One of the biggest misconceptions that our clients in our estate planning practice have is that their will is the “controlling document” when they pass away. However, in many circumstances this is not the case. In fact, what controls the distribution of the deceased person’s assets can rely on a variety of factors. In most estate plans, wills are a backup document to be used to distribute the decedent’s assets in the absence of one or more of the other items we will discuss below. If you require assistance with creating or revising a will, our Troy, MI estate planning lawyer is here to help you.
The first factor is whether the decedent had assets that they co-owned with other persons and how the ownership of that asset was titled. If the decedent owned the asset with a co-owner who is their spouse or with other persons as joint tenants or joint tenants with full rights of survivorship, then the decedent’s ownership of the asset passes to the co-owner of the property automatically upon their death. This is true even if a will calls for a different distribution of the asset because the co-ownership designation is given a higher legal authority than the decedent’s will under these circumstances.
How the decedent owns the property is another factor in deciding if a will has control of the asset after their passing. If the decedent’s property has been transferred to or purchased by a trust, then the terms of that trust will determine what happens with that asset after the decedent’s passing, not their will. Likewise, if the decedent “owned” property which is in a controlled entity such as a corporation or an LLC, then the corporate documents of these entities will be controlling over the disposition of the asset, and not the decedent’s will.
Another factor is if the decedent’s asset had beneficiaries designated for the asset. This can be done with many types of assets by naming beneficiaries with the institution such as a bank or life insurance company who holds the asset. With real property this can also be done using a Life Estate Deed, more commonly known as a Lady Bird Deed. In these instances, the beneficiary designation is given priority over the terms of the will. Therefore, the asset will go to the beneficiary of the asset, even if that beneficiary is not the same beneficiary listed in the decedent’s will.
In some cases, contracts made with other parties can also overcome designations made in a will. While this creates a much murkier situation than the previously described factors, it is possible that a contract entered into by a decedent with another party to leave an asset to them will supersede the terms of the decedent’s will. This is especially true if the decedent received some benefit or “consideration” from the people or entities they contracted with in return for leaving that party an asset once they have passed away.
As you can see, in many cases a decedent’s last will and testament may not be controlling over some or even all the decedent’s assets. It is important to make sure all the title to your assets, beneficiary designations, trusts, wills, and other documents all line up with your wishes in order to make sure what you truly want to happen to your assets is fulfilled. Contact Gudeman & Associates, P.C. today so that we can make sure your wishes are thoroughly documented and taken care of when the time comes.
