When planning your estate, it is important to ensure that the details in your will and the names of your designated beneficiaries are consistent. If they are not aligned, this mismatch could lead to complications, which can potentially create disputes among your heirs after your death.
Even worse, your assets might not be passed on as you wished, and the people you intended to support may be left without the assistance you planned for them.
In This Insight
What if beneficiary and will are different?
Does a will override beneficiaries?
What is the legal process to reconcile conflicts between a will and beneficiary designations?
What if beneficiary and will are different?
The priority of the documents determines how your assets will be allocated. Typically, the beneficiaries you have listed on any insurance policies or retirement accounts supersede what is outlined in your will. For example, if your will indicates your savings should be awarded to your child, but your brother is the one listed on your beneficiary form, the funds will be given to your brother. The reason being, beneficiary designations usually have more authority than wills.
If your will and beneficiary designations don't match, this inconsistency might lead to potential legal challenges among your inheritors. This situation can lead to confusion and can create tension among family members, particularly if large sums of money or valuable assets are involved. It is, therefore, better to avoid such disputes and ensure your will and beneficiary designations are consistently aligned.
Routinely checking the intentions of your Will and designated beneficiaries can help mitigate potential discrepancies. Revisiting these documents, particularly after any significant life event such as getting married, divorced, or having children, is best practice. It’s especially important to update your will and beneficiary designations as changes in your personal circumstances can affect how your assets should be distributed.
Beneficiaries named on insurance policies or retirement accounts usually take precedence over what is stated in your will.
Does a will override beneficiaries?
In short, the answer is generally no. The reason for this is tied to the differentiation between probate and non-probate assets. Probate assets are those detailed within your will, distributed according to the instructions your will outlines. Non-probate assets, however, bypass the probate process and pass directly to the named beneficiaries, and these can include entities like retirement accounts, life insurance policies, and any jointly held properties. For non-probate assets, they will generally ignore any instructions outlined in a will.
There may be some nuance to this depending on which state you reside. While some states may have legislation that causes beneficiary designations to override wills, others might uphold the opposite stance, making it fundamentally important to consult with a local estate planning attorney or a financial advisor at Selective Wealth Management.
Part of smart financial planning includes ensuring both your will and beneficiary designations are regularly updated and align with your current wishes. This is particularly important when there are major life changes like marriages, divorces, births, or the death of a previously listed beneficiary. Regular consultation with a legal and financial professionals can ensure your financial plan stays current and continues to serve your intended purpose.
A Will generally does not override beneficiaries. It's important to consult a legal professional in your state before making any adjustments to your estate planning wishes.
What is the legal process to reconcile conflicts between a will and beneficiary designations?
More often than not, when conflicts arise between what's stipulated in a will and what's declared in the beneficiaries' documents, the latter takes precedence. The specifics you have listed on your life insurance policy, retirement account, or other similar financial products are typically upheld, regardless of what your will states. In case an ambiguity arises due to differences between a will and a beneficiary designation, it is preferable to seek legal advice. Legal experts specializing in estate planning can navigate the intricacies of the probate process. In some circumstances, the courts may need to step in to resolve disputes while in others, a settlement can be negotiated amongst the concerned parties. However, remember that the process may involve delays in distribution and potential financial implications due to legal costs.
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Final Thoughts
When discrepancies arise between your will and beneficiary designations, it often leads to complications, potentially even resulting in legal disputes. Beneficiary designations are generally given priority over a will, hence a misunderstanding does not necessarily mean the will can overrule the beneficiaries. To resolve these conflicts, taking the matter to court and possibly making revisions to the estate documents may be necessary - a time-consuming and potentially expensive process that can be prevented by consistently aligning your will and beneficiary designations.