I recently received a call from a man whose wife was the beneficiary of her uncle’s estate in Nevada. He was troubled because after the estate had been open for quite some time, the lawyers had informed his wife that the largest estate asset was in fact going to go to the daughter of the deceased, who had been disinherited in the will. It turns out that the asset was an account that had a beneficiary designation. The deceased had named his daughter as beneficiary. He later executed a will disinheriting his daughter and leaving his property to his niece and other relatives. Unfortunately, he evidently had forgotten about the account when he executed his will.
What’s wrong with this scenario? First, the deceased should have changed the beneficiary designation on his retirement account. At a minimum, he could have made his estate the beneficiary, so the asset would pass as provided in his will. Even better, he could have designated the same people as were in his will to receive this asset. Second, why did the lawyers open a probate for this asset if there was a beneficiary designation? An asset with a beneficiary designation does not pass through probate; the financial institution should simply have closed the account and distributed it directly to the designated beneficiary. Evidently the lawyers didn’t realize the account had a beneficiary designation—but why the probate had been open for more than a year before they learned that, I couldn’t say.
Lesson learned: If you want to leave your assets to someone, having a will is a good start but it is not sufficient. Assets may pass by beneficiary designation. They may also pass to a joint owner if you hold an account or a house as a joint tenant, for example. It is important to review all of your assets and how they are held, and take action to ensure that they pass to the person or persons you wish to benefit. Working with a knowledgeable lawyer is always recommended.