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University of Massachusetts Amherst

Family Business Center

WHEN A WILL IS NOT ENOUGH

Attorney Ronald P. Weiss, Bulkley, Richardson and Gelinas, LLP

A friend recently told me that she had finally gotten around to doing her will and felt good because her property would pass as she wanted. She said her estate was below the level where state or federal taxes would apply, so she didn’t have to do much by way of tax planning.

I asked her a few questions and suggested to her that she had a bit more work to do if the right people were to inherit her assets in the way she wanted. I explained to her that her will acts only on assets that stand in her name alone, such as household belongings, bank accounts, real estate, and stocks and bonds. It doesn’t act on life insurance proceeds, IRAs, 401(k)s, pensions, annuities or other assets that pass under the terms of a contract or employee benefit plan. Nor does it act on assets that pass as a matter of law, such as joint bank accounts or jointly owned real estate.

It turned out that in my friend’s case, almost none of her estate would pass under her will. Most of her assets were in her 401(k) plan at work and in property held jointly with her husband. In addition she had a small life insurance policy.

She asked me what she should do. I told her that the beneficiary designations that she filled out for her 401(k) plan and insurance policy would control how they passed. She said she had filled those out a long time ago, before she had children. While she was pretty certain that she had named her husband as primary beneficiary, she didn’t remember whom, if anyone, she had named as beneficiary if he died first. She also said that while she had included some provisions in her will to hold assets in trust for her children if they hadn’t reached age 25, she hadn’t thought to making any provision for distributing 401(k) proceeds or insurance proceeds for the benefit of her children if her husband died first while her children were still young.

I explained to her how she could use her beneficiary designations to accomplish the same ends that she had accomplished in her will. I also suggested that she be very careful before putting assets in joint names for convenience purposes with anyone, including children, on the assumption that the joint owner would then distribute the assets in the way that she would have wanted. The joint owner had no legal obligation to do so.

The next time I saw my friend she talked about gardening. Not my thing.

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