New York Estate Planning & Elder Law Blog
A common question asked of us is what happens when a will’s language is inconsistent with the titling of an account held with survivorship benefits? The immediate answer to the question is that the titling of an account will control over a will’s language. The practical effect on the survivor or beneficiary of the account, if there is a discrepancy with the name or a name has been changed, is to challenge the titling of the account in probate proceedings.
When an account is held with survivorship benefits to another account holder, how that account is titled may mean one of two things. Ideally, the named beneficiary, by operation of law, should automatically receive the contents of the account. If the titling is wrong or incorrect, legal intervention will be necessary to correct the account titling. In almost all cases, the account title will supersede any instructions to the contrary in the deceased person’s or maker’s will.
Why do people set up accounts with survivorship rights?
The benefit of an account with survivorship rights is that it places assets in the immediate hands of any survivor following the death of the account holder. The survivor, by operation of law, has immediate access to the account proceeds and does not have to wait or depend on the probate process to receive access to the funds. Especially among married couples, one spouse typically leaves all of the cash accounts to the other spouse upon death and vice versa, contemplating that the couple’s other assets may take time to sort out in and out of the probate process.
The law of the matter
It is important to keep in mind that there is a legal distinction between wills and banking or financial accounts. While wills are governed by New York State laws regarding testamentary dispositions and the passing of assets from the will maker to his or her beneficiaries; banking and financial accounts are governed by state contract law. How a banking and financial account is interpreted is governed by the agreement between the account holder and the financial institution. If the account holder set up an account that provides survivorship rights to a beneficiary, by the terms of the contract between the financial institution and the will maker, that asset can only pass to the named beneficiary and not the estate.
What you should do in this situation?
Challenging a will is not an easy and straightforward process. Speed is often of the essence because the proceeds of such accounts tend to be liquid or money that may dissipate. You should therefore seek expert legal advice to ensure your position is protected while any investigations are carried out to support your claim.