The Bigger Picture: Estate Planning beyond the Will

by Larissa Bixler Stein

Sometimes we encounter frustrated would-be heirs who are convinced the Executor of a loved one’s estate has mismanaged the estate. The reason? The Will says they are to receive something and they know their loved one had assets, yet they in fact receive nothing. Surely the Executor has been up to no good—right? The answer is “not necessarily.”

Won’t My Will Distribute All of My Assets?

Not necessarily! While certainly an important component of an estate plan, a Will does not trump other legal arrangements in place to distribute assets upon death. A Will generally controls only assets that are not distributed to heirs by some other legal means. There are many instances when assets pass “outside the Will.” For instance, assets like life insurance and 401(k) retirement accounts generally have beneficiary designations, which are a legal directive from the account owner to the financial institution instructing them as to whom should receive the assets upon the owner’s death. Regardless of what the Will says, the beneficiary designation controls the distribution of those assets. Another example includes property and bank accounts that are owned jointly with rights of survivorship. The legal effect of joint ownership with rights of survivorship is that the surviving joint owner automatically owns the property or bank account upon the death of the other joint owner–regardless of what the Will says.

Is It Bad to Have Property Pass Outside of the Will?

Not necessarily! Sometimes having property pass outside of the Will is beneficial since it can avoid probate and, in some cases, minimize taxes. However, having property pass outside the Will can also result in unintended consequences if the deceased person was not aware of the overall effect on their estate plan. For example, a person can execute a Will saying that their children should receive equal shares of their estate, but if they have put one of those children on their largest bank account as a joint owner with rights of survivorship, the overall effect is that their children will not be treated equally. That is because the Will does not control the bank account jointly owned with the one child. Regardless of what the Will says, the child who is the joint owner on the bank account will automatically own the entire bank account when their parent dies because of the survivorship rights. This may not be the outcome the parent intended, but the children who were not joint owners on the bank account will be out of luck with respect to that asset regardless of their parent’s intent.

A thorough estate planning attorney will help you understand how each of your assets will be distributed after your lifetime so that you can be sure that the overall effect of your estate plan is as you intend. Please feel free to reach out to any of the attorneys at Garrity & Gossage, LLP if you have questions about your specific circumstances.

Larissa Bixler Stein is an attorney with Garrity & Gossage, LLP whose passion is helping those in North and South Carolina provide a more secure future for themselves and their loved ones through Wills, Trusts, Powers of Attorney, Guardianship, Probate, and Elder Law Services. Please note that this article is intended for general information purposes only, and is not legal advice. Legal advice depends on the specific facts and circumstances of each individual’s situation. Those seeking specific legal advice or assistance should contact an attorney.