Beneficiary Designations: Why They Can Override Your Will

Why this matters

Many accounts transfer by contract to the person named on the account—not by what your will says. If your beneficiary forms are out of date, assets can bypass your will entirely. Family Harbor helps you inventory these accounts, store confirmations in your own Google Drive, and keep an easy “Beneficiary Audit” tracker so your paperwork matches your intent.

What “beneficiary designation” means

Some assets pass directly to the person you name on a form with the financial institution. These usually do not go through probate and are generally not controlled by your will.

Common examples

Life insurance and annuities

Retirement accounts (401(k), 403(b), IRA, Roth IRA)

Payable-on-Death (POD) bank accounts

Transfer-on-Death (TOD) brokerage accounts or TOD deeds (state-specific)

Some HSAs and certain employer benefits

Plain version: the agreement you signed with the company says “on death, pay Person X.” That contract usually wins before the will is even read.

Why they can override your will

Contract rules first: The account agreement instructs the company who gets paid.

Outside probate: These assets typically transfer directly, so the probate court never applies your will to them.

Timing: The institution pays the named beneficiary on receipt of required documents, often faster than an estate distribution.

Result: If the will says “leave everything to A” but your IRA still lists ex-spouse B, the IRA likely goes to B. Your executor may have no authority to change it after death.

The right way to think about your plan

Your will/trust directs probate assets and trust assets.

Your beneficiary forms direct designated accounts.

Your titles (joint tenancy, community property, etc.) direct co-owned assets.

These three layers must be coordinated. Family Harbor’s checklist and Access Map help you line them up and document the “why” behind each choice.

Best-practice setup for designations

Name a primary and at least one contingent beneficiary.

Use plain, complete legal names and relationships (and, where requested, SSN/DoB).

Decide per stirpes (down the family line) vs per capita (equal shares among living beneficiaries) when available.

Avoid naming minors directly; consider a trust or custodian approach on attorney advice.

Review employer plans: some require spousal consent to name a non-spouse.

Consider special situations (special-needs planning, blended families, charitable shares) with a professional.

Note: Retirement-account tax and payout rules change over time. Get current guidance from your advisor before naming a trust or non-spouse.

How to do a 30-minute Beneficiary Audit

List accounts

Open Family Harbor’s Beneficiary Audit sheet and list every life insurance policy, retirement plan, bank, and brokerage account.

Pull current forms

Compare to your intent

Does each form reflect your current wishes, including contingents? Are spellings, percentages, and addresses correct?

Update where needed

Submit changes through the institution’s process (often e-sign). Ask for written confirmation.

Upload and tag

Save each confirmation PDF in your Family Harbor Drive:

Drive › Legacy Plan › Beneficiaries › <Institution>_<AccountType>_<YYYY-MM-DD>.pdf

Update the tracker with date/notes (“Added contingent per stirpes; spouse consent on file”).

Re-review annually

Turn on a Family Harbor reminder (e.g., each January) and after life events (marriage, divorce, birth, move, new job, rollover).

Common pitfalls to avoid

Out-of-date forms after marriage/divorce or job changes.

Missing contingents (if your primary can’t inherit, it may default to your estate).

Naming minors without a plan for management.

Conflicts with your will or trust terms (e.g., your trust says “hold until 30,” but the IRA pays a 19-year-old outright).

Assuming a rollover or account transfer copied your old designation—often it did not.

Employer plan quirks: some 401(k)s need spousal consent to name anyone else.

Should I name my trust as beneficiary?

Pros

Centralized control and staggered distributions

Privacy and coordination across assets

Cons

Retirement accounts may face different tax timing or administrative complexity

Language must be drafted properly (see-through trust rules, etc.)

Plain guidance: This is case-by-case. Talk to your attorney/CFP before naming a trust for retirement assets. Family Harbor will store the trust excerpt your advisor wants attached to the form.

After you update designations: what to store in Family Harbor

Confirmation PDFs for each account

Summary page listing primary and contingent by percentage

Any required spousal-consent forms

Advisor notes explaining “why this structure,” dated

A quick “Where originals live” note (if any paper policies)

Organizing this in your own Drive ensures your executor and beneficiaries can find proof quickly, without chasing portals during a difficult time.

Quick FAQs

Do beneficiary assets count toward the will’s “equal shares”?

Not automatically. They pass outside probate. If you want overall equalization, plan it explicitly with your advisor.

What if my beneficiary died first and I never changed it?

The contingent usually steps in. If none, the default may be your estate or plan default—check the form and fix it now.

Can creditors of my estate reach designated assets?

Rules vary by state and account type. Ask your attorney; in general, beneficiary assets are treated differently than probate assets.

I switched jobs—did my 401(k) beneficiary move with my rollover?

Don’t assume. Confirm and file a fresh form with the new custodian.

Next steps with Family Harbor

Run the 30-minute Beneficiary Audit and set an annual reminder.

Upload every confirmation to the Beneficiaries folder and mark each task complete in your checklist.

Use the Access Map to show who can view confirmations now (usually just you/spouse) vs. who gets access later (executor/trustee).

This guide is educational, not legal or tax advice. Work with a qualified professional to decide the right designations for your situation. Family Harbor’s role is to keep your documents organized, your access clear, and your plan on track.