Conflicts in Your Estate Plan – Which Document Wins?

Even a simple estate plan usually includes more than just a Last Will and Testament. If you have a life insurance policy, a bank account, or even own a home, all of those documents are ultimately part of your estate plan whether you realize it or not. Because people often do not think of these documents as being part of their estate plan, a conflict can arise when the time comes to probate an estate. Understanding how a conflict can wreak havoc on your estate plan may help you avoid the situation altogether.

Let’s use the estate of our imaginary friend Susn to illustrate how a conflict can occur. Susan’s Last Will and Testament clearly states that all of her assets are to be divided equally between her children Fred and Wilma and that her husband Bob gets nothing.

When Susan dies though, the family comes across a bank account with a substantial amount of money in it that is titled as “payable on death” with Bob as the designee. Furthermore, they receive notification that a retirement account exists that lists only Wilma as the beneficiary.  Susan’s children are sure that Susan only put her husband’s name on the account for convenience, but what happens to the funds in the account? Do Fred and Wilma have to split the retirement account funds?

A Last Will and Testament only covers assets that are held by the maker of the Will and that are not legally accounted for by another estate planning instrument. In this case, the disposition of those assets that are jointly titled, or that have a beneficiary designation, is not governed by Susan’s Will.

Therefore, even though she specifically indicated that she wanted her assets evenly split between her children and that she did not want her husband to receive anything, that will not likely be the outcome because of how she titled assets.