If you are like many people, when you opened your bank account you probably only briefly reviewed the signature card utilized to establish your account. At death, assets pass in several ways. Assets owned in your name alone, with no beneficiary designation attached, pass under the terms of your will. If, for example, your will gives your property to Sam Smith and the beneficiary designation on your life insurance policy names Betty Jones as the beneficiary, Betty receives the life insurance proceeds regardless of the terms of your will.
Some assets pass by virtue of the manner in which title to the assets is held.
For example, if your bank account is held by you and your daughter as joint tenants with a right of survivorship, at your death, the proceeds in the account pass to your daughter even though your will provides that your estate is to be distributed to your spouse. Survivorship rights, pay on death instructions, and beneficiary designations should be coordinated with your estate plan to make sure that those assets do not pass to an unintended beneficiary, thereby possibly creating family disharmony or creating unnecessary and avoidable taxes. In North Carolina, the inheritance tax which is levied at death is based upon the beneficiary's relationship to the decedent. In addition, North Carolina law affords a credit against the tax associated with a certain amount of property passing to a child, grandchild or other lineal descendant or ancestor. This credit is not available for property passing to anyone other than a lineal descendant or ancestor.