Many people believe their will controls everything they own after they pass away. Several valuable assets actually skip the will process entirely. If you include these assets in your will, you might end up naming different people from the actual beneficiaries and cause disputes among your loved ones.
Joint property with right of survivorship
Property owned with rights of survivorship passes directly to the surviving owner when one owner dies. This often applies to homes and vehicles co-owned by spouses.
Your will cannot override this automatic transfer. The asset passes directly to the co-owner regardless of what your will says. Additionally, the automatic transfer happens immediately without court involvement.
Life insurance policies
Your life insurance payout goes straight to whoever you named as the policy beneficiary. The insurance company pays this person directly—completely outside your will. The money never becomes part of your estate or goes through probate, regardless of what your will states.
Retirement accounts and pensions
Like with your life insurance policy, your 401(k), IRA, pension and other retirement accounts transfer to whoever you named as beneficiaries on those accounts. These designations trump anything written in your will.
So, if your relationship with the people you originally named changes, update the designations as well.
Payable-on-death accounts
Bank accounts with a “payable on death” designation are yours alone while you live. But after you die, the account is “paid” to your named beneficiary. All they have to do to claim the account is show a valid ID and your death certificate to the bank.
Transfer-on-death registrations
You can register vehicles and securities with a transfer-on-death designation. This works like a payable-on-death account but for cars, stocks and bonds. The named beneficiary gets these assets directly without any will or court involvement.
Planning beyond your will
Assets that bypass your will generally avoid probate, too. Since probate can take months and cost thousands in various fees, these assets help you save time and money.
More importantly, these ensure your beneficiaries get the funds you set aside without much stress. Working with an estate planning attorney can help you make asset transfers much easier for your loved ones.
