What Overrides a Will?

A will is a foundational document in estate planning, but it does not always have the final say on how all of a person's assets are distributed. Many types of assets and legal arrangements can override a will, meaning they pass directly to beneficiaries or co-owners outside of the probate process governed by the will.

The most common and significant factor that overrides a will is beneficiary designations made directly on specific accounts or policies.

Key Assets and Mechanisms That Override a Will

Understanding what bypasses a will is crucial for effective estate planning and ensuring your assets go to your intended heirs.

1. Beneficiary Designations

For many financial accounts and policies, you can name a specific beneficiary directly with the institution (e.g., bank, investment firm, insurance company). These designations dictate who receives the assets upon your death, taking precedence over any conflicting instructions in your will. This means that if your will states your sister should receive your retirement account, but the account's beneficiary form names your niece, your niece will inherit the account.

• How it Works: When you pass away, the institution simply pays out the funds directly to the named beneficiary after verifying your death and their identity. This process generally avoids probate, which is the legal process of validating a will.
• Common Examples:
  • Life Insurance Policies: The death benefit is paid directly to the named beneficiary.
  • Retirement Accounts (e.g., 401(k), IRA, 403(b)): Funds are distributed according to the beneficiary form on file.
  • Payable-on-Death (POD) Accounts: Bank accounts (checking, savings, CDs) where you designate a beneficiary to receive the funds upon your death.
  • Transfer-on-Death (TOD) Accounts: Investment accounts (brokerage accounts, stocks, bonds) where you name a beneficiary to receive the assets.
• Important Note: While beneficiary designations simplify the transfer of assets, they can lead to unintended consequences if not regularly reviewed and updated. If your heirs decide to contest a beneficiary designation in court, litigation can become very expensive and may take months to resolve.

2. Jointly Owned Property with Right of Survivorship

Assets held in joint tenancy with right of survivorship, or tenancy by the entirety (for married couples in some states), automatically pass to the surviving co-owner(s) upon your death. This transfer occurs outside of probate and overrides any instructions in your will regarding that specific asset.

• How it Works: The surviving owner automatically assumes full ownership of the property.
• Common Examples:
  • Real Estate: A home owned by a married couple as "joint tenants with right of survivorship."
  • Bank Accounts: Joint checking or savings accounts.
  • Vehicles: Titles held jointly with the right of survivorship.

3. Living Trusts

Assets that are legally titled in the name of a living trust are not subject to the terms of your will. A living trust is a separate legal entity that holds assets for the benefit of named beneficiaries. Upon your death, a successor trustee manages and distributes these assets according to the trust's terms, bypassing probate entirely.

• How it Works: The trust agreement specifies how assets are managed and distributed, independent of your will. Your will often includes a "pour-over" provision, which directs any assets not already in the trust to be transferred into it upon your death.

4. Spousal Rights and Elective Share

Many states have laws designed to protect surviving spouses, regardless of what a will specifies. These "elective share" or "forced share" statutes allow a surviving spouse to claim a certain percentage of the deceased spouse's estate, even if the will leaves them less or nothing at all.

• How it Works: A surviving spouse can "elect" against the will, choosing to receive their statutory share instead of what the will provides. The exact percentage varies by state and sometimes by the length of the marriage.

5. Creditor Claims

Before any beneficiaries receive assets, the deceased's outstanding debts must be paid. Legitimate creditors have a legal right to make claims against the estate. The executor of the will is responsible for identifying and paying these debts from the estate's assets, effectively reducing the amount available for distribution to heirs.

• How it Works: The probate court oversees the process of notifying creditors and paying valid claims. Certain types of debt (e.g., secured loans like mortgages) may have specific claims against the property itself.

Practical Implications

It's crucial to regularly review and update your estate plan to ensure your intentions are accurately reflected across all assets. A discrepancy between your will and a beneficiary designation or property title can lead to:

• Unintended Beneficiaries: Assets going to someone you no longer wish to inherit, or even to someone you explicitly disinherited in your will.
• Probate Delays and Costs: While some assets bypass probate, discrepancies can lead to legal challenges, increasing time and expense.
• Family Disputes: Conflicting instructions can cause significant strife among family members.

Working with an estate planning attorney can help you understand how different assets are treated and ensure your overall plan aligns with your wishes.