Examples of will substitutes are: 1) Life insurance, 2) Pension accounts, 3) Joint accounts (multiple party accounts), 4) Revocable trusts
Will Substitutes
Will substitutes are functionally indistinguishable from a will because the death beneficiary receives assets at the death of the donor and will substitutes convey no lifetime benefits (personal enjoyment) to the death beneficiary during the lifetime of the donor. However, they differ in one way: in a will substitute, the title of the asset transfers to the death beneficiary during the lifetime of the donor, whereas in a will there is no asset title transfer before death of the donor. Because the title is transferred before death, will substitutes avoid probate court.
[Under the "probate exception" to federal jurisdiction, federal courts sometimes decline to hear cases that are essentially disputes over property referenced in a will and controlled by a state probate court. In the excerpt quoted below, a court observed that due to the similarity between wills and will substitutes, the probate exception might apply even in the presence of a legal instrument that was not technically a will.]
"The plaintiffs argue that the probate exception is inapplicable here because this action relates to the execution of an inter vivos trust, not to a will. We reject such a per se rule. The inter vivos trust is clearly a will substitute. However, the fact that this case [involves] a will substitute does not automatically render the probate exception applicable."
