What does a will actually control

A will acts as one of the most important documents inside of an estate plan. The will can say who should receive property after someone dies and who shall administer the estate. Despite this fact, signing a will does not mean that every asset an individual owns will pass according to its instruction.

The main distinction depends on how the asset is owned and whether it has a beneficiary designation.

Property that passes under a will

A will directs the property in a person’s probate which includes assets owned solely in that person’s name when no survivorship right, beneficiary designation, or living trust controls the transfer. Some examples of this may include bank accounts, personal belongings such as furniture or jewelry, and a solely owned home. The way each asset is titled matters due to the proprietorship of the items.

A share of property maintained as tenants in common can also become part of the probate estate, unlike property held with a right of survivorship. Life insurance or other benefits payable to the estate, rather than to a defined beneficiary may pass through the estate as well. A will can also create a trust at death or direct probate assets into a trust created during life.

Property that does not pass under a will

Some assets may pass directly to another person because of their ownership or the beneficiary paperwork. Property that is held jointly with a right of survivorship generally passes to the surviving owner. Bank accounts that are payable on death, retirement accounts, various IRAs, life insurance policies, and employee death benefits pass to the named beneficiaries. The will does not override these directions.

Property that is already held in a living trust is distributed under the trust’s terms. Additionally, the same kind of asset can fall in either section, an insurance policy naming a person follows its beneficiary designation, while one payable to the estate can be administered through the estate. An account held in one person’s name differs from a joint account with survivorship rights. Reviewing the title and beneficiary designation is therefore as important as reviewing the will. Whether an asset bypasses probate is a separate question from whether it counts for estate tax purposes.

Tyler ThompsonAuthor