It should be noted that there are numerous assets that can be deemed testamentary substitutes, meaning that due to the nature of ownership or the beneficiary scheme, these items may not be covered under the terms of the will.
For the most part, if an asset is owned exclusively by the testator-decedent (the person who died) and there is no named beneficiary, this asset will fall under the purview of a Last Will and Testament, and ultimately the Surrogate’s Court of the county in which the decedent was domiciled. These assets will have to go through the process known as probate. Or if a decedent died without a will (intestate), the process is known as administration.
Some examples of assets that may not be covered under a Will would include financial accounts that are owned jointly (i.e. joint banking or checking account). Furthermore, accounts that are commonly known as POD (payable on death accounts) where a beneficiary will become the titled owner upon death would not be covered under the terms of a will.
Life insurance policies with named beneficiaries are another category of estate assets that would not be covered under the Will or the purview of the Court. It is important to name a beneficiary under a Life Insurance policy if you do not want the proceeds from the policy to be held up during the probate process.
Usually, real property will have to go through the probate process as a beneficiary cannot be named on a deed for real property. However, commonly the testator-decedent may reserve a life estate, meaning that they will reside in the premises for as long as they live and pay the carrying costs of the house (i.e., maintenance, taxes). However, when the life tenant passes away, the remaindermen automatically become titled owners.
When a house is owned by a husband and wife (tenants by the entirety) or when two persons own a home as joint tenants with right of survivorship, when the first joint tenant or tenant by the entirety dies, the surviving tenant receives the property by operation of law without having to go through the provisions of the will or Surrogate’s Court. It is important to note the distinction between joint tenants and tenants in common, with the latter needing the probate process in the event of the tenants in common dies. In that case, the tenant’s heirs at law or beneficiaries according to a will would take that respective portion of real property.
Finally, a very common form of ownership that will result in assets not passing through the Will would involve property owned by a trust whether the trust be revocable or irrevocable. There are advantages and disadvantages to both forms of ownership, with the irrevocable trust typically created to avoid estate or inheritance tax or to shield assets from creditors. Both forms of trust will avoid the probate process and will likely ensure the seamless management of assets without the necessity for the intervention of the Surrogate’s Court.
Should you require an experienced estate attorney, please contact the Law Offices of Michael W. Alpert at (516) 280-7288 or malpert@alpertlegal.com.