Do you know that the way you handle your assets can, essentially, void the terms of your Will? Parents sometimes make the mistake of preparing a Will leaving assets to their children; but, they structure their accounts to favor one child over the others.
This may be intentional. The parent may want the child to have the proceeds of that account. Conversely, the parent’s intention in adding the child to an account may be merely to make it easy for the child to help the parent to pay bills. There is nothing wrong with a parent intentionally wishing to give a child the proceeds of an account by adding the child to the account and avoiding the probate process. However, if the parent does not intend to give the account to the one child, the parent may accidentally withhold inheritance from other children.
- For example, Sally Denton has a Last Will and Testament that leaves her assets equally to her three children. However, Sally has her son, Ralph, listed as a joint owner on her checking account, savings account, and certificates of deposit. When Sally dies, Ralph has full ownership of the checking account, savings account and certificates of deposit. Ralph is not obligated to divide those accounts with his siblings. Why? Sally signed contracts with the bank making Ralph an owner. Those contracts overrule the terms of her Will. If Sally had not added Ralph to those accounts, the Will would have controlled how those accounts were divided.
- Wilma Parker is not on good terms with her son, Carl. They rarely speak and she hasn’t been able to visit with her granddaughter since the child’s first birthday. Annette, Wilma’s daughter, is very close to her mother. She also helps her mother by shopping for her, taking her to appointments, and cooking meals for Wilma. Wilma has a Will that leaves her assets to her children equally. She also has a life insurance policy for $300,000 that names Annette as the sole beneficiary. Wilma’s intent is to leave Carl some assets; but, her intent is to give Annette much more because of their close relationship.
A person’s probate estate consists of all the assets owned at the time of death unless the person has taken actions that remove the assets from being under the control of probate court. Adding someone as a joint owner may remove the asset from probate. Adding someone as a beneficiary to an asset can also remove it from probate because there is now a contract that gives direction on who to give the proceeds. If no beneficiary is named, the bank or insurance company will pay the proceeds of the account into the probate estate and the assets will be distributed under the terms of the Will.
It is fine to knowingly plan for assets to pass to certain people outside of probate. Just be sure that you realize you are deviating from your Last Will and Testament.