A client's will leaves everything to a daughter, but a beneficiary designation on an account names someone else. Before answering who receives the money, identify the account's ownership and beneficiary designation.
When you recommend an account title, you affect who owns the assets today and who receives them at death. Probate is the court-supervised process for administering a deceased person's probate estate. Some assets pass through that process; others transfer through survivorship, beneficiary designations, or trusts.
Start by checking the registration, meaning the recorded ownership of the account. Then inspect any beneficiary designation and governing document. These records reveal whether the client's intended recipient can receive the assets through the existing arrangement.
Survivorship means a deceased co-owner's interest passes automatically to the surviving co-owner or co-owners. The following types of ownership differ principally in ownership shares, eligible owners, and whether that automatic transfer exists.
- Joint ownership with survivorship: Joint tenants with rights of survivorship (JTWROS) generally hold equal, undivided interests. Each interest extends across the whole property rather than particular assets within it.
- Tenants in common (TIC): Tenants in common hold undivided interests that may be equal or unequal. There is no automatic right of survivorship; a deceased owner's interest generally passes through...
Common mistakes
- Reading only the will. A will naming a sibling does not redirect the $240,000 survivorship account in Example 1.
- Assuming joint means equal. A stated 70%/30% TIC registration is possible; the deceased owner's stated share controls what enters that estate.
- Choosing TBE for unmarried owners. Two unmarried business partners do not meet the married-spouse requirement, even if they want survivorship and creditor protection.
Bottom line
- JTWROS generally provides equal undivided interests and automatic survivorship; TIC permits unequal shares without automatic survivorship.
- TBE and CPWROS provide spousal survivorship where recognized, while ordinary community property does not automatically provide it.
- TOD/POD beneficiaries generally receive assets outside probate after the sole or last surviving owner's death.
- Beneficiary designations generally control designated assets; ERISA-covered 401(k) plans generally protect the surviving spouse.
Exam shortcut
Underline the account title before reading the will. Identify whose death triggers the transfer, especially when a TOD designation sits behind joint ownership. For per stirpes, draw the original beneficiary branches before assigning dollars to descendants. Count branches first, then divide within the affected branch. Circle “plan” or “IRA” in a divorce question. Also distinguish the original distribution from a later withdrawal after rollover.
The full lesson (about 3,098 words, 21 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- C16
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