Ask the Attorney: I heard certain assets won't pass under my will. Is this true?

Dear Ask the Attorney:

My friend told me that my retirement plans, joint bank accounts and life insurance do not pass under my Will.  Is that true?

V.C.M.

Our guest blogger is Christopher J. Roman, Esq.   Mr. Roman is an associate in our Taxation/Trust and Estates Department where he handles a wide variety of tax related matters for his clients including estate planning, estate and trust administration, estate litigation, and tax controversies for businesses, families, executives, entrepreneurs and other high net worth individual, using practical, yet creative, solutions to help preserve and enhance his clients’ wealth.

Dear V.C.M.,

Your question is a very common one.  The answer is that yes, that statement is true.  At your death, certain assets which are commonly referred to as non-probate assets pass simply by survivorship or by beneficiary designation rather than through your Will.  It is important to consider these assets when developing your estate plan because non-probate assets can often be a person’s most valuable assets. 

Some examples of non-probate assets are joint bank accounts, bank accounts with a pay on death (POD) designation, a home that is owned as “tenants by the entirety” or as “husband or wife,” retirement plans and life insurance policies.  The next question is how do these assets pass at death?  Any asset with a beneficiary designation, such as life insurance or a retirement plan, passes to the beneficiary named on the beneficiary designation on file with the insurance company or retirement plan custodian.  Any asset owned jointly, such as a joint bank account or a home owned as “tenants by the entirety,” passes to the surviving joint owner. 

This means that whether you have a Will or not, these assets pass in this manner – to the surviving joint owner or the named beneficiary.  What does that mean?  It means, for example, that your Will could leave everything to your favorite charity, but if your 401k names your sister as the beneficiary, the 401k plan will pass to your sister.  Therefore, an effective estate plan incorporates the disposition of all of your assets, including non-probate assets, in order to ensure that your intentions are carried out after your death. 

If you have any questions about estate planning and coordinating the disposition of your assets, please contact an estate planning attorney.

“Ask the Attorney” is a blog in which answers to your legal questions submitted to asktheattorney@einhornharris.com may be answered. The answers to the questions are for informational purposes only and are not to be construed as legal advice or the creation of an attorney-client relationship. The facts of each case are different; therefore you should seek competent legal representation.