When it comes to estate planning, most people focus on creating a will, and for good reason. A will outlines your wishes and provides direction for how your assets should be distributed after your passing. But what many people don’t realize is that beneficiary designations on financial accounts can actually override what’s written in a will.
For example, if you’ve named someone as the payable-on-death (POD) beneficiary on your checking or savings account, that person will receive the funds directly. Even if your will says those funds should be divided differently, the named beneficiary takes precedence.
This detail matters more than most people think. It’s not uncommon for someone to go through the process of writing a will, only to forget to update the beneficiaries listed on their bank or investment accounts. If your will directs that your assets be divided equally among your children, but your bank account lists only one child as the beneficiary, that account won’t be included in the division outlined in your will. The beneficiary named on the account will receive the entire balance, potentially causing confusion or even conflict among heirs.
One reason beneficiary designations are so powerful is that they allow funds to bypass probate. That means the bank will transfer the money directly to the designated individual after receiving a death certificate, without waiting for court approval. Not only does this make things easier for your loved ones, it also allows them quicker access to funds during what is often a stressful time.
To ensure your wishes are honored, it’s important to review your beneficiary designations regularly. Life events like marriage, divorce, births, and deaths can change your priorities, so it’s a good idea to confirm that the people named on your accounts still align with your overall estate plan.
Ultimately, your will and your beneficiary designations should be part of the same strategy. One without the other can create gaps and lead to unintended consequences. A coordinated approach—one that includes both updated legal documents and current beneficiary information—offers the best protection for your assets and your loved ones.
If you haven’t checked your account designations recently, now is a great time to do so. A few simple updates can help ensure your estate is handled the way you intend.
