Property Ownership and Comprehensive Planning

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Why Your Will Might Not Control Your Assets: A Guide to Property Ownership

Everyone wants an estate plan that works exactly as they intend. You spend time and resources creating a will or trust to ensure your assets are distributed according to your wishes. But a common and costly mistake can unravel the entire plan: the way you own your property.

An estate plan is more than just a set of documents; it’s a comprehensive strategy. If your property ownership is not aligned with your legal documents, your plan can easily fall apart, leading to unintended consequences and family disputes.

The Power of Titling: Joint Ownership with Right of Survivorship

One of the most common ways property ownership can override a will is through Joint Tenancy with Right of Survivorship (JTWROS). This is a frequent setup for bank accounts and real estate, especially between spouses or a parent and a child.

When an asset is owned this way, it automatically passes directly to the surviving joint owner upon death, regardless of what your will says. For example, a senior may add one of their four children to their bank account to help pay bills. If that account is titled as joint with right of survivorship, the entire balance legally belongs to that one child upon the parent’s death. While the parent may have intended for the money to be shared, that child has no legal obligation to do so, which can create significant family conflict.

The Power of Beneficiary Designations

Similarly, many financial assets pass to heirs outside of the probate process through beneficiary designations. These are contracts you have with financial institutions, and they supersede the instructions in your will. Common examples include:

  • Life Insurance Policies
  • Retirement Accounts (IRAs, 401(k)s, 403(b)s)
  • Annuities
  • Pay-on-Death (POD) and Transfer-on-Death (TOD) Accounts

A frequent and disastrous mistake is failing to update these designations after a major life event like a divorce or the death of a beneficiary. If your ex-spouse is still listed as the beneficiary of your life insurance, they will receive the proceeds, no matter what your will directs.

The Solution: Comprehensive and Integrated Planning

A truly effective plan involves more than just drafting documents. It requires a thorough review of every asset you own to ensure that the titling and beneficiary designations work in harmony with your will or trust. This process of aligning your assets with your legal documents is a cornerstone of creating a comprehensive plan for your estate. It ensures that the administration of your estate is smooth, efficient, and free of unintended conflicts.

Call our office at (919) 256-7000 to schedule a consultation.