Your Will Doesn’t Control Everything

Many people believe that once they have a will, their estate plan is complete. They assume that their will tells everyone exactly who should receive their property after they die.

But a will does not control every asset you own.

A will generally directs the distribution of assets that are part of your probate estate. Certain assets, however, pass to another person through a beneficiary designation, joint ownership, or a trust. When that happens, the asset may pass outside of probate according to the arrangement already attached to it.

That means your will and the rest of your estate plan need to work together.

What Your Will May Not Control

Several common types of assets can pass independently of your will.

Retirement accounts: 401(k)s, IRAs, and similar retirement accounts generally pass according to the beneficiary designation on file with the financial institution. If your will says one thing but your beneficiary form says another, the beneficiary designation may control the distribution of that account.

Life insurance policies: Life insurance proceeds are generally paid to the beneficiary named on the policy. Your will does not automatically replace or override that designation.

Payable-on-death and transfer-on-death accounts: Bank and investment accounts with these designations can transfer directly to the person or people named on the account when the owner dies.

Jointly owned property: Property owned jointly with rights of survivorship can pass to the surviving owner when one owner dies, depending on how the property is titled and the applicable law.

Assets held in a trust: If an asset has been properly transferred to a trust, its distribution is generally governed by the terms of the trust rather than the instructions in your will.

This is why having a will is important—but having a will alone may not be enough.

The Problem Is Often What Wasn't Updated

Estate-planning problems do not always happen because someone had a poorly drafted will.

Sometimes, the documents were perfectly fine when they were signed. The problem is that life changed afterward.

Consider someone who got divorced but never changed the beneficiary on an old life insurance policy.

Or a parent who created a new will after getting remarried but forgot to update the beneficiary designation on a retirement account.

Or a homeowner who created a trust but never properly transferred the intended assets into the trust.

Years later, these outdated arrangements can create confusion and potentially produce a result that is very different from what the person intended.

And unfortunately, these mistakes are often discovered only after death—when the person who made the original decision is no longer available to correct it.

Your Estate Plan Needs Maintenance

Creating an estate plan should not be treated as a one-time task. Your estate plan should be reviewed whenever there is a significant change in your life or finances.

Consider reviewing your plan after:

• Marriage or divorce

• The birth or adoption of a child

• The death of a beneficiary or family member

• A major change in your finances

• Purchasing or selling real estate

• Starting or selling a business

• Creating or changing a trust

• Changes in your relationships with intended beneficiaries

It is also a good idea to periodically confirm the beneficiaries listed on your retirement accounts, life insurance policies, and financial accounts.

A Will Is One Piece of the Bigger Picture

A comprehensive estate plan looks beyond the will.

Your attorney may need to consider your beneficiary designations, how your property is titled, whether assets have been properly transferred to a trust, and how different parts of your estate plan work together.

The goal is to make sure the plan you have in place reflects what you actually want—not simply what you wanted several years ago.

If you already have a will, that is a good start. But take the time to review the rest of your estate plan, too. The most important question is not simply, “Do I have a will?” It is, “Will my entire estate plan work the way I intend when my family needs it?”

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699.

Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.