Does a Will Take Precedence over Beneficiary Designations?

Does a Will Take Precedence over Beneficiary Designations?- Estate planning is more than just writing a will. Some of people's most valuable assets—retirement accounts, life insurance policies, and certain bank accounts—do not pass through a will at all. Instead, these assets are controlled by beneficiary designations filed with financial institutions.

This distinction is critical. If the information in a will conflicts with what’s listed on a beneficiary form, the beneficiary designation usually takes precedence. Understanding how these two tools work together helps prevent unintended outcomes, legal disputes, and family confusion.

How Beneficiary Designations Work

Beneficiary designations are instructions you provide directly to financial institutions indicating who should receive specific assets upon your death. These forms are typically used for:

• Life insurance policies
• IRAs and 401(k)s
• Payable-on-death (POD) or transfer-on-death (TOD) accounts
• Annuities and some brokerage accounts

When you pass away, the institution distributes the asset to the named beneficiary—no probate required. Because these transfers occur outside of the will, courts and executors are not involved.

This is why it’s crucial to keep these designations updated. For example, an outdated form listing an ex-spouse can result in that person receiving your retirement account even if your will says otherwise.

When the Will and Beneficiary Form Don’t Match

If your will names your son as the heir to your IRA but your beneficiary form lists your daughter, the financial institution must follow the form, not the will. The same applies if your will states that all assets should be divided equally among your children, but a retirement account names only one of them.

These inconsistencies can create confusion, especially if family members interpret the will as the “final word.” Unfortunately, courts always side with the financial institution’s records when a valid beneficiary form is in place.

That’s why periodic reviews of beneficiary designations are essential, especially after significant life events such as marriage, divorce, birth of a child, or death of a loved one.

Does a Will Take Precedence over Beneficiary Designations?

When the Will Takes Priority

Assets not subject to beneficiary designations typically pass through probate and are governed by the terms of the will. These may include:

• Personal property (furniture, jewelry, household goods)
• Real estate not held in joint ownership or a trust.
• Bank or investment accounts without a TOD or POD designation

In these cases, the executor follows the will’s instructions, and the assets are distributed through probate. For this reason, a will is still a vital part of every estate plan—but it is only one piece of the puzzle.

Coordinating Your Estate Plan

Your beneficiary designations, will, and trust documents should work together to avoid conflicts. An estate planning attorney can help review each component, confirm that assets are appropriately titled, and ensure your wishes are carried out consistently across all accounts and documents.

If you intend for a trust to receive retirement funds or life insurance proceeds, you must name the trust as a beneficiary or reference it in your will. Failing to do so may result in assets going to the wrong person or being subject to unnecessary taxes.

Estate planning is not a one-time event. Regular updates ensure that your legal documents reflect your current wishes, relationships, and financial circumstances.

Key Takeaways

• Beneficiary designations override wills: Assets like retirement accounts and life insurance are distributed based on the forms you file, not your will.
• Conflicts can create confusion: Outdated or inconsistent documents may lead to unintended inheritance outcomes.
• Wills still govern certain assets: Property without beneficiary designations passes through probate and follows the will’s instructions.
• Coordination is key to a smooth plan: All estate planning documents should work together to reflect your full intentions.
• Regular reviews prevent mistakes: Updating designations after life changes keeps your plan accurate and effective.

Schedule your phone consultation: THE LAW OFFICES OF CLAUDE S. SMITH, III

Does a Will Take Precedence over Beneficiary Designations?

Reference: Forbes (June 2, 2015) “Your Will And Trusts Aren’t Enough: Using Beneficiary Designations As An Estate Plan”