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The (Not So) Long Arm of the Last Will and Testament

By William D. Block of Block Legal Services, LLC posted in Wills on Monday, October 3, 2016.

It's the scene of the movie where the Last Will is read to the grieving family, and they find out - to their surprise! - that everything is left to the irresponsible young protagonist. When wills leave everything to someone, though, what does "everything" actually mean? Turns out, it might not be much.

This post is the second in a series discussing the general limitations of wills. In my last post, I talked about whether a will keeps your estate out of court. In this post I'll be talking about the next limitation: Wills Do Not Have Power Over All Assets.

With the abundance of probate-skipping tools available, it's quite possible that you have something already in place without knowing it. As I mentioned in my last post, assets only go through probate if there aren't any other mechanisms in place to transfer legal ownership at death. So what mechanisms might you have in place without realizing it?

One of the most common is joint ownership. If two people are full owners of an asset, the survivor gets it when the other one dies and the probate court does not need to be involved. This type of ownership is called Joint Tenancy. (This is different than what's called Tenancy in Common, where each person only owns 50% of the asset and can pass their 50% on to their beneficiaries.) Married couples often own homes as Joint Tenants. Adding someone's name to a bank account can also create this type of joint ownership.

Another very common way to avoid probate is by using beneficiary designations. If you've named someone as the beneficiary of a bank account, life insurance policy, or nearly any other type of financial account, that person will receive the assets directly no matter what your will says. This is especially important if there are old accounts that might have left out children who weren't alive at the time, or named people that are no longer important in your life.

Make Sure All The Pieces of Your Estate Planning Machine Work Together

An estate plan works like a complicated machine with any number of moving parts. When you review your plan, it's important to realize that legal documents are just one of those pieces. Putting your intentions in your will isn't enough if your probate-avoidance tools contradict those intentions.

At Block Legal Services, I can help you review your entire estate plan (not just the documents that I draft) to tune up your estate plan and make sure all the parts are moving in the same direction.