Recently, a potential client asked a question that has grown more common over the years. If Mom or Dad makes a Will, but then leaves most or all of their assets in accounts with designated beneficiaries, is the Will going to even matter? The accounts pass without regard to the Will, and if there is little to no property outside of these accounts, what’s the point?
The question typically comes from one of two angles. Many times, the individual not named as a beneficiary on the accounts, but named as a beneficiary or Executor of the Will, is concerned. First, they might be concerned about having access to estate property for anticipated expenses (final medical bills, funeral costs, etc.). Second, or maybe even first, that individual is worried that Mom or Dad has unintentionally left an unequal division of their Estate. Failure to coordinate probate and non-probate assets is a big problem, and some estate planners inadequately serve their clients when they leave a plan uncoordinated.
Like any good default system, there is a probate plan for every Texan. Most of us just wouldn’t like it, and estate planners have made careers out of helping people avoid it. Non-probate assets can be terrific tools, and planners are always finding new ways to give effect to a client’s plan. Accounts can be held as POD, TOD, JTWROS, or as any of a variety of acronyms that mean “pay this other person when I die.” Trusts can hold virtually any property, and substantial estates transfer every day without a Will ever coming into play.
But even really well-designed tools still must be used properly. The obvious trick comes down to sound coordination between probate and non-probate property. If the Will is just a safety net, that’s fine. But if we expect that the Executor will have some work to do (e.g. sell a house, close down a business, etc.), then an estate heavily comprised of non-probate assets may not be the best idea. The Executor might not be able to engage in these steps if the probate estate is insignificant, or worse, insolvent.