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Non-probate assets in an estate plan

New York residents who are creating an estate plan should be aware that non-probate assets are not passed to beneficiaries under a will. That means that whoever is on the beneficiary designation or whoever shares the asset inherits the asset regardless of what is written in the will.

Examples of non-probate assets are those that are passed down using beneficiary designations, such as retirement accounts and life accounts. Real property in which people share rights of survivorship is another example. Certificates of deposit or bank accounts might have beneficiaries named to whom the accounts are payable upon the owner's death.

This means that if people change a will, they must make sure that the changes are consistent with their designations for non-probate accounts. For example, if a testator wishes to disinherit a family member and only does so in the will but leaves the person as the beneficiary on the retirement account, the beneficiary designation overrides the testator's wishes as stated in the will. If there is additional evidence besides the will of the testator's intentions, it might be possible to mount a legal challenge, but it will not necessarily be successful.

Even if beneficiary designations are consistent with a will, if people want to disinherit someone, they may want to make specific mention of it in the will. Otherwise, it might be assumed that they simply forgot to mention the family member. It is also important to review beneficiary designations and other aspects of an estate plan regularly to ensure they are up to date. Otherwise, there could be a scenario in which an owner forgets to remove an ex-spouse from a retirement account and that person gets the assets instead of the owner's current spouse.

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