How Will My Assets Be Distributed After I Die?
After you die, you may assume that your will dictates the distribution of all your property. Although the will does control the distribution of a significant pool of your assets, it does not affect how everything is distributed. Because of this fact, it is important for everyone to have a basic understanding of the rules of asset distribution.
What Does My Will Control?
In essence, your will controls the assets that are subject to probate. Probate is the process during which a court examines the will, determines that it is valid and ensures that the assets subject to probate are distributed according to the will’s provisions. In cases where there is no will, the purpose of probate is to ensure that the probate assets are distributed according to the intestacy laws of Massachusetts (or the law of the state in which the property is situated and titled). These laws serve as the default rules of distribution for those who die without a will.
What assets are subject to probate? In general, probate assets are those that are titled in your name only. In addition to your personal property, these assets include your solely owned real property, stocks and investments, bank accounts, and motor vehicles. Once the probate process has concluded, these assets will be distributed according to your will (or the intestacy laws, if applicable).
What Is Unaffected By My Will?
In addition to probate assets, there are non-probate assets that do not have to go through probate before they may be distributed. Generally speaking, non-probate assets include your property that is jointly owned with someone else or assets containing a beneficiary designation. Some of the most common examples of non-probate assets include:
• Assets within a trust
• Life insurance proceeds
• Real property owed with someone else that has a right of survivorship or transfer-on-death designation
• Bank accounts with payable-on-death designations
• Retirement accounts
• Pensions and annuities
• Practically any other property that has a beneficiary designation
Non-probate assets are always distributed according to the instructions in the beneficiary designation, even if the will says otherwise. Because of this, it is important for you to periodically update your beneficiary designations after major life events (e.g. births, deaths, divorces, marriages etc.). Failing to update your beneficiaries can mean that certain non-probate assets may inadvertently go to an ex-spouse, for example, even if you amend your will to say otherwise.
To ensure that your estate is updated to accurately reflect your wishes, it is imperative to check in periodically with your estate planning attorney. An experienced attorney can ensure that everything is in place in order to accurately carry out your final wishes.