In this episode, Tim will review assets that pass to others regardless of what a decedent’s Last Will and Testament might say.
Podcast transcript:
WRVO Producer Mark Lavonier:
This podcast is part of the series Estate Planning Pro Tips, hosted by attorney Tim Crisafulli of Crisafulli Estate Planning and Elder Law PC an estate planning probate and elder law firm serving clients throughout central New York. A former school teacher, Tim explains complex legal subjects in an easy-to-understand way. The commentary focuses on the central aspects of estate planning, such as Wills, trusts, asset protection, long-term care, and probate. And now here's Tim.
Tim Crisafulli:
A lot of estate beneficiaries are shocked to learn that a loved one's Last Will and Testament does not determine where all of the decedent's property goes. Indeed, sometimes a person will tell the beneficiary, “Don't worry, my Will says you get everything.” In reality, it's not so simple. For starters, there's a whole host of assets that are not affected by a person's Will. Those that pass pursuant to a beneficiary designation. One such category of assets includes bank accounts with a transfer on death or payable on death designation. Those assets pass directly to the designated beneficiary regardless of what an individual's Will says. Similarly, if a decedent designated a certain person to receive an IRA, a 401k, a 403b, or a life insurance policy, then the beneficiary designation controls, and the decedent's Will has no authority over such assets. Another type of asset that passes regardless of the contents of a Will is jointly titled property. For example, if a married couple both own a house, then as soon as one passes, it generally belongs to the other. The Will makes no difference. Problems often arise where an elderly parent picks one child, perhaps the one who lives closest, and adds that child is a joint owner of a savings or checking account for the convenience of allowing that child to help with banking. However, when the parent dies, the child is the sole owner of the account, regardless of what the Will says. The other beneficiaries of the Will are left account and the joint owner's siblings willingness to share, which may have negative gift tax consequences. A particularly interesting surprise that can arise comes from New York's Right of Elective Share law. Basically, this law requires a married person to leave something to the surviving spouse. Let's consider an extreme case. Imagine a decedent's Last Will and Testament states, “I hereby leave nothing to my husband. I never liked him very much, and I don't want him to have anything of mine.” Even if that were a legitimate Will, and even if it accurately reflected the dead spouse's intentions, New York's Right of Elective share would swoop in to entitle the surviving spouse to the greater of $50,000, or one-third of the decedent's estate. In sum, a Last Will and Testament does not control where all of a decedent's assets go. That's why it's important to have an overall estate plan. One which addresses how all of a person's assets pass. Merely having a Will can often lead to unexpected outcomes.
