You have probably heard about the importance of having an estate plan set up for you and your family. An estate plan consists of a number of legal documents to ensure that your affairs and assets are handled if you are ever unable to do so. One of the most important documents of an estate plan is a will. In its most basic form, a will instructs the probate court how to distribute your assets or possessions that have not already been predetermined by an ownership designation or beneficiary.
It is important to understand that there are a couple of limitations that a will may have in attempting to distribute assets according to your wishes. Both beneficiary designations and joint ownership of assets will supersede any instructions left in a will. These designations can affect where certain assets go upon a person’s passing.
When a beneficiary is listed on an account, whether that may be life insurance proceeds, annuities, retirement plans, etc., those specific assets in the account will be distributed to the named beneficiary of the account rather than anyone listed in the will. For example, if you have listed your daughter as the beneficiary of your life insurance proceeds and listed your spouse as the sole beneficiary of your will, any life insurance proceeds would be distributed to your daughter because she was listed as the beneficiary. You should understand that although you may have listed someone as a beneficiary of your will, that individual may not recover everything if there are designated beneficiaries on accounts.
Similarly, joint ownership is another instance that will supersede the instructions of a will. Any account that is owned in joint ownership is transferred immediately upon the co-owner’s passing. If you have listed your spouse as the co-owner of the account, the spouse will receive ownership of those assets upon your passing even if you have listed your son to be the sole beneficiary in your will.
Understanding these potential limitations with a will can help you develop your estate plan accordingly. For these reasons, it is important that you make sure any designated beneficiaries are listed according to your wishes. Otherwise, there are a number of potential problems that can arise with your intended distribution of your assets.
If you need help developing your estate plan, be sure to contact The Higgins Firm Estate Group. Our Tennessee estate planning attorneys would be happy to answer any questions that you may have regarding your estate planning needs.