I once met with the adult children of a recently deceased client from Brooklyn. Their father had remarried late in life, and his will was clear—his entire estate was to be divided equally among his three children. They assumed this included a substantial investment portfolio he had built over 40 years. They were wrong. The portfolio was held in an account with a transfer-on-death (TOD) designation naming his second wife, which he’d set up years earlier and forgotten. The will said one thing. The account’s beneficiary form said another.
The beneficiary form won. The entire multi-million dollar portfolio passed directly to his widow, completely outside of his will and the probate process in Surrogate’s Court. This wasn’t what he intended in his final years, but the designation he signed a decade prior acted as a binding contract. A will is a cornerstone of any estate plan, but it is not a magic wand that controls every asset you own. Certain assets pass by “operation of law” or by contract, and understanding which ones fall into this category is critical to the stewardship of your legacy.
Assets Governed by Contract and Designation
The most common category of assets that a will cannot touch are those controlled by a beneficiary designation. Think of these designations as mini-wills for specific accounts. When you fill out that form, you are creating a legally binding contract with the financial institution to transfer that asset to the person you name upon your death.
These assets include:
- Life Insurance Policies: The death benefit is paid directly to the beneficiary named in the policy.
- Retirement Accounts: This includes 401(k)s, 403(b)s, IRAs, and other pension plans. The funds are distributed to the designated beneficiary.
- Annuities: Similar to life insurance, the proceeds of an annuity contract pass to the named beneficiary.
- Payable-on-Death (POD) Bank Accounts: These are standard bank accounts where you have designated a person to receive the funds upon your death.
- Transfer-on-Death (TOD) Investment Accounts: Brokerage and investment accounts can be titled to transfer directly to a named individual.
In New York, the power of these designations is codified. New York’s Estates, Powers and Trusts Law (EPTL) § 13-3.2 explicitly validates these non-testamentary transfers, confirming that they are not defeated by the terms of a will. The law recognizes these are separate contractual arrangements. That is why an outdated beneficiary form—one naming an ex-spouse or a parent who has since passed away—can completely undermine an otherwise carefully constructed estate plan. Your will could be perfectly drafted, but it will be powerless over these accounts.
The Impact of Property Titling
How you own property—the legal title—also dictates its path after your death. This is especially true for real estate and bank accounts. In New York, when two or more people own property as “Joint Tenants with Right of Survivorship” (JTWROS), the property automatically passes to the surviving owner upon the death of one owner. It does not matter what the deceased owner’s will says.
This is common for married couples who own their primary residence together. Upon the first spouse’s death, the surviving spouse becomes the sole owner of the property automatically. While this is often the desired outcome, it can create unintended consequences. For example, a parent might add an adult child to their bank account as a joint owner for convenience, intending for that child to pay bills. Upon the parent’s death, that child becomes the sole owner of the entire account, regardless of the will’s instructions to divide all assets among all children. The law presumes the joint account was intended to pass to the survivor, and overcoming that presumption can be a difficult and expensive legal battle for the other siblings.
The titling of assets requires the same deliberate thought as the drafting of a will. It’s not just a clerical detail; it is a dispositive legal act.
When a Trust Is the Controlling Document
Finally, any assets you have placed into a trust are governed by the terms of the trust agreement, not your will. This is one of the primary reasons we create trusts for our clients. A revocable living trust, for instance, is created during your lifetime, and you retitle assets—real estate, investments, business interests—into the name of the trust.
You, as the grantor, typically also act as the trustee during your lifetime, maintaining full control. The trust document names a successor trustee to take over upon your incapacity or death and provides explicit instructions for how the assets should be managed and distributed. Because the trust owns the assets, they are not part of your probate estate and are not subject to the terms of your will. The trust agreement is the playbook, and your successor trustee has a fiduciary duty to follow it.
This is not a conflict to be avoided but a powerful planning structure to be used with intention. By moving assets into a trust, you ensure they are managed and distributed according to a detailed, private document that can account for contingencies far beyond what a will can typically handle.
A well-crafted estate plan is an integrated system where the will, beneficiary designations, property titles, and trusts all work in concert. When they are out of sync, the plan can fail, and your intentions can be frustrated. Stewardship means ensuring every piece of the puzzle reflects your ultimate wishes.
A periodic review of not just your will but all your asset titles and beneficiary designations is a fundamental part of maintaining your plan. If you are unsure how your current designations align with your will, schedule an asset and beneficiary review with our firm. We can identify these conflicts and ensure your legacy is distributed exactly as you intend.
