There are several types of estate planning documents. There are wills, which serve as court instructions and control the entire probate process regarding how the assets of a deceased are divided. There’s the revocable trust estate plan, which skips probate and governs all assets in a trust or private family entity.
When choosing between two of these estate documents, an individual should choose one or the other and not both. This is because different things can happen to assets, depending on the type of estate plan selected. These two can come into conflict if there is a provision about a particular asset in a will, but a separate beneficiary is mentioned in the revocable trust. These are the kinds of issues that can arise without proper estate planning.
Conflict Between a Will and Revocable Trust
If one has a revocable trust, the assets in that trust automatically transfer to the trust beneficiaries upon first death, so if the same assets are in a will and should be given to another beneficiary, the latter will not be followed because revocable trust assets do not go through probate.
Assets That Shouldn’t Go in a Revocable Trust or Will
There are certain assets that should not go in either a revocable trust or a will. These are assets that are owned jointly by two individuals. In a joint ownership, the assets are co-owned by two people. When one of the joint owners dies, full ownership goes to the surviving owner.
It doesn’t matter if the assets that are jointly owned are part of a revocable trust or a will. Because there is a joint ownership, the applicable rules on joint ownership will apply, which say that the surviving owner gets full ownership.
For example, if an individual jointly owns a bank account, insurance policy, IRA, or 401(k), etc. with his or her spouse, the assets go to one spouse upon the death of the other even if these assets are part of a trust or a provision in a will provides that these should go to another beneficiary.
Because of this set up, assets that are jointly owned by two people should not go in a revocable trust or will on first death, meaning the death of one of the joint owners.