Perhaps you are considering (or already in the process of) having an attorney craft your new Will. You might think you'll be all set, right? But you might be
surprised how much of your estate is not subject to the terms of your Will, and these assets
should be carefully considered in your estate planning.
Your Will deals with what is
called the probate estate. However, there are some assets that are not
part of the probate estate, and are thus not distributed by your Will. This includes property owned in joint tenancy (with right of survivorship), and
payable-on-death (POD) accounts such as life insurance, retirement accounts,
and brokerage investments. Those are transferred or paid directly to your beneficiaries upon
your death.
In addition, there are other types of property that can be removed from your probate estate. These include real property, bank accounts, and motor vehicles. By use of a Transfer-on-Death Deed (TODD), real property can be conveyed to a named beneficiary after your death. Similarly, POD designations can allow payment of your bank account funds to beneficiaries after your death and vehicle titles can be transferred to a beneficiary by setting up a Transfer-on-Death notice. Thus, these assets are no longer subject to the terms of your Will.
Pro tip: Because there are so many assets that will be distributed directly, it is important to make sure those beneficiary designations are up to date. It is wise to revisit your investment accounts, pensions, life insurance, and other payable-on-death instruments from time to time.
If the estate governed by your Will is valued at less than $75,000 with no real property (i.e., any real property is either in joint tenancy with another person who survives you, or you had registered it under a TODD), then your estate may avoid probate altogether. Avoiding probate can save your family a lot of time and money.
You may ask: If so many assets can be designated to transfer outside of probate, why have a Will in the first place?
Having a valid Will is important to ensure that your property is distributed per your wishes, no matter the makeup of the estate assets. Your estate may still include a sizable residue comprising many items of value, and the Will directs to whom those assets will go. The Will names your beneficiaries and successor beneficiaries, and it nominates personal representatives and other fiduciaries such as guardians and conservators. Your Will can incorporate a distribution list of personal property items, which can be updated as you wish without changing the Will itself.
If you are considering your
estate planning strategies, a qualified attorney can help you get started. When meeting with your attorney, it is important to discuss all of your assets, so that they can be best protected for your loved ones.