Beware of Named Beneficiaries

The Facts: In her Will my mother directs that her estate be divided equally between me and my two siblings. One of my sisters is named as a joint account holder on my mother’s checking account.

The Question: Is my sister entitled to the balance in the joint account in addition to a full 1/3 share of my mother’s estate?

The Answer: Because a person’s Will only governs the distribution of property owned individually by the person at the time of death, the short answer to your question is “Yes.” Oftentimes people have some property that they own individually such as a savings account that is in their name alone, jewelry or a car, and other property which they own jointly with others, such as joint bank accounts or real property that is owned by a husband and wife. The individually owned property makes up the person’s “probate estate” and, if the person dies with a Will, the Will controls the distribution of that property. Jointly held property, on the other hand, is not part of the person’s probate estate and its distribution is not governed by the terms of the person’s Will. Although your mother may have wanted her entire estate to be divided equally between her three children, since the joint account is not part of your mother’s probate estate, it will not pass under her Will. Instead, it will pass directly to your sister as a matter of law.

While I hope that your mother understood and intended that the funds in the joint account would pass outside her Will, I know that many people mistakenly assume that all of their assets will pass in accordance with the terms of their Wills. Since that is clearly not the case, it is important to work with an experienced elder law attorney to insure that the distribution plan laid out in your Will does, in fact, reflect your wishes with respect to your entire estate.

This article first appeared in the July 16, 2009 issue of the Times Beacon Newspapers.

Linda M. Toga of The Law Offices of Linda M. Toga, P.C. is an East Setauket,New York attorney with a general law practice focusing on estate planning, real estate, marital planning, small business services and litigation.