A few years ago, a family from Brooklyn sat in my office, confused and frustrated. Their late father’s will was clear: he left his entire estate to be divided equally among his three children. But the largest single asset—a $750,000 IRA—was not going to be divided that way. An old beneficiary form, signed 20 years prior, named only his eldest son. The will, for all its legal weight, had no power over that account. The other two siblings were, for the purposes of that account, disinherited.
This is a scene we see play out far too often. Clients meticulously plan their wills, believing they have directed the stewardship of their entire legacy. But in the eyes of the law, not everything you own is part of your “probate estate”—the property governed by your will and overseen by the Surrogate’s Court. Understanding this distinction is the difference between an orderly transfer of your life’s work and unintended consequences for the people you love.
Assets That Pass by Contract
The most common assets that operate outside of a will are those governed by a contract you signed, often years ago. Think of these as self-executing instructions triggered by your passing. The contract—not your will—dictates the outcome.
The primary examples include:
- Retirement Accounts: This includes your 401(k), 403(b), IRA, and other qualified retirement plans. When you open these accounts, you fill out a beneficiary designation form. This form is a binding contract with the financial institution. Upon your death, the funds are paid directly to the person or people named on that form.
- Life Insurance Policies: Like a retirement account, a life insurance policy is a contract. The death benefit is paid directly to the named beneficiaries. It is not an asset the executor of your will can collect and distribute.
- Payable-on-Death (POD) and Transfer-on-Death (TOD) Accounts: Many people set up bank accounts (POD) or brokerage accounts (TOD) that automatically transfer to a named individual upon death. These are simple and effective ways to avoid probate for liquid assets, but they function independently of a will.
These beneficiary designations supersede any instructions in your will. If your will leaves everything to your spouse, but your IRA from an old job still names a former spouse or a parent, the IRA funds will go to that named person. The contract wins. Every time.
Property That Passes by Title
Another category of assets that bypasses probate is property owned in a specific way—where the right of survivorship is built directly into the title. In New York, the most common form of this is Joint Tenancy with Rights of Survivorship (JTWROS).
When two or more people own property as joint tenants, they each have an equal, undivided interest. Upon the death of one owner, their share automatically and immediately transfers to the surviving owner. The asset does not enter the deceased’s probate estate and is not subject to the terms of their will. This is often used for real estate owned by a married couple. Creating such a tenancy is a deliberate legal act. New York’s Estates, Powers and Trusts Law (EPTL) § 6-2.2 requires an express declaration of survivorship rights.
While this can be a useful tool, especially for spouses, it can also create problems. Adding a child as a joint owner on a bank account or a deed for convenience can have serious unintended consequences. It not only directs that asset to that one child upon your death, but it also potentially exposes the asset to that child’s creditors or a divorcing spouse during your lifetime.
The Role of a Living Trust
Finally, one of the most intentional ways to control assets outside of probate is through a trust. When you create a revocable living trust and fund it—meaning you transfer title of your assets from your individual name into the name of the trust—you are fundamentally changing their ownership.
Assets held by your trust are not part of your probate estate. You, as the trustee, control them during your lifetime. Upon your death, a successor trustee you appointed steps in to manage and distribute the assets according to the detailed instructions you laid out in the trust document. There is no need for Surrogate’s Court intervention. This process is private, efficient, and allows for far more nuanced control over your legacy than a will alone can provide.
The key is proper funding. A trust is just a set of instructions until it actually owns the assets it is meant to control. A home, a brokerage account, or a business interest must be formally retitled into the name of the trust to be governed by its terms and avoid probate.
Understanding which assets your will controls—and which it does not—is fundamental to effective planning. It’s not about paperwork; it’s about ensuring your intentions are honored and your family is cared for as you planned. A misalignment between your will and your various asset designations can create conflict and legal challenges that last for years.
A prudent first step is to gather the most recent statements and beneficiary designation forms for all your life insurance policies and retirement accounts. My firm can then work with you to conduct a beneficiary audit, ensuring these powerful documents align with the intentions stated in your will and overall estate plan.
