Why Beneficiary Designations Can Override Your Will
When most people think about estate planning, they focus on their will. However, many don’t realize that beneficiary designations on financial accounts can override the instructions in your will. This can lead to unintended consequences if not properly managed.
What Are Beneficiary Designations?
Beneficiary designations are instructions you give to financial institutions on who should receive specific assets when you pass away. Common examples include:
Life insurance policies
Retirement accounts (401(k), IRA, pension plans)
Payable-on-death (POD) or transfer-on-death (TOD) bank and brokerage accounts
Annuities
These accounts bypass the probate process and transfer directly to the named beneficiary, making them powerful estate planning tools.
Why Do Beneficiary Designations Override Your Will?
Because beneficiary-designated assets pass outside of probate, they do not get distributed according to your will. Instead, the named beneficiaries receive these assets automatically upon your death, regardless of what your will states.
For example, if your will says your estate should be split equally between your children, but your life insurance policy names only one child as beneficiary, that child will receive the life insurance proceeds directly — even if your will says otherwise.
Risks of Outdated Beneficiary Designations
If you fail to regularly review and update your beneficiary designations, your assets could go to unintended recipients. Common situations where this happens include:
Divorce or separation, where an ex-spouse remains the beneficiary
Death of a previously named beneficiary without updating the account
Birth or adoption of children or grandchildren, not reflected in your designations
Changes in family relationships such as remarriage or blended families
These mismatches often cause family disputes, legal challenges, and delays in asset distribution.
How to Review and Update Beneficiary Designations
To keep your estate plan aligned with your wishes:
Schedule regular reviews – At least once a year or after major life events like marriage, divorce, birth, or death in the family.
Gather all accounts with beneficiary designations – Life insurance, IRAs, 401(k)s, bank accounts, investment accounts, and annuities.
Verify current beneficiaries – Confirm that each account’s beneficiary designation matches your current intentions.
Update designations promptly – Submit the required forms to financial institutions to make changes official.
Coordinate with your will and trusts – Work with your estate planning attorney to ensure all elements work together smoothly.
Special Considerations
Contingent beneficiaries: Always name contingent (secondary) beneficiaries in case your primary beneficiary predeceases you.
Minors as beneficiaries: Consider setting up trusts if minors are inheriting assets to avoid outright distributions.
Community property states: In some states, spouses have rights to certain assets regardless of beneficiary designations—consult your attorney.
Why Professional Guidance Matters
Managing beneficiary designations might seem straightforward, but mistakes can have serious financial and emotional consequences. An estate planning attorney can:
Review all your beneficiary designations in the context of your overall estate plan
Help you navigate complex family situations
Ensure your assets are protected from creditors, taxes, and unnecessary probate delays
Bottom Line
✅ Beneficiary designations control who receives certain assets and override your will.
✅ Regularly reviewing and updating these designations prevents unintended outcomes.
✅ Professional estate planning advice helps coordinate your designations with your broader plan to protect your loved ones.
If you want peace of mind knowing your assets will go exactly where you intend, we’re here to help.
📞 Contact Moskowitz Legal Group today for a free consultation to review your beneficiary designations and estate plan.
