It’s very important to keep in mind that usually not all of your assets pass through your will. This is something that many people don’t realize. And this can potentially cause BIG problems.

Assets that don’t pass through your will are called non-probate assets. These assets are usually financial assets like checking accounts, savings accounts, life insurance policies, investment accounts, IRA’s, and 401k’s. The reason that these assets usually don’t pass through your will is that you may have signed some sort of beneficiary form for each of these assets. And usually those beneficiary forms say that upon your death that the money, stocks, or whatever should go directly to someone or a group of people that you named in the form.

Other examples of non-probate assets include assets that have been placed in a trust or a house that has a transfer on death deed.

There’s nothing necessarily wrong with naming someone as your beneficiary on one or more of these beneficiary forms or with leaving assets to someone via a trust or transfer on death deed. Just keep in mind that it will have nothing to do with the wording of your will. And if you want certain amounts or percentages of your entire estate to go to certain people, you will need to plan accordingly for both your probate assets and your non-probate assets.

If you don’t keep this in mind, you might inadvertently give one of your beneficiaries way more of your entire estate than you had meant to. And vice-versa, you may give another beneficiary way less than you had intended.

For example, what if you had two children, and you said in your will that you wanted your estate to be divided equally between them. That would work perfectly fine for all your probate assets. But what if a significant part of your estate was made up of a bunch of stocks you own in an investment account, and what if you had named only one of your children as the beneficiary? People often do this thinking one particular child might tend to be better with handling financial issues. But at the same time you might have thought that the wording of your will would dictate how that investment account should be divided.

Nope. The beneficiary form on that investment account is what decides where those assets should go, not your will. So if your investment account was your only non-probate asset and it represented 50% of your entire estate, one of your children would get 75% of your entire estate and your other child would only get 25%. If that’s what you really wanted then that is perfectly fine. But if your true intention was for your children to share your entire estate equally, then you would have failed miserably. These kinds of situations happen very often unfortunately, and it can cause a lot of heartache and turmoil in your family during an already very difficult time.