information with the recipient, their gifts will be completely inaccessible. Because of that, your customers will need professional advice on avoiding these outcomes while creating their last will.

Assets That Shouldn’t Appear in a Will

When you’re compiling the assets above, it’s important to omit a few key investments that aren’t appropriate for a last will for a variety of reasons. The following accounts, documents, and financial instruments either have a legal transfer of ownership built into them or simply need to be stored elsewhere in a life-planning portfolio.

• POD/TOD accounts. Funds in payable on death (POD) and transfer on death (TOD) accounts automatically go to a predetermined beneficiary. As a result, there’s no need for these accounts to go through probate.
• Trust assets. Like POD/TOD accounts, trust assets go directly to named beneficiaries and aren’t subject to probate.
• Certain stocks and bonds. Most stocks and bonds should appear in a person’s will. However, that isn’t the case if these assets already have a named beneficiary. 
• Jointly-owned properties. When a property is jointly owned and one owner dies, sole control of that property automatically passes to the remaining owner unless there is a formal legal agreement stating otherwise. 
• Retirement accounts. Since they allow recipients to make tax-free withdrawals, Roth accounts are an excellent choice for end-of-life planning activities. However, people can name a beneficiary for these accounts without getting probate involved. If contrary information is found in a will, it can result in a complex—and destructive—legal battle. 
• Insurance policies. Similarly to retirement accounts, insurance policy payouts go directly to a named beneficiary when the insured person dies.

How Can You Help With Will Preparation?

No matter what assets your customers want to include in their wills, there’s a good chance they aren’t familiar with the ins and outs of will preparation. In fact, 4 out of 10 Americans said they didn’t have enough assets to need a will as of 2024—even though anyone can benefit from having one of these plans in place.

Because the average person isn’t able to create a legally binding will alone, most people look for outside help while making end-of-life plans. The customers at your financial institution already trust you with their money, so they may come to you when they need assistance in this regard. If you can help these people create wills, you can build more robust emotional relationships with them and direct them toward in-house services that can make the most of their legacy and goals. 

But surprisingly enough, most banks aren’t ready to take advantage of this golden opportunity. If you don’t want to miss out, you’ll have to offer services that go beyond the basics. That means your financial institution should be able to help its clients:

• Create wills and more. Though your customers should certainly create a last will during the end-of-life planning process, they’ll also need documents like advanced directives and ethical wills too.
• Store vital documents. These days, the safest way to store documents is to put them in a secure digital vault. And when people access this vault through your bank’s partnerships, you’ll have extra opportunities to interact with them.
• Collect messages and memories. Storing sentimental photos, videos, and messages isn’t directly connected to the financial side of end-of-life planning. That said, hanging on to these mementos is a great way to strengthen your emotional ties with clients.

Know How to Help Your Customers Create Wills

Understanding the end-of-life planning services your bank should provide to customers is easy enough—but if you don’t already offer these services, it can be challenging to get started on your own. At The Postage, we strive to make it as easy as possible for financial institutions to help their clients build reliable end-of-life plans.

Banks that team up with The Postage to provide will creation, document storage, and message/memory sharing services find new ways to connect with their customers as well as build stronger financial relationships with clients. Introducing end-of-life planning support could even get the attention of people you don’t already work with, helping to grow your overall customer base.

Thanks to these benefits, banks that partner with The Postage enjoy average ROI increases of more than 300% a few months after they start offering these services. To find out what The Postage can do for your financial institution, schedule a demo today!