Will Substitutes: A U.S. Perspective

Abstract

This chapter aims to introduce the phenomenon of will substitutes in the United States to a transnational readership. The chapter consists of six principal parts. After this brief introduction, Part I lays a foundation by defining the terms of art ‘will substitute’ and ‘nonprobate transfer’, by locating the law(s) governing will substitutes within the federal-state structure of the United States, and by explaining the reasons why in the U.S. will substitutes are often used. Part II surveys the principal types of will substitutes used in the United States: revocable trust instruments, life insurance beneficiary designations, pension and retirement account beneficiary designations, multiple-party and pay-on-death bank account registrations, transfer-on-death registrations of securities or automobiles, deeds creating joint tenancies and tenancies by the entirety in land, and transfer-on-death deeds of land. Part II also briefly discusses gifts causa mortis. Part III explains the distinction between ‘pure’ and ‘imperfect’ will substitutes. The former fully replicate the essential features of a will; the latter do not. Part III also explains why will substitutes are valid under U.S. law even though they need not comply with the formalities required for a testamentary transfer. Part IV explores the rights of third parties in assets transferred at death by a will substitute. These third parties include taxing authorities, the decedent’s creditors, and the decedent’s surviving spouse and children. Part V explores a dominant trend in U.S. succession law: the harmonization of the default rules governing wills and will substitutes. Part VI then explores a counter-trend: the federal preemption of state succession law, particularly relating to pension plans and life insurance. A brief conclusion follows.

Keywords: wills, will substitutes, probate, nonprobate, succession