Estate Planning Series – Post #3: Does All Property Pass Under My Will? Probate v. Non-probate Assets

Not all property is automatically subject to the terms of your Will.  It can be made subject to it, but it is not automatic.  We call assets that pass according to your Will “Probate” assets, because they would come under a court’s jurisdiction should your Will ever be offered for probate.

On the other hand, property or assets with designated beneficiaries, like life insurance policies, are generally not subject to the terms of your Will.  Other assets that might not pass according to the terms of your Will include bank accounts that are designated as Joint Tenants With Rights of Survivorship (“JTWROS”) or designated as Payable on Death (“POD”),  and IRAs, 401ks, or other investment accounts with designated beneficiaries.

With proper planning, non-probate assets can be a very useful part of your estate plan. They may present opportunities for deferral of income tax and they may also enable you to avoid a probate of an estate.  However, if you are not aware of how your property will pass, it can make a real mess of your estate. For example, say you are a single person with children. You have decided to leave everything to your children in equal shares.  Say you also have an IRA from an old job where you had designated the sole beneficiary as your oldest child since this was before your other children were born. You assume because you have an updated Will, the IRA will pass to your children in equal shares. Contrary to your wishes, the life insurance policy will go to your oldest child and not be shared with the other children.  This situation is easily avoidable with a little understanding and careful planning.

If you would like an attorney to help you organize your assets into a cohesive estate plan, give us a call or come in and see us.  We will help you ensure your hard-earned assets are not misdirected. Not sure if you need a Will? Check out our previous post and give us a call.


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