When planning your estate, you may have a will, a trust, and various financial accounts with named beneficiaries. But what happens if these conflict? Many people ask: Does a will or trust override beneficiary designations?
The Short Answer
Beneficiary designations typically override both wills and trusts. That means the person named on your life insurance policy, retirement account, or payable-on-death (POD) account will receive the funds directly, regardless of what your will or trust states.
How Beneficiary Designations Work
Beneficiary designations are contracts between you and the financial institution. When you pass away, the institution is legally obligated to transfer the funds to the named beneficiary. This process avoids probate and generally happens more quickly than distributing assets under a will or trust.
Where Conflicts Arise
Conflicts often occur when:
- A will leaves an asset to one person, but the account’s beneficiary designation names another.
- A trust directs assets to beneficiaries, but a retirement account names someone else.
In these cases, the beneficiary designation almost always takes precedence.
Why Keeping Designations Updated Matters
Failing to update beneficiary designations can cause unintended results. For example:
- An ex-spouse could inherit a retirement account if the designation wasn’t changed after divorce.
- A will might name children equally, but a bank account still names only one child as the beneficiary.
This is why estate planning attorneys recommend reviewing beneficiary designations regularly, especially after major life events such as marriage, divorce, births, or deaths.
Coordinating Beneficiary Designations with Your Estate Plan
To avoid conflict:
- Review all account designations regularly.
- Make sure they align with your broader estate planning documents.
- Seek legal guidance to ensure your designations, will, and trust work together rather than against one another.
Final Thoughts
Beneficiary designations are powerful legal tools that usually override wills and trusts. If your estate plan isn’t coordinated, it can lead to outcomes you didn’t intend. Working with an experienced estate planning attorney ensures your designations and documents are consistent and reflect your true wishes.
