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What Your Will Doesn’t Cover (and Why It Matters So Much)

It’s a commonly-held belief that if you have a will, its terms will determine how your estate will be distributed when you die. But in many cases, that’s far from true. A will only covers assets that are not the subject of their own self-contained plan for distribution. As it turns out, that covers a lot of different types of assets.

What Your Will Doesn't Cover

What your Will doesn’t cover:

Most traditional and Roth IRAs designate beneficiaries. They are only distributed under the terms of your will if you name your estate as beneficiary or fail to name a beneficiary — which, by the way, is bad tax planning and also subjects the IRAs to claims against your estate.

Similarly, most life insurance policies and annuities designate beneficiaries. They only pass under your will if you fail to name a beneficiary, or if the beneficiary or beneficiaries you name die before you.

Bank accounts can be set up as “pay on death” (POD) and investment accounts can be set up as “transfer on death” (TOD). Those pass according to the POD or TOD designation, not under your will.

Bank and financial accounts, as well as real estate, can be owned as joint tenants with right of survivorship. Those assets automatically pass upon the death of one joint tenant to the surviving joint tenant(s).

Real estate can also be subject to a beneficiary designation, through a beneficiary deed in Missouri or a transfer on death instrument in Illinois. Those also trump the terms of your will.

Finally, any asset owned by or through any type of trust you have in place passes under the terms of the trust, not your will. But as with a will, just because you have a trust, that doesn’t necessarily mean that it will control everything. A trust applies only to assets it owns during your lifetime or of which the trust is the named beneficiary.

So why does it matter, as long as all of your property passes upon your death in one way or another?

Simply put, a lack of coordination can easily mean that your estate will not be distributed as you intend when you die.

For example, you might name your oldest or geographically closest adult child as a joint tenant on your financial accounts, intending to do so “for convenience,” not realizing that when you die, that child may either decide not to share what’s left evenly with his or her siblings, or may not be able to, if that child owes bills at the time and creditors enforce claims against the inherited money. In either situation, the fact that your will left everything equally to your children won’t matter.

Or you may plan for an equal distribution of your estate through POD or TOD designations. But what if leave a $50,000 CD to each of your three children in that way, but then one of the CDs has to be cashed in and the money used during your lifetime to pay for your medical or long-term care? Your will may provide for equal distribution among your children, but that won’t be the result.

Or you may have a will or living trust that provides that if one of your children dies before you, that child’s share should go to his or her children, or that if a child becomes disabled, his or her share should go into a special needs trust. But if an asset passes through some type of beneficiary designation, that’s likely not going to be the result. In a will or living trust, you can take all the room and words necessary to say what should happen with your estate in that type of situation. But most beneficiary designation or joint tenancy forms have enough soon to squeeze in two or three names, and that’s about it. They aren’t designed to deal with contingencies.

Unfortunately, a lot of people who read the preceding paragraph will think “well, if something like that happens, I’ll just change it.” But the statistics don’t lie, and they tell us that, just as often as not, that doesn’t happen. Sometimes people remember to change a few things, but not everything. Other times, people are by then dealing with dementia or other medical issues, and it just doesn’t or even can’t happen.

By the way, an executor named in your will can’t make those types of changes for you in later life. Your executor has no authority to do anything until after you die. But (planning hint!), if you have a well-drafted and properly-funded living trust, you won’t have to worry about scrambling to change everything if “something happens.” Your living trust will automatically and effectively address the situation.

There is an important moral to this story. Estate planning, done correctly, isn’t just about getting documents in place. It’s about making sure that, when you die, your estate is distributed in accordance with your wishes and that you are able to accomplish the most possible good for your loved ones with whatever amount of estate you are able to leave for them. Accomplishing that critical goal is the essence of what a good estate planning attorney can help you to accomplish.


Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (877)995-6876 or Contact Us and we will get in touch as soon as possible.

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774 Sunset Blvd Suite 200
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Effingham, IL 62401
(217) 330-5500

Fax: (618) 632-7333
Send us an email

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