01 May Mom screwed up her estate plan. What now?

Q. My mother-in-law changed her will in October and she passed in January. I’m the executor. She removed two estranged grandchildren and made my son, her grandson, the sole beneficiary. In 2015, she had all three grandchildren as beneficiaries of a mutual life insurance fund and the company is not acknowledging the will. Can the company just ignore the will? I know this isn’t what my mother-in-law wanted.
— Executor

A. What’s happening to your mother-in-law’s estate is why it’s so important to talk to a professional about estate planning.

Upon death, certain assets pass by will, and others pass based on the manner by which title is held or by beneficiary designation.

Non-probate assets are not determined by the will, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

Examples of non-probate assets include joint accounts with rights of survivorship, joint real property where title is held by two or more people with rights of survivorship, life insurance with a beneficiary designation, a bank account or certificate of deposit with payable on death beneficiaries named, and IRAs, profit sharing or pension plans with a beneficiary designations, Romania said.

“Assets that do not have a beneficiary designation, or do not pass by survivorship, or where the beneficiary designation names the estate, will pass in accordance with the will, or if no will exists, then by the laws of intestacy,” Romania said. “These assets are denominated probate assets.”

Romania said the terms of a will do not change or supersede any beneficiary designation. A properly executed and delivered beneficiary designation is a valid legal document and is relied upon by the administrator of the life insurance policy, retirement account or other financial institution holding the financial asset, she said.

If your mother-in-law wanted your son to receive her entire estate as well as her entire life insurance policy, it was necessary for her to change not only her will, but also the beneficiary designation for her life insurance, Romania said.

“If you have evidence — other than merely the will disinheriting the other two grandchildren from the probate assets — indicating that your mother-in-law did not want the other two named grandchildren to receive the life insurance proceeds, it is possible to bring an action in court,” Romania said.

But there’s no guarantee you would succeed.

Romania said it’s not uncommon for a decedent to leave a non-probate asset to a particular heir while leaving the bulk of their estate to other beneficiaries, which in essence disinherits the heir from the probate estate.

Assuming you and your son are not going to object to the payment of the life insurance proceeds as set forth in the beneficiary designation, you should provide the life insurance company with the contact information for the other beneficiaries — to the extent you have such information — so that the life insurance company may contact them, Romania said.

Alternatively, you should communicate with the beneficiaries and provide the contact information for the life insurance company.

As executor, you should ensure your mother-in-law’s assets pass to the designated beneficiaries.

“In order to accomplish your estate planning goals, it is important to disclose to and discuss with your estate planning attorney all of your assets, both probate and non-probate, as well as any obligations you may have that would affect your estate plan — for example obligations under a premarital agreement, divorce agreement or shareholders’ agreement,” Romania said.

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This story was first published in May 2017.