In Part I, I discussed what happens when a person dies without a Will. Now I am going to discuss what assets pass under the Will. As I will discuss, not all assets pass under the Will. In fact, depending on your assets and how they are held, you not even need a Will!
Jointly held property. The most common ownership is Joint Tenants With Right Of Survivorship (JTWROS). Upon the death of the first joint tenant, the surviving joint tenant automatically owns 100% of the assets held this way. This is how married couples traditionally hold their personal residence and bank accounts. No assets held as JTWROS pass under your Will.
Life insurance, annuities, retirement plans (IRAs, 401(k)s, 457 plans, etc.) with named beneficiaries. When you name beneficiaries of your life insurance, annuities and retirement plans, the named beneficiaries are going to receive those assets upon your death, regardless of what your Will says. No assets with named beneficiaries pass under your Will.
“Named beneficiaries” means that you name individuals and/or charities. You do not name “my estate.” If you name “my estate” as the beneficiary, that asset will pass under your Will.
Bank accounts, certificates of deposit. Even bank accounts and certificates of deposit may have named beneficiaries. We call these “Payable on Death (POD)” accounts. No POD accounts pass under your Will.
Brokerage accounts. Brokerage accounts also may have named beneficiaries. We call these “Transfer on Death (TOD)” accounts. No TOD accounts pass under your Will.
What passes under the Will? I have named assets that do not pass under the Will – jointly held assets, assets with named beneficiaries, and POD and TOD accounts. So what passes under a Will? When do you need a Will?
You need a Will to transfer, upon your death, all assets that are held only in your name. If title to your personal residence or any other real estate is only in your name, it will pass under your Will. Bank accounts, certificates of deposit, brokerage accounts, or savings bonds that are only in your name will pass under your Will. Also, stock certificates which are not held in a brokerage account and are only in your name will pass under your Will.
And remember that if assets pass under your Will, your Will has to be court-administered. The assets are not transferred to your beneficiaries named in your Will, until the Will goes through the probate process and the Court, by its order, transfers the property to the beneficiaries.