Your last will and testament doesn't necessarily designate who should receive every one of your assets after you die. It's possible you have already designated who receives certain assets in documents requiring the naming of beneficiaries, such as life insurance policies or retirement accounts. Accounts and property held jointly often pass to the surviving owner. These designations supersede your will. If you mistakenly leave these assets to a different beneficiary, they won't receive them.
When you open a retirement account — whether a pension plan, employer-sponsored 401(k) or one of the various forms of Individual Retirement Accounts (IRA) — you must list beneficiaries. The same holds true for life insurance policies. When you die, these accounts bypass the probate process necessary for wills and your named beneficiaries inherit the funds.
A transfer-on-death account set up for your mutual funds or securities directs who receives the funds after your passing. A TOD designation supersedes a will. For bank accounts, you can set up a similar account known as payable-on-death, sometimes referred to as a Totten trust. Your beneficiaries can't touch the account while you're alive, and you're free to change beneficiaries or close the accounts at any time. Once you're dead, your beneficiaries receive these assets by filling out forms provided by the financial institution and providing a certified copy of your death certificate.
If you live in certain states, you can register your motor vehicles with a transfer-on-death option to a named beneficiary, as well as prepare real estate deeds with a TOD designation. Check with your state's motor vehicle department to see if this option is offered.As with other TOD accounts, you can revoke the deed or change beneficiaries during your lifetime. Deeds with a TOD beneficiary require notarizing and recording, just as any other such document.
If you're married, it's likely you own your home with your spouse as "joint tenants with right of survivorship." You might own property titled as "tenancy by the entirety." Either means the surviving person owns the property. Joint tenancy with right of survivorship supersedes a will, as does any brokerage or bank accounts titled in this manner. Unlike TOD accounts, the person named in the joint bank or brokerage account with right of survivorship has full access to these funds while you are alive. That means there is always the possibility they could liquidate the account and withdraw all of the money. If there's a judgment against the person, creditors could go after the account.
You want to ensure that your assets go to the beneficiaries you intend. Contact an attorney to discuss your estate plans and go over the titling of all assets. Then, you'll rest assured that your estate affairs are in order.