You’ve taken the time to create a will and maybe a trust. You’ve signed the necessary paperwork, and there’s a sense of relief that your affairs are finally in order. But what happens if you leave out some assets or don’t get around to including some new assets you acquire later? It could be a new bank account or a property you purchased after creating your estate plan but never formally transferred into your trust or included in your will.
Such assets don’t simply disappear. What happens to them depends on the type of asset and how it’s titled. Here’s more on this.
The law in Florida
For assets solely in your name with no automatic transfer mechanism in place, they will be distributed under the state’s intestacy laws. In other words, the law decides who inherits them. Courts follow a strict formula based on family relationships, starting with spouses, children, parents and so on.
Any verbal promises you made, family expectations or informal agreements won’t matter. Additionally, this process requires probate, which can add months of delay, court costs and public exposure of your private financial affairs.
That said, not all assets pass through probate. For instance, property held in joint tenancy with right of survivorship transfers to the surviving co-owner when you die. Similarly, life insurance policies, retirement accounts and payable-on-death bank accounts pass directly to whomever is named as beneficiary, regardless of what your will says.
What can you do to avoid this?
The best way to avoid such unintended outcomes is to ensure that your estate plan and your assets remain properly aligned. Legal tools, like a pour-over-will that channels any assets left out into a trust or a residuary clause in a will to account for anything not specifically addressed in the document, can also help. It’s equally important to keep beneficiary designations updated since these typically override instructions in a will or trust.
Reaching out for experienced legal guidance can go a long way in reducing the risk that assets pass in ways that contradict your intent while providing structure and continuity as laws, finances and personal situations evolve.