Helen is 68 and divorced. Her will, signed last year, leaves her entire estate to her daughter Ines and names Ines as executor. Three assets make up most of Helen's wealth. Her 400,000 dollar brokerage account still carries a transfer on death registration naming her former husband, completed several years before the divorce and never revisited. Her home, worth 550,000 dollars, is titled in joint tenancy with right of survivorship with her sister Kate. Her 300,000 dollar Individual Retirement Account names Kate as sole beneficiary. Helen tells her planner that the new will has taken care of the lot. Assume no state statute revoking a beneficiary designation on divorce reaches the brokerage account. How will these three assets in fact pass at her death?
- AThe brokerage account and the Individual Retirement Account pass to their named beneficiaries and the home passes to Kate by survivorship, so the will governs none of them Correct
- BAll three pass under the will to Ines, because the will is the most recent document Helen signed and it supersedes the earlier designations
- CThe brokerage account passes under the will because divorce cancels a former spouse's designation everywhere, while the home and the retirement account pass outside it
- DThe home passes under the will because a joint tenancy is severed at the first owner's death, while the two account designations control their own assets
Why A is correct: Each asset carries its own non-probate transfer mechanism, a beneficiary designation on the two accounts and a survivorship right on the home, and every one of these takes effect at death without reference to the will, leaving Ines with nothing from these three assets.
Why B is wrong: This is the assumption Helen has made and it treats the will as a master document, but a will governs the probate estate alone, and none of these three assets enters probate because each already has a transfer mechanism attached to the asset itself.
Why C is wrong: Some states do revoke a former spouse's designation on divorce, which makes this tempting, but the protection is neither universal nor uniform in what it reaches, so a planner cannot rely on it and must have the registration changed instead.
Why D is wrong: A joint tenancy can indeed be severed, but that happens by an act during life such as a transfer of the interest, not by the death of a joint tenant, which is the event that triggers the survivorship right and passes the whole property to Kate.